�CFT wants Donner to issue ?special instruction?
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PHILIPSBURG--The additional changes suggested by government to the Committee for Financial Supervision CFT to balance the 2011 budget and cover a deficit of some NAf. 45 million were deemed ?insufficient? by CFT on Thursday. However, Finance Minister Hiro Shigemoto and CFT have reached an agreement on how to move forward with the budget for it to be approved as soon as possible.
� The CFT board considers that with all the proposals on which St. Maarten agreed, an adopted and approved budget 2011 within a responsible financial framework is feasible as soon as possible, but in any case within four weeks.
��?The package of agreed measures should ensure that the execution of the budget really takes place within the established financial framework. It is to everybody?s benefit, first of all of St. Maarten?s, that there will not be any further delay in the execution of this package of measures.?
� In its proposal, St. Maarten ?assumes an income calculation which is too high? and this was ?not responsible,? the CFT board said in a statement last night. The expectations on economic growth and the proceeds of a number of measures are being ?calculated too highly? and St. Maarten wants to utilise its reserves.
� The CFT board does not consider this a responsible action, as long as there is no certainty regarding the actual capital position. Also, the board said reserves should be retained in case of unforeseen circumstances. ?In this matter the information of the financial situation of the government companies and foundations is important.?
� According to the board?s judgment, an earnings estimate of NAf. 416 million should be the point of departure. Compared to the draft budget that has been submitted, there is a deficit of NAf. 45 million, it said, and the evaluation shows that one cannot speak of a balanced budget that meets the criteria in the Kingdom Act on Financial Supervision Cura�ao and St. Maarten.
� CFT, Shigemoto and the Finance Ministry have been working together to fill the gaps in the budget. The minister spent Wednesday and Thursday in Cura�ao dealing with the budget.
� Countering CFT?s opinion on the budget, Shigemoto said the budget shortfall of NAf. 45 million as stated by CFT is due to the difference in economic growth indexes applied by CFT (0.3 per cent) and government (1.3 per cent) on the projected income.
� CFT?s growth projection, as forecast by the Central Bank of Cura�ao and St. Maarten, would mean that the island would have an income of NAf. 416 million, while government believes there will be a projected growth with an income of NAf. 444 million. The difference then would be NAf. 28 million still to be covered.
� ?With the inclusion of the cost-of-living adjustment for teachers and civil servants of 3.3 per cent, an additional sum of NAf. 16 million had to be added, bringing the total budget to NAf. 461 million with a deficit of NAf. 45 million.
� ?We continue to have a difference of opinion that cannot be bridged, such as the economic growth index. However, dialogue continues and we have come up with a plan of approach that would allow for government to present a balanced budget within a reasonable period of time,? Shigemoto said late Thursday evening.
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Package
� The package of measures that will enable St. Maarten to prepare and execute the budgets for 2012 and for the coming years according to its own regulations and the Kingdom Act has been suggested, according to CFT.
� This package consists of three elements. The first is that a budget of maximum NAf. 416 million, which meets the criteria in the Kingdom Act, should be set up and executed. To guarantee budget execution within the established budget maximum, a number of jointly-agreed instruments in the management regulations will be established according to provisions included in the Kingdom Act.
� To provide the package of measures with legal validity, CFT has requested the Kingdom Council of Ministers to enable Dutch Minister of Internal Affairs and Kingdom Relations Piet Hein Donner to work out the management regulations, by means of a special instruction.
� The legal basis is laid down in article 4, paragraph 4 of the Kingdom Act. That article states: ?Our Minister can, in agreement with the Kingdom Council of Ministers, which acts in accordance with the governments, establish management regulations and give general and special instructions regarding the implementation of the duties and authorities granted to the Board through this act.?
� According to CFT, the fact that a package of measures has been agreed on with St. Maarten simplifies the forethought that in this context should take place in advance with government.
