CFT cites challenges in financial management in half-year report

~ State of government-owned companies 'less alarming' ~

WILLEMSTAD--Curaçao and St. Maarten face various challenges in the coming years to keep their public finances in due order and to improve their financial management. That is in addition to the trials the countries' economies will endure from the international conjuncture, the Committee for Financial Supervision CFT noted in its sixth half-year report.

Curaçao will have to demonstrate that its ambitious reform plans actually will be implemented, whilst St. Maarten has to accomplish a lot with the listing of all effects the aging of the population has on the public finance in the long run.

Both countries, but particularly St. Maarten, will have to achieve a great deal to improve their financial management. This is very important, considering that sound financial management is a crucial condition for diligent budget management.

CFT acknowledged that both countries had made progress. Curaçao has ambitious plans to reform the public health sector and the old age pension, to improve the budget's long-term sustainability. Cooperation and communication with St. Maarten has improved considerably in the recent period, but the CFT office, which was opened in Philipsburg on January 17, will have to fortify this upward development.

CFT will monitor the ambition time planning of the reform measures closely in 2012, together with Curaçao and, in the event the planning is not kept, the board also will see to it that adequate securing measures be taken.

In its half-year report CFT also perceives risks regarding the planned construction of a new hospital. Currently the new hospital has not yet been provided for in the budget, which is why there is no clarity about the financial framework and the possible risks of a new hospital for the government budget.

However, it is clear that the new hospital can be operated in a financially sound way only if the many reform measures actually are implemented. Therefore, CFT always will consider these reform plans and the construction of the new hospital in connection with each other.

Another point brought to attention in the half-year report is the financial position of the government companies and foundations in Curaçao and St. Maarten. For both countries, CFT has received the financial statements over 2008 and 2009 (though just partly). Based on this incomplete information, CFT draws the conclusion that the financial situation of some of the larger government companies and foundations in Curaçao is critical.

In St. Maarten the situation up to and including 2009 seems less alarming.

As the countries are considered implicitly as the guarantors of the government companies and foundations, it is important to bring clarity diligently into the financial situation of these entities.

That is why in 2012, together with both countries, CFT will make an inventory of the current financial statements of the government companies and foundations, based on the most recent financial statements. This way there will be a better view of the budgetary risks for the countries, so policies can be developed to control the risks and take necessary measures.

Source: http://web.thedailyherald.com/islands/1-islands-news/26160-cft-cites-challenges-in-financial-management-in-half-year-report-.html

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