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St. Maarten government liquidity down to NAf. 24 million

THURSDAY, 12 DECEMBER 2013

PHILIPSBURG–Government’s liquidity (cash in the banks) has dwindled from NAf. 84 million in late 2011 to about NAf. 24 million now, Finance Minister Martin Hassink disclosed Wednesday. The dip is due to government having to cover outstanding bills that should have been covered by promised Dutch Debt Relief which was never given, and the use of government funds for small projects.

Furthermore, the capital expenditure budget is NAf. 10 million in the red as of the third quarter of this year. This deficit has resulted from government funding projects from its own bank accounts, because it was barred from seeking loans on the capital market this year by the Committee for Financial Supervision CFT.

The country’s overall liquidity position is “a little worrying going into the high season.” The minister pointed out that a peak in income is usually seen in first and second quarters of the year, but this was not so for 2013.

Taking the liquidity position into consideration, the minister said government will have to look at its expenditures more closely and take measures to increase its income.

The Central Bank of Curaçao and St. Maarten has forecasted growth for the country, “but we don’t see it reflected in our income,” said Hassink. “That is a serious matter, which has my attention and, of course, the whole Council of Ministers.”

The operating budget up to the third quarter has a deficit of NAf. 2 million, but government believes that the gap will be closed in the fourth quarter leaving only the capital budget lagging behind.

The third quarterly financial report shows government income at NAf. 317 million and expenditures at NAf. 319 million, resulting in the NAf. 2 million deficit.

Turnover Tax (TOT), standing at NAf. 110 million, for the first nine months of the year accounted for some one-third of government income. Some NAf. 100 million was collected in wage tax and NAf. 20 million in profit tax.

Income from fees and licences among others generated some NAf. 56 million for government up to the third quarter.

Personnel cost (NAf. 135 million) so far has been the biggest expenditure for government. Goods and services have cost NAf. 77 million, subsidies NAf. 58 million and social charges NAf. 33 million.

The projection for 2013 is that the year will end with a balanced operating budget at NAf. 423 million. However, deficit on the capital expenditure budget may remain.

Hassink said the Finance Ministry is aware that there are still important steps to be taken to produce and complete financial reports with reliable information in a timely manner. Progress in reducing the backlog in the financial administration is contributing significantly to the process, he added.

The Finance Ministry is also aware that the internal accounting procedure throughout government’s organisation needs to be improved within an acceptable term.

The third quarter report has been submitted to Parliament for review. Hassink hopes to present the 2012 annual financial statement to Parliament.

The Finance Ministry will start all preparations for the 2015 budget and multi annual budget 2015-2018 as soon as the 2014 budget is approved. Hassink is optimistic that those budgets will meet all deadlines with proper reporting.

Tax compliance will continue to be a concern. The integration of the tax administration is being worked out. Hassink is still looking into the administration model the Dutch Government put in place for Bonaire, St. Eustatius and Saba. Getting assistance from the Dutch Government is possible, but that somewhat hinges on St. Maarten dealing with a levy for goods delivered to St. Eustatius and Saba.

Hassink met with Dutch State Secretary Frans Weekers briefly at the airport this week regarding assistance for the tax office and the TOT matter. On the latter, the minister said St. Maarten will look into it to see if it is “not too damaging” to remove the tax for the two islands.

For the physical integration of the various tax offices, the minister hopes to have “Block D” at the new Government Administration Building constructed and ready for occupation by January 1, 2015.

Source: The Daily Herald, St. Maarten

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