THE HAGUE--The Kingdom Council of Ministers on Friday did exactly as was anticipated: it gave St. Maarten an instruction to get its 2015 budget and multi-annual calculations in order. A number of measures have to materialise in a budget amendment before October 31.

 

“St. Maarten needs to have a realistic budget. The budget is too optimistic. Nothing gets solved by pushing the problems ahead. They will come back at you next year,”Dutch Minister of Home Affairs and Kingdom Relations Ronald Plasterk said after Friday’s meeting in The Hague, which was attended by the Ministers Plenipotentiary of Aruba, Curaçao and St. Maarten.

 

The Kingdom Government followed the early July 2015 advice of the Committee for Financial Supervision for Curaçao and St. Maarten CFT to give St. Maarten an instruction.

 

The instruction orders the St. Maarten Government to compensate the deficits of previous years amounting to at least NAf. 60 million, and to settle the payment arrears amounting to NAf. 189 million in the 2015-2018 budgets. The St. Maarten Government has large debts to Social Health Insurance Bureau SZV and St. Maarten Pension Fund APS, but also to third parties.

 

In addition, the St. Maarten Government will have to adapt the budget to fully include the pension and health care premiums. Also, concrete measures will need to be taken to reform the pension and health care insurance system, which has become unaffordable in its current form. One of these measures is to increase the pensionable age from 60 to initially 62 and later on to 65.

 

St. Maarten will have until the end of 2016 to implement the necessary measures to ensure that it creates a tenable pension and health care insurance system. CFT will decide whether the budget amendment and measures are adequate, it was stated in a press release issued by the Dutch Government on Friday afternoon.

 

“The Kingdom Council of Ministers deems it necessary to give this instruction at this time. St. Maarten has had ample time to take the measures, but repeatedly has omitted to do so, in spite of the fact that it promised to do so. The instruction serves to prevent that St. Maarten ends up in great financial problems,” it was stated.

 

“The essence is that the current 2015 budget does not give a realistic perspective for the future. The payment arrears are not included in a manner that had been agreed on earlier,” Minister Plasterk stated. He confirmed that St. Maarten would have to carry out the instruction before it could obtain financial loans through the Netherlands for capital investments.

 

Plasterk said assistance would be available to carry out the instruction, if St. Maarten requested such. Asked whether assistance also would be available to help St. Maarten Finance Minister Martin Hassink with his efforts for the much-needed upgrade of the Tax Department, Plasterk said the collection of taxes was primarily the responsibility of Country St. Maarten.

 

“St. Maarten has to do this on its own, but I will gladly check with my colleagues whether they can provide support, if specific expertise is required. However, we should not create the impression that the Netherlands will make the capacity, the manpower available to take over part of this responsibility. But if we can make a small contribution in the form of expertise, we will certainly do so,”the minister said.

 

Plasterk said he had “a lot of appreciation and respect” for St. Maarten’s Minister of Finance Martin Hassink. He said the instruction could be considered a support for the Finance Minister’s efforts to restructure and improve St. Maarten’s finances. Hassink was in the Netherlands last week for talks with Plasterk.

 

This is the second time a Dutch Caribbean country has received an instruction to get its finances in order, based on the Kingdom Financial Supervision Law. The last time it concerned Curaçao, in July 2012. Aruba received a financial instruction from the Kingdom Government in July 2014 that was not based on the Kingdom Financial Supervision Law, as that law does not apply to Aruba.

 

Referring to the 2012 instruction for Curaçao, Plasterk said an instruction had proven to be an effective measure to get the finances of a country in order. “Curaçao now has a balanced budget. More than that, the government considers it an objective to have a balanced budget. Initially, the instruction was seen as a hindrance, but now, two, three years later, they see that it was good for the country’s future and its economy,” he said.

 

Just as Curaçao did at the time, St. Maarten will make use of the opportunity provided by the Kingdom Financial Supervision Law to appeal the instruction at the Council of State. Hassink confirmed this in an interview with The Daily Herald last week.

 

Asked for a reaction to this announced move by St. Maarten, Plasterk said he had no knowledge of such. “But I can imagine that we all get to work instead to solve this matter,” he said.

 

The Daily Herald