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~Minister Hassink relays objections to The Hague~

By Suzanne Koelega

THE HAGUE--St. Maarten has faced the threat of a budgetary instruction before, but this time there seems no escaping: the Kingdom Council of Ministers is expected to give St. Maarten an instruction on September 4, to get its 2015 budget in compliance with the requirements of the Financial Supervision Law.

According to St. Maarten Finance Minister Martin Hassink, in the Netherlands earlier this week for talks with Dutch authorities, the measure against St. Maarten appeared unavoidable. Not because St. Maarten is not cooperating or obstructing efforts to get its budget balanced, but because in his opinion the country is not granted sufficient leeway to realise the targets that have been set.

Then there is also the lack of cooperation from the Dutch Government to assist St. Maarten in the process of arriving at a sound financial management, to improve tax compliance and to find a sustainable solution for St. Maarten's structural finance related issues.

Hassink met with Minister of Home Affairs and Kingdom Relations Ronald Plasterk in The Hague on Thursday to discuss the pending instruction. The Committee for Financial Supervision CFT in early July advised the Kingdom Council of Ministers to give St. Maarten an instruction based on the Kingdom Financial Supervision Law.

The CFT has not given a positive advice on the 2015 budget which was already approved by the St. Maarten Parliament in January 2015. According to the CFT, St. Maarten has insufficiently complied with the agreements that were made in February to find a solution for the payment arrears, the debts incurred in previous years and a restructuring of the pension and health care system.

The financial instruction would order St. Maarten to compensate the deficits of previous years, in total some NAf. 60 million, in the 2015-2018 budgets, pay off the payment arrears in three years to, among others, the St. Maarten Pension Fund APS and the Social and Health Care Insurances SZV amounting to NAf. 189 million, to adjust the 2015 budget to include all health care and pension costs, and to revise the existing health care and pension system.

Also, the pensionable age must be raised to 62 on short term. Hassink said that this law should be approved before the end of this year. He said that indeed the current health care and pension system was unaffordable and needed urgent revision, but that it was unrealistic to execute this revision, which will start in 2016, under terms and timeframe set by the CFT.

St. Maarten has given its vision and indicated its objections to the instruction and the CFT requirements per letter to the Ministry of Home Affairs and Kingdom Relations BZK in August following the proposal of the CFT to the Kingdom Council of Ministers. This letter hasn't resulted in a change of position of the CFT, explained Hassink in an interview with The Daily Herald on Friday.

Unrealistic

St. Maarten is not against the instruction itself, but it does not agree with the point of view that it is taking insufficient action to tackle the situation. "The terms set by the CFT are unrealistic. The biggest setback we are facing now is that without a positive advice of the CFT we cannot make the necessary capital investments. We have to solve matters, but we are not given the leeway to do so," said Hassink.

The Finance Minister mentioned as an example the Tax Department which was severely neglected under the Netherlands Antilles. The justice sector was a in a similar position when St. Maarten was part of the Netherlands Antilles. "I have been asking attention for the Tax Department for several years now, but so far we have barely received cooperation from the Dutch."

Hassink pointed out that the request for assistance to reorganise the Tax Department as well as help to fill certain vacancies at the St. Maarten Ministry of Finance was also turned down, despite the fact that St. Maarten has offered to pay for this. "It is a vicious circle: the Netherlands is demanding that we take measures, but doesn't assist in the process."

St. Maarten wants to make use of the extensive ICT programme that was introduced at the Tax Department of Bonaire, St. Eustatius and Saba, but it needs to be adapted so it can be used by the St. Maarten Tax Department, said Hassink. For that, money is needed, which is a problem.

Hassink has had positive talks with the Netherlands about the hiring of Dutch personnel for the St. Maarten Tax Department per early 2016. "We are close to a solution. But we also need to realise the much needed reorganisation of the Tax Department, the ICT system and the establishing of one, central Tax Department where the levying and collection of taxes are no longer spread over two buildings."

St. Maarten has no problem with external financial supervision, but it should be put in perspective and the conditions and terms should be realistic. "We need assistance in order to make progress," said Hassink.

Starting position

He noted that St. Maarten has never had a "healthy starting position" when the Netherlands Antilles was dissolved and St. Maarten attained Country status on October 10, 2010, because only a portion of St. Maarten's debt was paid off by the Netherlands while St. Maarten also had to take over a substantial part of the remaining debt of the Netherlands Antilles.

St. Maarten has a claim in the process to settle the division of assets of the former Netherlands Antilles. "We should receive, whereas Curaçao and the Netherlands have to pay. The process to settle this matter is going far too slow. We had already expected an advance in 2014, but so far nothing," said Hassink.

Referring to Thursday's meeting with Plasterk, which was also attended by St. Maarten Justice Minister and Vice Prime Minister Dennis Richardson, Hassink said it was clear that the Kingdom Council of Ministers would not deviate from the CFT advice to give St. Maarten an instruction. "So it will be coming down."

Once the Kingdom Council of Ministers has taken its decision, which is scheduled for the meeting next Friday, St. Maarten will be filing a formal objection at the Council of State, as is regulated in the Financial Supervision Law. "This will not defer the instruction. It is a mere formality," said Hassink.

Asked to give his view on St. Maarten's finances, Hassink said that the financial situation was generally good, but that measures were necessary to achieve improvement and to make it more sustainable. "Most of our problems are of a budgetary nature. Our debt position is good, better than the other countries in the Kingdom. But our track record is bad. We are accused of saying a lot and doing little."