The board of the CFT visited St. Maarten this past week and held a series of discussions with the Governor, the Minister of finance the council of Ministers and the parliamentary committee for Finance. The CFT also met with various stakeholders such as SZV, Tax Office, general audit chamber, the St. Maarten member of the steering committee and parties involved with the reconstruction. This was their second visit since the hurricanes. They acknowledge the extra ordinary circumstances of St. Maarten but also the strong resilience of the people to rebuild their country.
Intensive discussions held with the new Minister of Finance and his staff focused on several issues: getting the economy rolling again. It is very important to restart the economy. A recent IMF report projects that real GDP in 2018 will contract by 8.5% in 2018 but important also, real GDP will be positive again by 2 percent, just above its structural level of 1.9%. Therefore the CFT believes that cruise passengers arrivals will recover to pre-Irma levels. The reconstruction of the Airport, which is a critical gate of entrance for tourist and business, is crucial in this respect. This is not only in the interest of St. Maarten, but also the BES Islands. Of course also the reconstruction fund administered by the World Bank to which the Dutch Government has pledged 470 Million euros plays a vital role in re starting the economy. Meetings were also held to address this fund and the coming weeks and months according to the CFT will be crucial to getting the several identified projects going. They stressed the importance of the economy being up and running again; a boost in the economic activity will have a positive influence on government finances, and the deficit will shrink.
Regarding the Budget 2018, we once again expressed concerns about the precarious liquidity positions and the current deficit. St. Maarten will be in need of additional Liquidity soon to meet its financial obligations and therefore a request is sent to the Kingdom Council of Ministers.
Despite the difficult situation, it is important to take measures to balance the budget again as soon as possible. In their opinion St. Maarten should limit the budget deficit as much as possible; Cost-Cutting measures, broadening the tax base and increase tax compliance are of uttermost importance to achieve this.
In their continuing discussions with SZV, some reforms stressed by The CFT was necessary for the sustainability of the pension and health care system due to an aging society. Some efforts by the Government to present budgetary documents were applauded although they were received late, however, the CFT noted, they are yet to receive the annual accounts for 2013 to 2016.
Although St. Maarten succeeded in decreasing the back log in financial reporting, financial management still fall short which is a reflection of the poor quality of the country’s financial statements. The IT problems were also addressed by the CFT that were there before Irma and St. Maarten has not been able to fix its IT-Problems on its own, therefore technical assistance is needed in this regard. The CFT said they were informed that St. Maarten was working on additional capacity to address all these issues, but it has yet to be realized. The CFT is expected back in St. Maarten in October of 2018.