The recent IMF criticism of the CFT and its intent to recommend and instruction for Curacao

Review of the Kingdom Law Financial Supervision against the backdrop of St. Maarten’s economic development

Kingdom Law on financial supervision (Rijkswet financieel toezicht – RFT)

“These rules are not bad for developing countries”.

higher debts will become a burden on future generations and on future budgets as interest someday will raise again

College financieel toezicht (Cft)/Board of financial supervision

To give honor to the truth, Sint marten has never been able to comply to the LVO on accountability (Comptabiliteitslandsverordening) nor with the ‘Rijkswet’.

the economy improves after the hurricanes, 

the tax transformation plan is executed, stimulating the grow of the economy and increasing income revenue

if pension and healthcare systems are changed etc. 

The restructuring of the Netherlands Antilles

f

f

f

Formal Kingdom instruction of 2015

Pension system:

NAf 32 million

EACH YEAR

on an investment fund of Naf 800 million.

NAf 10

healthcare

payment arrears

compensate of deficits with surpluses

Some questions of the honorable members of Parliament can be answered in general terms:

RFT evaluations. The RFT was evaluated twice by an evaluation committee. First in 2015 for the years 2010-2014. And second in 2018 for the years 2015-2017. The committee did not evaluate the RFT and the functioning Cft, but rather if Curacao and Sint Maarten complied with the RFT. The committee was also tasked to advice on the need of the RFT going forward; if financial supervision is deemed necessary for the future and/or if certain aspects of the RFT should be changed. In both evaluations the advices were to continue with the RFT. The next evaluation will happen in 2021. 

Budget deficits. To budget a deficit is prohibited in the RFT unless certain extreme circumstances like the hurricanes of 2017 make that inevitable. For the years 2017-2019 the Kingdom Council of Ministers (RMR) gave Sint Maarten permission to deviate from this ‘golden rule’ and approved the budgets after an advice from Cft. We recently applied for article 25 of the RFT for 2020 as well. This will allow Sint Maarten to budget a deficit in 2020. In the end however, it is not the budget that is important but the realization of those budgets as provided in the annual reports.

Does CFT intervene with the content of our capital (investment) budgets?

NOT,

On the more specific questions of honorable members of Parliament:

MP Jules James

How many years has Sint Maarten produced a balanced budget?

Until 2018 a balanced budget was approved. However, as you can see in the table above, in most years a deficit was realized in the annual accounts. For 2017 however this was related to the hurricanes, for the other years before 2017 because of mainly negative surprises and poor budgeting in some respects.

How many times did Sint Maarten receive a Kingdom instruction based on Cft feedback?

Until now, Sint Maarten only received one (1) formal Kingdom instruction from the RMR, the 2015 one described before. 

Can you summarize the content of the instructions received?
I refer to the part on the Kingdom Instruction 2015 before and the last part of letter b before.

What are Sint Maarten deficits since 10-10-2010 cumulatively?

MP Sidhart Bijlani

What was the outcome of the round table of then Minister Ferrier with relevant parties on sustainable financial Government and have we reached progress in this?

What is a medium-term fiscal framework and how does it work for Sint Maarten?

A fiscal framework starts with the objectives of fiscal policy. And that is not alone how and how much income the Government needs out of that, but also other objectives like stimulating the economy, maintaining financial stability, all using a methodology repeated over time accepted by all involved. IMF defines the fiscal framework also as the set of institutions that design and conduct fiscal policy;

The short term (1 year) framework is ready to be implemented. As part of the tax transformation we are reviewing our tax policy for the medium and longer term. That should be included in June of 2020. The Fiscal Affairs Department of the IMF will help us with the overall strategy. while the OECD will be developing the detailed projection models for Sint Maarten based on available data, benchmarks and best practices.

“Our strategy is to have a tax policy that grows the economy, not raise taxes. We would like to reduce corporate and personal income taxes, move to indirect consumption taxes, reducing the shadow economy and increase compliance. While at the same time assuring a lower tax burden for compliant taxpayers”. 

What is the current unemployment rate? 

What is the current position of Sint Maarten with Cft?

