Published On: Mon, Dec 11th, 2017

Government out of money by month’s end

Richard Gibson - HH 20171211 - government has no moneyPHILIPSBURG – The government will run out of money by the end of this month. This appears from a letter Cft-chairman Raymond Gradus sent to Finance Minister Richard Gibson about the proposal to amend the 2017 budget. Revenue for the year will drop by 126.7 million guilders to 351.4 million, while expenditures will increase by 38.1 million to 496.2 million. This will result in a deficit of 144.8 million guilders.

St. Maarten had indicated to the Cft that liquid assets will be completely exhausted by the end of the year. The financial supervisor notes in its letter that not all liquid assets are freely available. Some assets have been reserved for capital investments, others for settling debts to social and health insurances SZV and to pension fund APS.

“These payment arrears are part of the instruction given by the Kingdom Council of Ministers in September 2015,” Gradus writes to Minister Gibson. “Using these liquid assets does not offer a solution in the long term and possibly creates additional problems. In the Cft’s opinion, additional liquid assets will be necessary in the short term.”

The Cft furthermore notes that St. Maarten has invoked article 25 of the Kingdom law financial supervision. This article offers the option to diverge from the requirement of having a balanced budget. The basis for this decision is that the government has classified the damages caused by  Hurricanes Irma and Maria as “exceptional events.”

However, the Cft points out that invoking article 25 requires an agreement with the Kingdom Council of Ministers. “As far as the Cft is aware, St. Maarten has not submitted a request to the Kingdom Council of Ministers and the Kingdom Council of Ministers had not decided either that article 25 applies.”

Therefore, the Cft says, article 15 (that requires a balanced budget) is still applicable. “Presenting a budget with a deficit means that the budget does not meet the standards of the Kingdom law financial supervision.”

The Cft advises the government to find an agreement with the Kingdom Council of Ministers about the status of article 25.

The additional expenditures related to Hurricane Irma are 50.1 million guilders, according to the budget amendment Minister Gibson submitted. Part of these costs are 7 million in additional expenditures for the ZV-fund (the healthcare insurance fund).

But the Cft is not convinced that these additional expenditures are a result of the hurricane. “In the execution report over the second quarter St. Maarten has already indicated that the annual deficit in the ZV/OV-funds of around 12 million poses a risk for the budget. Based on the law, St. Maarten is obliged to cover these deficits. The Cft asks Minister Gibson to clarify whether the additional expenditures are really a consequence of the hurricane.

Photo caption: Finance Minister Richard Gibson. Photo Hilbert Haar.