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CFT says ‘keep on working on multi-annually balanced budget’

WILLEMSTAD--The execution of their 2014 budgets is running its course in Curaçao and St. Maarten. If the countries continue on this path their budgets will stay balanced this year, according to the Committee for Financial Supervision CFT. Additionally, Curaçao has met "all the requirements" of the 2012 instructions since the beginning of 2014.

In its semi-annual report, CFT still urges both countries "to vigorously deal" with the risks for their long-term budgets and improvement of their financial management.

Based on the positive advice on their 2014 budgets in the first half of 2014, both Curaçao and St. Maarten have taken out loans from the Netherlands through the current tender. Curaçao used these funds to finance the construction of the new hospital, St. Maarten partly for various investments and partly to perk up the precarious liquidity position.

In its evaluation of the concrete loan requests, besides the test of the interest burden standard (rentelastnorm), CFT also took into consideration the capacity of the countries to absorb the loans. This has led to CFT agreeing to a lower loan amount than originally requested by St. Maarten.

It is "important" for Curaçao to maintain the positive image of budgetary control it built up in the past period. To this end, the government needs actually to implement the previously-intended government policy to reduce its operating cost and subsidies, CFT said in its semi-annual report covering January to June 2014. It also conveyed the message to Curaçao during its visit to there in May.

Also, looming deficits in the short-term basic insurance should be dealt with and the financial positions of public companies should be addressed. The "turnaround" plans of the government companies that are facing financial problems should be implemented to minimise their risks for the budget.

A capital injection improved the liquidity position of St. Maarten "significantly" the past half year. However, it really remains a point of concern for St. Maarten to strengthen its liquidity position in a structural way, and to build up sufficient resistance capital, said CFT.

The challenges for St. Maarten are currently mainly in the area of payment arrears. St. Maarten has not been able to reduce these debits so far, although this subject already has been discussed with the two largest creditors, the pension funds and health insurance, said CFT.

For both countries, CFT will test the identified risks for long term balanced budgets on the 2015 draft budgets. This evaluation shall take place during the second half of 2014.

CFT also will include the condition of the financial management and its consequences for the budgets in its assessment. "There is much room for improvement in this area, even though much effort is being made by these two countries to show progress."

Unscheduled visit

page5a098St. Maarten received an unscheduled visit from an Aero L-39 Albatros on Tuesday night. The pilot had to make a technical stop en route to Brazil. The fighter jet was piloted by a former US Air Force pilot and trainer. The aircraft will be delivered to its new owner in Brazil today, Thursday. This L-39 Albatros is the training version of the fighter jet; the difference is the gun attachment on the fuselage. St. Maarten is a very popular airport to ferry aircraft to and from South America. The crew are usually fascinated with the approach and the availability and options of restaurants and other amenities. Arrindell Aviation by Signature has provided many of these aircraft with first-class service over numerous years thanks to the welcoming employees.

St. Martin’s GDP per inhabitant lowest of all French territories

page8a097MARIGOT--Estimated Gross Domestic Product (GDP) per inhabitant in French St. Martin is 14,700 euros, the lowest of all French territories with the exception of Mayotte (6,575 euros), and less than Dutch St. Maarten where the equivalent GDP is estimated at 16,018 euros per inhabitant.

The above was just one of the findings in the 98-page 2013 report on the French-side economy presented Monday by officials from Institut d'Émission des Départments d'Outre Mer (IEDOM). President of the Territorial Council Aline Hanson and President of the Chamber of Commerce Jean Arnell were also present to hear the report.

IEDOM publishes each year a report for each territory based on information collected from legitimate sources to provide a snapshot of local economies. The focus for St. Martin is on the budget of local government and two of the main pillars of the economy, tourism and construction.

St. Barths showed the highest GDP at 35,700 euros followed by New Caledonia 29,905 euros, Martinique 20,655 euros, Guadeloupe 18,919 euros, Polynesia 18,867 euros, Reunion 18,549 euros, and French Guiana 14,893 euros.

GDP is one of the primary economic indicators that gauge the country's health and represents the total dollar value of all goods and services produced over a specific time period.

Director of IEDOM Jean-Marie Paugam, one of the two presenters of the report with Bérangère Callamad responsible for studies and credit-lending establishments, noted the GDP of French St. Martin is attributed to "a very strong demographic growth of 27 per cent between 1999 and 2010."

Despite the lack of statistics from the National Institute for Statistics and Economic Studies (INSEE) Paugam summed up the state of the economy in 2013 as "fragile" where different sectors were "struggling to bounce back despite timid indicators of a recovery."

Tourism: The report indicated tourism overall performed better in 2013 than in 2012 but the French- side was still unable to capitalise on the trickle-down effect of tourism from the Dutch-side where 90 per cent of visitors arrive first. But it noted the island continues to retain its attractiveness as a destination.

