PHILIPSBURG – “We still don’t know how much of the €550 million Dutch recovery fund will be a grant and how much will be a loan,” Finance Minister Mike Ferrier said at Wednesday’s Council of Ministers press briefing. The more we get as a grant, the better it will be for our Moody’s credit rating.”
Ferrier pointed out that a good Moody’s rating results in lower interest rates for loans, also for the private sector. The rating depends for a good part on how much money the government has at its disposal and that is currently a problem.
However, under the current Kingdom law financial supervision, St. Maarten is not allowed to borrow on international financial markets. Loans require approval from financial supervisor Cft; the Netherlands is required to subscribe to the loans against interest rates that are based on the Netherlands’ excellent credit rating.
“As far as liquidity is concerned we are in a tight situation,” Ferrier said. “We have not received the liquidity support yet that has to come from the recovery fund.”
To address this situation, Ferrier says that all ministries have to find ways to cut costs. “Every ministry must cut down on expenses,” he said, adding that he is for instance looking at the light in the government building and at ways to turn it off at night.
The government’s financial position is also affected by its creaking ICT-systems. “We have trouble getting timely reports. There is an inability to effectively figure out assessments and to collect taxes,” the minister said. “The systems are under a lot of strain and we have problems in the tax administration and the finance department because of it. If you can’t make assessments you can’t collect taxes and without taxes you have a bigger liquidity problem.”
The Council of Ministers has approved the 2018 budget – with a deficit of close to 255 million guilders. “That deficit is due to a drop in income and increased expenses,” Ferrier said.
The Kingdom law financial supervision allows deficits when they are triggered by extenuating circumstances – like Hurricane Irma. “We have requested approval for this budget from the Kingdom Council of Ministers,” Ferrier said. “We are also in contact with the Cft to help us navigate through this process and to do things in the right fashion. We hope that it will not come to an instruction from the Kingdom.”
The 2018 budget is currently at the Council of Advice. Ferrier said that the objective is to have an approved budget by March 1.
