THE HAGUE--The Council for Financial Supervision CFT doesn't have sufficient insight into the finances of St. Maarten's government-owned companies because government hasn't handed over the annual reports. As such the Council can't approve of government's strategy to include reserves of these companies in St. Maarten's 2011 budget.
Margot Vliegenthart, who represents the Netherlands in the CFT, was clear in the interview with Radio Netherlands earlier this week: "St. Maarten is counting itself rich without knowing whether this is actually the case."
St. Maarten is counting on an economic growth of 1.3 per cent, while the joint Central Bank of Cura�ao and St. Maarten calculated a 0.3 percentage. St. Maarten's Government also didn't take into consideration the negative spin-off on the buying power of the increased turn-over tax. Besides that, St. Maarten has included reserves of government-owned companies, reserves of which the CFT isn't certain whether they exist.
According to Vliegenthart, the CFT has repeatedly asked for financial information of the government-owned companies and foundations as well as the bank accounts of the island government. St. Maarten resorts under the Financial Supervision Law since it attained the status of country within the Kingdom on October 10, 2010. That law prescribes that St. Maarten's budget, which must be balanced, is subject to approval by the CFT.
CFT rejected St. Maarten's budget last week and, in consultation with St. Maarten, has advised the implementation of a package of measures through an instruction of the Kingdom Council of Ministers via Dutch Minister of Home Affairs and Kingdom Relations Piet Hein Donner.
Through these measures, Vliegenthart hopes to finally gain some insight into St. Maarten's finances and especially into the finances of the government-owned companies. CFT has repeatedly requested the annual reports of St. Maarten's government-owned companies, but to no avail. Consequently, the CFT has no insight into the financial status of these companies, whether they have capital or debts.
"We suspect that there are annual reports, but we are not getting them. This information is needed so it can be taken along in the budget," said Vliegenthart, who added that the fact that the CFT didn't receive the annual reports was one of the main reasons for requesting the Kingdom Council of Ministers to give an instruction to the Minister of Home Affairs and Kingdom Relations.
As long as the information on the government-owned companies doesn't become available, the CFT will not allow reserves to be added to the 2011 budget. The policy regulations which CFT wants the Kingdom Government to draft, should provide a clear picture of the financial relations between government and its companies so a "responsible decision" can be taken whether to allow the reserves or not, Vliegenthart told Radio Netherlands reporter Dick Drayer.
Vliegenthart said that the situation on St. Maarten is "difficult." "It is a misplaced expectation that everything will work out one time. They have to come from far. Many things are not organised, there is a human resources and capacity problem. There is no unwillingness to come to a solid budget, surely not by Finance Minister Hiro Shigemoto," she said.
Elaborating on the lack of capacity, Vliegenthart said that a number of departments on the island don't have the size and strength needed to fully function as part of a country. St. Maarten also still needs to get used to the stricter financial regulations. "That adaptation takes time," she said.
Vliegenthart guessed that in the end everyone would be happy with the measures taken by the Kingdom Council of Ministers. "But it is up to the Kingdom Council of Ministers to decide that. We haven't included a final date in our request. It seems plausible to me that the measures will last as long as there are problems drafting and executing a budget," she said.
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