Published On: Tue, Jun 12th, 2018

Government faces 20 million guilders setback

PHILIPSBURG – The final settlement of the OZR – the government healthcare costs regulation – will confront the government in all likelihood with 20 million guilders in additional expenditures. This appears from the reaction of the Board financial supervision (Cft) to St. Maarten’s first quarterly execution report for 2018.

Finance Minister Mike Ferrier submitted the report on May 24 – technically ten days too late – but the Cft  noted in a letter to the minister that St Maarten, “in spite of the IT-problems and the aftermath of the hurricanes, has increased its ability to meet its reporting obligations.”

Payment arrears stood at 87.3 million guilders in March. These arrears did not decrease, the Cft notes, while the calculation of liquidity support for 2017 reckoned with the payment of 40 million to the general pension fund APS and Social and Health Insurances SZV. “The Cft advises to make these promised payments without further delay,” Cft-chairman Raymond Gradus writes in his letter to Ferrier.

The financial supervisor furthermore notes that the pension premium the government paid to APS in the first quarter of 2018 is lower than the legal percentage that is due. “This created new payment arrears and that is unacceptable. It could deteriorate the financial position of APS.”

The Cft urges the government not to create additional payment arrears.

The government had 136 million guilders in liquidities at the end of the first quarter – an increase of 34.5 million compared to 2017. This is however mainly due to the 50 million zero interest loan the Netherlands extended for liquidity support; without this loan, the liquidity position dropped 15.5 million.

Of the available liquid assets, 48.6 million has been earmarked for covering payment arrears to SZV and APS, leaving 87.4 million guilders available for other purposes.

The Cft furthermore notes that St. Maarten still does not have an agreement with the Netherlands about liquidity support for 2018. The government has not yet submitted a loan request for review to the financial supervisor.

The Cft has assisted the finance ministry with the outline of such a request and advises to get in touch with the Netherlands on short notice.

State revenue in the first quarter was 104.2 million, while expenditures were 117.2 million. The deficit – 13 million – is however lower than projected, because the government had budgeted 92.8 million in revenue and 125.2 million in expenditures; that would have resulted in a 32.4 million deficit.

Higher tax revenue and lower personnel costs tipped the scale.

Wage and profit taxes amounted to 35.7 million while 33.4 million was budgeted. Profit tax was, with 10.5 million, 3.1 million above budget. Turnover tax receipts were 1.3 million lower and amounted to 29.6 million. Receipts from concessions and fees were 1.8 million guilders higher.