CFT calling for realistic multi-annual forecasts on St. Maarten
THURSDAY, 18 OCTOBER 2012
PHILIPSBURG--The Committee for Financial Supervision CFT has advised government to improve the budget, draw up realistic multi-year forecasts and include the financial impact of the old age pension fund and of the health care funds in the multi-year budget.
"Only by including realistic forecasts it will be possible to take and implement the steps necessary to structurally improve the financial situation of the country. A plan of action to pay for the arrears that have arisen in the last couple of years has to be part of the budget 2013," CFT said in a statement Wednesday.
CFT has a number of questions concerning the budget that need to be addressed by the government before a final advice can be given. These questions relate in particular to the multi-year risks and the payment arrears accumulated prior to and since 10-10-10.
For the coming years, government will have to deal with the consequences of rising expenses related to health care and old age pensions. "St. Maarten is not unique in this development; worldwide rising expenses for health care and pensions pose challenges for governments."
Since the CFT board's visit in June, new information was received on payment arrears to the General Pension Fund APS and the Social and Health Insurances SZV over the past years.
Challenges also exist related to health care and pension costs. CFT believes that by providing an open and transparent picture of the risks facing the budget in the medium term, the foundation can be laid for finding solutions to put government finances on a healthy footing.
CFT's concerns for future budgets are further aggravated because compensation of expected deficits for 2011 and 2012 will have to take place.
CFT welcomed the good cooperation with government and particularly the Ministry of Finance in enhancing transparency in public financial management. Additional efforts are needed to improve financial management.
The CFT board held "open and frank" meetings on these issues during the past two days with the Council of Ministers, Prime Minister Sarah Wescot-Williams, Minister of Finance Roland Tuitt and Members of Parliament. An agreement was made that in the coming weeks "concerted efforts" from all ends "are needed to draft a sustainable balanced budget."
CFT applauded St. Maarten for voluntarily requesting its advice on the draft 2013 budget.