� These instruments are to introduce preceding supervision by the Minister of Finance, duty to report when undertaking financial commitment outside the preceding supervision, access to the bank statements of the bank accounts of St. Maarten to judge whether the execution of the budget is taking place correctly and completely, to request annual reports from government-owned companies and foundations, to review extra capacities and fill in critical vacancies, and to set up a monitoring committee.
� Shigemoto added that as part of the measures, he would appoint a civil servant to monitor and control closely that individual expenses within government that exceed NAf. 5,000 are according to and comply with the financial management rules and the Consensus Kingdom Law on Financial Supervision for Cura�ao and St. Maarten.
� For CFT to have a complete picture of the country?s financial possibilities, the annual reports of government-owned companies and foundations are necessary.
��Shigemoto said, ?The insight into this information, in the opinion of the Council of Ministers, must go via the Minister of Finance and should not be regarding policy issues, but merely insight into the financials of the government-owned NVs and foundations.
� ?As stipulated in the recently adapted Civil Code Book 2, government-owned NVs should already make certain financial records public. The insight should not supersede the Civil Code at any time.?
� CFT proposed that a special commission be established to monitor the agreements that have been made to resolve the 2011 budget challenges. This commission would inform the Finance Minister, the Council of Ministers and CFT of its findings.
� Shigemoto?s opinion is that CFT should establish an office in St. Maarten, which would enhance the working relationship because there would be easier access to the experts.
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Work in progress
� Shigemoto said, ?I am busy also working on solutions to rapidly increase the agreed-upon ceiling from NAf. 416 million until the submitted budget of NAf. 461 million can be arrived at.? One such measure is working out the substantiation for the reserves to prove that these are hard reserves, as well as other measures that are in preparation and cannot be disclosed at present.
� ?It is important also to point out that the supervision will all be local [carried out by the minister and his ministry]. This process will help to secure the funding for the Plans of Approach which were politically agreed to, but for which no financing was secured by the previous administration in power prior to October 10.?
� An additional NAf. 24 million that was not accounted for in the 2010 budget for back service pension as a result of the indexation of 4.6 per cent paid out in 2010 had to be taken up into the 2011 budget.
� It is imperative for St. Maarten to receive its fair share of the political agreement made for debt relief by the Netherlands, as this was the basis for financial supervision, the minister said. ?It is our opinion that no debt relief means no financial supervision. This too will be made clear to Dutch Minister of Interior Affairs and Kingdom Relations [Piet Hein] Donner during a planned visit to the Netherlands as early as mid-March.?
� St. Maarten also has requested permission to borrow money on the capital market to refinance some outstanding debts that were incurred in the past to carry out infrastructural projects totalling some NAf. 27 million. The pre-financed arrangements, if paid off in full, would save considerable interest in the budget, he added.
� Another request for a loan to complete Blocks A, B, and C of the new government building on Pond Island and to purchase these from the current owner also was submitted to CFT for approval so that Government can save on interest and paying double rent.
� Shigemoto explained that government paid nearly NAf. 900,000 in rent every quarter for the incomplete three ?blocks? while paying more rent to house the departments that should in those buildings.
� ?It is imperative for the people of St. Maarten to remember and in some cases understand that our country received a raw deal by not having the assistance of the former Central Government to help build up its departments or in some cases even establish decentralised departments in the last couple of years. Now that 10-10-10 was realised and especially without a transition period, all of the financial skeletons are coming out of the closets,? he said.
� ?The fact that we need to hire some 72 police officers, which is part of the plan of approach of Justice, will cost quite some money, which has to be funded from the budget. And this is just part of the Plan of Approach which was not worked out financially, but previously agreed to politically without knowing the financial consequences and, more important, how these costs were going to be covered.
� ?? It is important to realise that this situation didn't arise as of October 10, 2010, but has grown over the years and in some cases decades due to neglect from the former Central Government as well as from the agreements made by the previous administration which we are now finding out the financial consequences, coupled with having to improve also in our financial management and other factors,? the minister said.
Source: http://www.thedailyherald.com/islands/1-islands-news/14408-2011-budget-shows-naf-45m-deficit.html
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