Published On: Fri, Jun 4th, 2021

Politicians and civil servant must contribute to pension system and SZV-funds, Cft advises

PHILIPSBURG — St. Maarten ought to amend legislation as soon as possible so that civil servants and politicians start paying a 10 percent contribution towards healthcare costs, financial supervisor Cft writes in its advice about the second draft 2021 budget to Finance Minister Ardwell Irion. The measure is necessary to safeguard the future financial viability of the SZV-funds.

The Cft also advises to establish the national decree for the execution of the pension system to enable the 10 percent contribution of participants to the pension fund as well.

The draft budget lists 608 million guilders expenditures, of which 174 million are personnel costs, while 128 million is reserved for corona-related measures.

The personnel costs are 20 million lower than they were in 2020. According to the Cft-advice, this is mainly due to the 25 percent solidarity reduction for ministers and members of parliament and the 12.5 percent cut in the labor conditions for civil servants.

The Cft notes that the budget includes expenditures of 9.5 million guilders for 161 full time vacancies. These jobs are open at the ministries of justice (45), finance (29) and education (26). The financial supervisor advises the government to fill these vacancies as much as possible internally.

The draft budget projects additional revenue of 6 million guilders from compliance-increasing measures. But the Cft-advice points out that the execution of these measures was expected to begin in the first quarter of the year. “The Cft observes that this did not happen.”

The budget contains a provision of 63 million guilders for Social and Health Insurances SZV, split up in 54 million for payroll support and 9 million liquidity support for the St. Maarten Medical Center.

“There have been structural deficits at the SZV-funds for some time,” the advice states. “The corona-crisis causes an additional decrease in premium-income. Implementing reforms is necessary to keep the funds viable in the future. The Cft advices adjusting the regulation as soon as possible, so that civil servants and politicians start paying their contribution of 10 percent.”

The Cft furthermore advises to adopt SZV’s proposal to increase the salary-ceiling for healthcare costs to 120,000 guilders.

The financial supervisor is critical of St. Maarten’s capital budget. Projected capital expenditures total 97 million guilders, of which 83 million for investments. Just 32 million is directly related to reforms. “It is unclear whether the remaining amount is for necessary replacement investments,” the Cft states.

From the draft budget, it appears that the government is using 4 million of liquidity support to pay off debts and to pay for study loans.

The budget projects the receipt of 294 million guilders in liquidity support, spread over five loans. The document erroneously mentions that St. Maarten received 135 million in liquidity support in 2020, while in reality, the Netherlands provided 175 million.

The debt of the collective sector is 70 percent in 2021 and the national debt will rise to 87 percent of Gross Domestic Product.