Country Report St Maarten

The Economist Intelligence Unit, September 2012, Pages: 22

The College Financieel Toezicht (CFT, the financial supervision council) has highlighted risks to the financial stability of Curacao and Sint Maarten in its 7th semi-annual report released in early September. The CFT warned that budget setting and monitoring by the two countries' respective legislatures may be compromised by the growing use of public corporations, foundations and special funds to channel spending off the budget.

An instruction issued in July by the Kingdom Council of Ministers handed the CFT a remit to carry out monthly checks on the public finances of Curacao and Sint Maarten. Since then, the CFT has rejected two proposed budget adjustments put forward by Curacao for the current 2012/13 fiscal year. According to the CFT, the budget amendments failed to clarify how the fiscal deficits accruing from 2010/11 and 2011/12 would be paid. Budget deficits were prohibited under fiscal rules brought in following independence in 2010 and new governments were also prohibited from incurring fresh debt.

The CFT also rejected Curacao's 2012/13 estimates for tax revenue as being too high, while saying that spending was underestimated, especially in the areas of healthcare, education and pensions. In addition, the government has advanced plans for the introduction of free education, to be financed by siphoning profits from Curacao's oil refinery. The CFT blasted the arrangement as being in contravention of the country's constitution and National Accounts Act, by effectively borrowing from the refinery in breach of the balanced budget rule, and for endangering the financial health of the refinery. The CFT also expressed strong objection to a July 2nd decision by the government to raise the cost of petrol and use the proceeds to finance an off-budget fund intended to pay for improvements in certain districts. The CFT described the idea as "highly undesirable", given the lack of oversight and potential for misuse of the fund for political ends.

Country Report St Maarten

Wrangling over the budget
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