PHILIPSBURG--Cuts were made across all seven ministries to ensure the new draft 2011 budget was balanced and met the criteria of the Kingdom Law on Financial Supervision for Cura�ao and St. Maarten.
"The cuts were made mainly where there was sufficient room to cut and where no contractual obligations were already established," Finance Minister Hiro Shigemoto explained on Wednesday.
The cuts, he added, will not harm government's obligations and service to the people, civil servants, and suppliers.
"It is important to note that the opportunities exist throughout the year to increase certain expenses via budget amendments, once the income can be raised or other cuts are substituted in its place," the minister told The Daily Herald on Thursday evening.
Thanks to the cuts the Committee for Financial Supervision CFT has advised that the new budget 2011 "complies sufficiently with the established norms in Article 15 of the Kingdom Law," Shigemoto said.
The new budget stands at NAf. 420,916,597. It is NAf. 23,526,328 less than the one that was approved by Parliament in December 2010. That amount was NAf. 444,442,925. The country's reserves remain intact. Government did not have to draw on the reserves for the budget and in the future could use these for incidental expenses, if necessary.
Explaining the cuts further, the minister said the amount for hiring consultants was cut across the board by NAf. 1.4 million for accounts where no obligations have been made as yet. The remaining sum for consultants on the budget is NAf. 7.1 million which is needed to pay experts to assist in building up the country and for contracts already established.
The Naf. 14.7 million back payment for pension premiums were taken out of the budget as those amounts didn't belong there and will be placed on the balance sheet. This is the amount owed to the Pension Fund, based on the increase in the basic salary (COLA) for government personnel, former commissioners and the Lt. Governor from 2006 to 2009.
"Due to the fact that the decision was made in 2009 and 2010 to increase the basic salaries with the COLA, then this should not be on the budget 2011, but on the balance sheet of the years when the decision was taken," Shigemoto said.
The American tourism budget was decreased by NAf. 1.6 million which leaves a balance of NAf. 3.8 million. That amount is still NAf. 200,000 more than was allocated on the 2010 budget. Tourist product development was cut by NAf. 500,000 leaving a balance of NAf. 1.3 million.
Travel allowance cuts across the board totalled NAf. 500,000, bringing the new budget allocation to NAf. 2.9 million.
Due to the need to balance the budget by reducing expenses, the minister said all accounts were reevaluated. "It was found the rent account allowed for an additional cut totalling NAf. 1.8 million with a remaining balance of NAf. 13.9 million." The cut does no hamper government's ability to pay rent for its offices where necessary.
The legal and other advice allocation was cut by NAf. 568,000, leaving a balance of NAf. 3.98 million.
Funds for projects and other activities were cut by NAf. 670,000. That cut leaves a balance of NAf. 1.37 million on the budget for projects.
"Interest cost was reduced by NAf. 499,940.92. This had to do with re-financing of long-term capital expenditures. If the budget needed to be balanced then there would be no room for unforeseen expenses, so this account was reduced to zero from NAf. 598,517."
Depreciation was reduced by NAf. 2.7 million as depreciation for assets bought during the budget year had to be omitted and will occur in subsequent years. "Some budget neutral reorganizing of existing accounts was also done."
Other "immaterial cuts" were made across the board while an increase of NAf. 1 million for personnel cost in connection with the additional 3.3 per cent COLA that affects only the basic salary was made.
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