Published On: Sun, Feb 5th, 2023

Poor financial management remains a concern

PHILIPSBURG — That the country’s financial management leaves a lot to be desired is no secret. Cft-chairman Raymond Gradus underlines in a letter dated January 31 to St. Maarten’s Minister of Finance Ardwell Irion once more how bad the situation really is.

These are the highlights: in 2014 St. Maarten had 74 million guilders ($41.3 million) equity, but in 2020 there was a negative equity of 294 million guilders ($164.2 million). Solvency decreased from 15 percent positive in 2014 to 38 percent negative in 2020. The Cft considers this “extremely worrisome.” Gradus writes that the country will have to compensate its deficits with surpluses in its future budgets.

St. Maarten’s total debt at the end of 2020 was 1,168 million guilders, or 61 percent of Gross domestic product.

Nobody knows how accurate these numbers really are, because both the government accountant bureau SOAB and the General Audit Chamber have issued negative opinions about the annual accounts for the years 2014-2018. Both auditors doubt the reliability and the lawfulness of these accounts.

Since St. Maarten obtained country status in the Kingdom on October 10, 2010, most budgets show a negative result. Only 2012 (+17 million guilders) and 2013 (+1 million) show a positive result. The cumulative deficit over the years 2011-2020 is 509 million guilders ($284.4 million). The highest deficits were recorded for the years 2017 (161 million) and 2020 (181 million).

The kingdom law financial supervision (Rft) requires that St. Maarten sends the approved annual accounts of the previous year before August 31 to the Cft. The financial supervisor received the annual accounts for 2019 and 2020 in January 18, 2023 – “well outside of the legal term,” the Cft remarks.

The financial supervisor found another problem with these annual accounts: they do not indicate how St. Maarten wants to compensate deficits in its annual budgets. The Kingdom Council of Ministers asked already for an explanation on September 30, 2022 and now the Cft also asks to provide this before March 1

The Cft refers in its letter to a report from the General Audit Chamber. It declared that the annual accounts for 2019 and 2020 do not present a true picture of the country’s financial position. “The bad state of financial management has given the Cft reasons for serious concerns for years,” Chairman Gradus writes to Minister Irion.

The Cft sees however a sliver of light at the end of the tunnel because St. Maarten is in the process of executing projects for the improvement of its financial management based on the country package. “St. Maarten must make sufficient capacity available for the implementation of these measures,” the Cft-letter states.

Another more or less positive point is that St. Maarten is catching up with the arrears in the production of annual accounts and that the country according to the Cft, “is working hard on the improvement of financial management.”

Together with the Temporary Work Organization, the Dutch national audit service and the SOAB St. Maarten is also working on processes that should result in faster delivery and control of the annual accounts.

One issue remains paramount, Gradus writes: the sustainable implementation of the recommendations that result from improvement projects. “St. Maarten must make sufficient capacity available for this purpose.”


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