"French St. Martin still remains detached from the good tourism health of the Dutch-side," commented Paugam.

The total number of visitors to the island in 2013 was 2.451 million, of whom 73 per cent were cruise ship visitors. The Port of Marigot received 5,161 cruise ship visitors (an increase of 7.7 per cent) and 133,229 inter-island passengers (-6.1 per cent) where 90 per cent of passengers chose Anguilla as their destination.

Grand Case Airport received 199,701 passengers, slightly less than in 2012. Air Caraïbes accounted for 54.8 per cent of the traveller market, Air Antilles Express 37.8 per cent, and St. Barths Commuter 7 per cent. The total air passengers for 2013 (both airports) was 670,000.

Hotel sector

The hotel sector has 713 rooms in four-star and above properties and 693 in three-star properties, compared to 1,610 in 2011 and 1,760 in 2010, a drop in hotel rooms of 20 per cent over three years. By contrast hotels of one or two stars, or not classified, rose by 244 per cent, to 272 rooms.

The average hotel occupancy rate in 2013 was 53.6 per cent, an increase of 3.8 points. The number of room nights also rose by 7.6 per cent to 292,600. However in 2009 there were 300,000 room nights recorded but with an occupancy rate of less than 50 per cent. The tourism sector employed 1,431 persons in 2013 of whom seven were part time or supplementary employees.

Construction sector

While 2014 looks to be better for the public works sector with on-going projects such as social housing, the construction of Cité Scolaire in La Savane, currently the biggest project on the French side, completion of the media library, water reservoirs etc, it experienced a bad 2013. The number of salaried employees dropped by 11 per cent to 381, in contrast to 600 in 2009 and 425 in 2012.

IEDOM indicated the public works sector (BTP) is the fourth employment provider after that of services and trades (34.3 per cent), hotels and restaurants (25.1 per cent), and commerce (21.8 per cent)

Financial difficulties of the Collectivité, exorbitant social charges that construction companies have to pay, and less demand from the private sector were among reasons for the sector's decline in activity along with a decline in construction permits; 59 permits were issued in 2013, 54 in 2012, 66 in 2011, 75 in 2010, and 97 in 2009; between the years 2006 and 2009 averaged 130 but dropped to below 100 from 2009.

Applications for construction permits have also been consistently in decline, from 176 in 2006, 142 in 2008, 118 in 2010, 81 in 2012, and 101 in 2013.

Commenting on the unemployment rate on the French side of 27.3 per cent with 4,301 persons out of work as of the end December 2013, Paugam suggested the Dutch side has an unemployment rate "two times less than that of the French-side due to its more liberal policies favouring employment."

As for IEDOM's perspective for 2014, the director said it will be a year of "total uncertainty."

"Tourism and the construction sector are still in a fragile state due to lack of demand. Even if the Collectivité is moving forward with the Bay of Marigot project it won't have any effect on the economy in 2014," he concluded.

Governor: Economic growth has not resolved social issues

page1b097PHILIPSBURG--While the country has seen and continues to expect economic growth, this has "not resulted in greater fiscal space nor resolved all the prevailing socio-economic issues," Governor Eugene Holiday said in his traditional opening of the fifth Parliamentary Year on Tuesday.

To tackle that lack of results, it is "essential" for unemployment, poverty, increasing healthcare cost and increasing shortage in affordable housing to "continue to receive the necessary attention," he said.

The policy challenges through existing plans and/or development and implementation of new policy plans will come "at a cost." That cost will "have to be managed efficiently and effectively" in view of the "limited fiscal space" in which government will be operating.

His speech focused on "policy challenges and opportunities" awaiting the new government coalition to take office on October 10, rather than government's plans for the new political year.

According to Holiday, initial indications show that an increase in tourism can be seen already in the recent figures. Projections of the International Monetary Fund (IMF) and the Ministry of Tourism and Economic Affairs show an economic growth of about two per cent this year. The country has "a healthy debt-to-GDP ratio of approximately 30 per cent."

New legislation has been prepared for further handling by Parliament this year, including a new law creating a small claims court, a change of the law to implement a tourist driver's licence and a new code for penal procedures.

Government has taken steps to introduce an intellectual property bureau. The ordinance in which the tasks and responsibilities of the intellectual property bureau are laid down has been presented to Parliament.

Other important policy challenges ahead include the development of the competition and consumer protection authority and an agency responsible for licensing and control over all gaming operations in the country, and a review of the tariff systems.

The current government "hopes to contribute to the debate on future policy plans of the new government aimed at continuing to create opportunities for all residents" based on "a sound national, social and economic foundation," through its outlined overview of legislation before Parliament and through the identified policy challenges and opportunities, said Holiday.