MP Sarah Wescot-Williams

Give an update on the infamous instruction and what if any progress has been made?

Are there any agreements with Cft regarding the finances of our country?

MP Rolando Brison

Has IMF ever issued similar recommendation to Sint Maarten as they did on Curacao and have we had any similar indications from other organizations like Moody’s, OECD, FATF en U.S. State Department and what is their position on Cft?

According to most economists economic growth is better stimulated by cost savings and cost cuttings than by raising taxes and other income items;

The period of current realized deficits and the amounts thereof in Curacao would hamper the economy even more as the investment climate deteriorates even further, leading to more unemployment etc than do both (eliminate deficits and revitalize economic prospects).

In case Curacao Government implements the measures agreed upon, they will get more time to compensate the earlier deficits in order to have more room for economic development.

Is there a set formula, an objective methodology used by Cft to determine what the capital expenditure of Sint Maarten should be?

How and why do they come to that amount and how often did what Government Submitted to Cft differ from what Cft says we should invest?

How many times did Cft said ‘no’ to the capital budget?

Were the mentioned items included in our capital account budgets and not accepted by Cft?

Philipsburg Police Station: Cft never denied items that fit within the SNA parameters. 

The prison? Point Blanche is in the capital account 2019 for NAf 6 million

Paying police officers does not belong in the Capital Account as this are no investments according to SNA rules but must be paid from ‘gewone dienst’

Hospital: some elements are paid for by the World Bank, the Hospital is not a Government owned entity but a foundation. It doesn’t belong in our budget;

Schools: as far as the hurricane related repairs and improvements concerned, this is financed through the Trust Fund and insurance proceeds. We are not allowed to budget capital investments that are covered by the Trust Fund in our capital account budget;

The dump: also Trust Fund

Improvement of Philipsburg: depending on the type of improvements this could be either Trust Fund, capital account or ‘gewone dienst’.

Our own budget chamber: 

Advising entities on capital expenditures and management of debts? 

Agreement of repayment of debts: 

Living up to debts? 

Money owed by Kingdom partners through APS? 
We are not aware of monies owed to us by other kingdom partners that would be settled through APS. Aps performed a separate division of assets.

Outstanding debt arrangements or debt forgiveness?

Recommendations Cft on pension fund?

MP Christophe Emmanuel

Do you agree with the position of IMF regarding Cft in Curacao?

Should Cft be evaluated? 

Should the structure of Cft change? 

Are the position and conditions laid down from Cft to Sint Maarten overreaching?

Dismantling of the Netherlands Antilles. 

Assets received from the dismantling: see my opening elucidation and the answer to the question in this respect.

Does Sint Maarten have a strong position because of the IMF remarks?

Do you believe CFT has Sint Maarten in a stiff jacket?

MP Frans Richardson

Have we done a proper evaluation on the working of CFT since 10-10-2010?

How did the Minister saw the need and the working of Cft with Government during his tenure where Sint Maarten is concerned?

Is there an evaluation committee in place who evaluates Cft?

MP Franklin Meyers

Who negotiated on behalf of Sint Maarten on Rft/Cft and who was responsible for accepting this?

Who is responsible for bringing the liabilities when we became autonomous?

What is the political agenda of CFT as IMF stated?

Can you give me a list of tangible recommendations Cft has come up with that any government has executed and have benefited Sint Maarten?

Forensic Lab bought for NAf 4,4 million in Cole bay, did Cft approve of that?

How far are we when it pertains the currency we are going to use, or do we stay in the monetary union with Curacao?
Opinions about the monetary union with Curacao tend to differ depending on the timeframe and economic developments of the partners. None of the previous governments ever came to a decision to change the existing situation.   

MP Egbert Jurendy Doran

Do you think that Cft giving Sint Maarten instructions is a good thing?

What do we need to do as a country or what was agreed upon to get rid of the Cft?

Should Sint Maarten have been given a break when Minister Gibson had 2 balanced budgets before the hurricanes hit?

https://www.soualiganewsday.com/index.php?option=com-k2&view=item&id=28230:minister-geerlings-gives-in-depth-overview-to-mps-about-cft-and-economic-development&Itemid=450