Healthcare reform condition for obtaining hospital loan

GREAT BAY – Financial supervisor Cft is following the developments surrounding the plans for the construction of a new hospital closely “considering potential risks for the national budget.” this appears from the first half-year report of the Cft that covers the period up to June of this year.

Financial supervisor Cft publishes half-year report

The report states that the current hospital has been losing money for years because the compensation for treatments has not been indexed for a long time – a situation Minister Emil Lee (Public Health) has in the meantime repaired.

The Cft refers to a report about the need for healthcare in St. Maarten and to the business plan that aims for affordable care, close to home and based on a quality that meets European standards.

The report furthermore reiterates that the Cft did not approve a loan the government requested on June 10, saying that the requested amount “could not be spent in a responsible way during the remaining period in 2016.”

The Cft refers again to the limited depletion of the capital budget and notes that there is still 30 million guilders remaining from loans dating back to 2014. The financial supervisor states in its report that a “new and realistic loan request” should be around 20 million guilders, 1 percent of gross domestic product. With a loan of this magnitude, the debt quota remains stable, the Cft observes.

The country’s wish to invest in the tax inspectorate requires setting new priorities within the capital budget according to the Cft.

“If the country also wants to borrow for the hospital, the Cft is prepared to treat this possibly as a separate case, whereby, apart from a balanced business case, reform of the healthcare system conform the instruction will be a condition.”

The Cft report shows that St. Maarten stays well below the interest burden standard established in the kingdom law financial supervision.

Ultimo 2015 the total loans amounted to 626 million guilders, or 33 percent of this standard. During the first half year, St. Maarten did not contract any new loans. If the country does not contract more loans in the second half of 2016, the total interest burden for the collective sector will be 14 million by the end of December. That is 43 percent of the interest burden standard.

The kingdom law financial supervision states that this standard is 5 percent of the average state revenue over the previous three years.
The Cft criticizes the government’s dealing with advice from the Corporate Governance Council. “The topic of corporate governance seems to attract increased attention from the media and the public,” the Cft observes in its report. “However, the advices of the corporate governance council about appointments are not always followed.”

The Cft notes that the government had the option to diverge from an advice if this is done motivated and in writing.

“While the process of appointments and dismissals at government-owned companies does not function optimally yet, the fact that the media report about it can be considered as a small improvement,” the Cft states. “The government needs to get a better grip on its role as shareholder in government-owned companies, so that it can pro-actively and timely react to the recruitment and selection for vacancies.”

The Cft maintains its criticism in the field of financial management, saying that the attention for this topic (seems to have been limited during the past period.”

The annual accounts of 2012, 2013 and 2014 still have not been handled by the parliament, despite the efforts of the Ministry of finance to have then handled by the end of March 2016.” The twelve projects that are described in the plan of approach for the improvement of financial management have not been established by the Council of Ministers and are still waiting for execution, the Cft notes.

The financial supervisor has created a list of forty government-owned entities. Of slightly more than half of them, the Cft has annual accounts for 2013 and 2014 and for a few a concept annual account 2015. “The risk of government-participations for the national budget seems to be limited.”