He told Members of Parliament, the Council of Ministers, members of the court and High Councils of State, and other invitees gathered in Parliament House for the opening that his reason for looking at the challenges had to do with the new political year starting "at a time of transition," as the composition of Parliament will change with the swearing-in of new Members of Parliament in just over a month.

Governance of the country is in "a transition phase, with the current ministers functioning as caretakers. In this caretaker capacity I have requested the current ministers to continue to manage the interest of the people by addressing the day-to-day operations of the country," he said.

Care for elderly

Holiday said it was "critical to note" that while the population was still comparatively young, people were living longer and as a result ageing steadily. "These issues form critical policy challenges." Addressing these issues is "important to ensure a balanced and sustainable development of our country."

Government, among other things, has drafted legislation to address these concerns. These include a draft ordinance to change legislation concerning civil contracts and the proposed price indexation legislation that will lead to an increase in social benefits. Both are expected to be presented to Parliament this year.

Government has adopted "a phased approach" to curb potential poverty among the current and future generations of elderly persons. In the first phase, government has decided to increase pension benefits and the pension age from 60 to 62. Legislation to that effect already has been presented to Parliament for approval. The second phase concerns researching the feasibility and design of a compulsory pension plan.

"Maintaining current social security provisions, health promotion activities and the quality of health care in light of annual budget cuts are other issues the new government and Parliament will face," the governor said.

Education

Developing and offering education that gives people the right skills and knowledge to become productive participants in our society, is "ultimately the most effective way to combat unemployment," the governor said.

The promotion of equal access to quality education, recreation, social and psychical development has therefore been a key objective of the current government. The preparation of legislation on study financing and on higher education has been "high on government's agenda" and these are in their final stage.

Steps to establish international and regional relations to promote education, sports, cultural and youth affairs look promising. In particular, contacts have been made in the Caribbean Community Caricom with meetings held in St. Kitts and Anguilla and existing plans to meet with Barbados officials.

"Government believes that fostering these ties and working in a close relationship with our French neighbours and the Netherlands can play a major role in the realisation of the potential of St. Maarten's education system, Holiday said.

Safety

While the safety and security challenges are complex, opportunities can be found in the form of the Justice Academy for capacity building as well as in the form of international and cross-border cooperation with the French authorities to better combat and disrupt criminal operations, Holiday said.

Maintaining good foreign relations has been "a priority" for the past governments and "should undoubtedly remain a key factor in future governance." Strong bonds in the region and internationally can help St. Maarten "to build capacity and grow economically."

Financial backlog

Government has worked over the past year to reduce the backlog in financial reporting and to manage information properly by instituting monthly reporting per ministry. These steps provide the basis and tools to manage income better, control spending and give account of government's activities.

Progress has been made in the preparation of the 2012 financial statement and the draft budget of 2015 for presentation to Parliament. The 2011 financial statement and the ordinance to amend the 2014 budget already have been presented to Parliament for consideration.

Concerns about tax collection and non-compliance have had the attention of the current government and "are expected to continue to be important policy challenges for the coming period." The development and introduction of tax reform measures "should therefore remain high on the policy agenda," Holiday said.

He added that in doing so, it was essential to make use of the opportunity to strengthen the function of taxation as a source of revenue and at the same time implement tax reforms that would favour the poor on the island.

It has been the policy of the current government to strengthen the public administration through institutional and capacity building. An "important aspect" with regard to public administration is the ongoing debate about integrity and the promotion of integrity as a means to ensure good governance.

"Considering the work carried out under the government's integrity programme during the past years and given the number of integrity inquiries conducted it will be up to the new government, supported by Parliament, to address this critical concern," Holiday said.

MP Theo Heyliger’s property burglarised

GUANA BAY--"I'm just happy my mother was not at home, but of course she's very afraid now," said Member of Parliament Theo Heyliger about a break-in at his mother's home located on his Guana Bay property on Tuesday afternoon.

His mother Aggie Wathey, who lives on the same property with him, was not at home at the time. The burglar(s) ransacked the house and made off with several items, including his mother's jewellery and a computer. The break-in was reported to the police.

Heyliger said his children and mother were very uneasy about staying in the house.

"I have always said in and out of Parliament that I face the same issues as everyone in the community, from concerns about safety of my family and the community as a whole," Heyliger said.

"Every resident deserves to be safe in their home. Our police officers do their best every day. We as a community need to take care of each other and realise many untrue statements about 'haves' and 'have nots' can quickly turn people into targets," he said.

Heyliger called on the Prosecutor's Office "to only make legitimate claims and not sensational ones to stir up emotions for whatsoever ulterior goal."

"Claims" made by prosecutors in recent court cases, "especially about money and ungrounded statement on blogs, social media and even the traditional press are now putting my family in jeopardy," Heyliger said. "The safety of my children and mother and the rest of my immediate family are paramount for me. I will not take it lightly if they are in any way harmed or further affected."

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