Published On: Tue, Jun 25th, 2019

Minister Geerlings: “Unable to maintain current expense-levels”

MinFin Perry Geerlings - Budget Presentation 24 June 2019

PHILIPSBURG –Minister of Finance Perry Geerlings painted a dramatic picture of the country’s financial position during the handling of the draft 2019 budget on Monday. “An example of the way of thinking in St. Maarten is that we like to spend money we don’t have,” he said. But we have a budget with a 71 million guilders deficit and we are dependent on loans from the Netherlands for liquidity support that enable us to execute the budget and to keep the government functioning.”

Geerlings pointed out that 85 percent of the country’s expenditures are fixed obligations. The collective sector will be close to 900 million guilders in debt by the end of the year – “That is 22,500 guilders per capita, children included” – and the country has to compensate budget deficits to the tune of 300 million. Payment arrears amount to 150 million.

The current government revenue – 370 million – represents just 20 percent of Gross Domestic product (GDP) while the international standard is between 25 and 30 percent.

“We are unable to maintain the current expense-levels,” Geerlings said, adding that for this reason tax reform and the improvement of financial management are top priorities. These plans require an investment of 57 million over the next three years. The objective is to increase revenue to 23 percent of GDP by 2022. (This would put the 2019 revenue at 425.5 million).

Geerlings furthermore noted that there are no plans to increase taxes. The focus is on having everybody paying his fair share. The informal economy therefore requires attention. According to the minister, the informal economy in Caribbean countries represents on average one-third of GDP. Based on 2019 data, this suggests that the informal economy in St. Maarten could be worth around 617 million guilders.

Minister Geerlings said that the government expects to sell the shares in telecom provider UTS for 21 million. Of that revenue stream, 12 million will go towards payment arrears at the government-owned telecom provider TelEm, 8 million will go towards “salary restraints” at the police force and the remaining 1 million will be used for the alleviation of social needs.