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Hiro: ‘Elasticity’ of 2012 budget to remain ‘limited’

PHILIPSBURG--The "elasticity" of the 2012 budget will "remain limited and it also means that we have to make progress with our efforts to increase income and cut expenditures," said Finance Minister Hiro Shigemoto in his "Year Note" to Parliament, submitted mid-May.

Most ministries already have begun putting together a draft 2012 budget, "so we seem to have enough time to prepare a country budget 2012 that meets all criteria and that balances."

The new budget has to stay beneath the maximum amounts that apply according to the multi-annual estimate of NAf. 438 million. "The small, allowable increase will be consumed by the general indexes for wages and prices."

Government expects tension on the new budget, because of vacancies that will be filled during 2011 (some NAf. 15 million), termination of financing of critical functions by Dutch funding agency USONA (NAf. 3 million) and back-service effects if wages are indexed (some NAf. 10 million).

There is some incidental cost in 2011 that will not return in 2012. The effect of this non-recurring cost is about NAf. 30 million. "This means that our elasticity will remain limited again next year and it also means that we have to make progress with our efforts to increase income and cut expenditures," Shigemoto said.

"The draw up of budget 2011 has been a hard and sometimes bothersome process. This was partly due to the fact that the preparations had to start in the situation of being a part of the Netherlands Antilles, while the budget had to fit the new organisational country structure.

"Especially for the former land functions, this appeared to be tough. Now we have the budget 2011 finalised and our governmental organisation is nearly installed, so that our starting position is much better than last year's," he added.

For the advancement of the country, several factors have to take place, such as more familiarity with the new country's organisational structure, together with the associated cost, and better understanding of the actual task and responsibility of a new country, which was previously under-budgeted by the former Netherlands Antilles.

"Government needs to commence a core task analysis for its administration with our desired policies. The availability of a core task study will be helpful, since it is expected to give advice on the core task of government. Once there is an understanding of this study, team SEB can initiate the most effective and appropriate measures that lead to structurally balanced budgets."

A National Development Plan (NDP) and a governing programme (GP) are "critical" to execute effective, structural measures in line with such initiatives for future balanced budgets. "The NDP and GP are imperative at this moment to ensure the cost associated with these initiatives are known and taken up in the multi-annual balanced budgets."

Once the core task analysis, NDP and GP are in place, government will have to implement revenue-generating, cost-cutting, control and efficient measures based on its short-, medium- and long-term objectives, Shigemoto said. "Some measures may certainly not be popular. However, these measures would be necessary for the advancement of country St. Maarten."

Hospital conducts first pacemaker implantation

Page3C010~Setting up Cardiology department~

CAY HILL--St. Maarten Medical Center (SMMC) made a major stride on Wednesday when it conducted its first permanent pacemaker implantation surgery on a 65-year-old woman.

Visiting cardiologist Meredith Sedney from Bronovo Hospital in the Netherlands, who had been in St. Maarten for several months as part of efforts to set up a cardiology department here, said the procedure was a huge success with the help of local professionals.

The patient, who left SMMC on Friday, had been fainting unexpectedly "every now and then," which Sedney said is a typical sign of Adams-Stokes disease (sudden collapse into unconsciousness due to a disorder of heart rhythm in which there is a slow or absent pulse). Adams-stokes can be fatal.

Sedney said there was an urgent need to help the patient. When the patient was admitted to SMMC, a decision was made to carry out the procedure.

"The patient needed a pacemaker. While she was admitted to SMMC we made sure to get the pacemaker and the necessary items to connect it to the heart. It took us about five days to get the items."

The procedure was conducted on Wednesday after all the items had been received.

Sedney highly praised the SMMC staff that assisted her during the operation. She said they had been competent and enthusiastic professionals. "This makes me happy to continue with this work because such a procedure can be [risky] because you never know what will happen during the procedure because the heart can come to a standstill. I found out minutes into the procedure that the workers were professionals."

Operating Room Supervisor Christina Jacobs-Berkel said a lot of the preparation was done prior to the operation. "It was something new for us, but we had a lot of discussion before and we were prepared. We enjoyed the challenge. The [support staff] were all local professionals at SMMC and everyone was enthusiastic.

"Living here on a small island even we as professionals in health care are confronted with the situation where our family members have to travel for medical treatment and professionally it is a challenge."

She said it's always a plus when patients can have their procedures done right here where they can get the support of families and friends.

Cardiology department

Sedney and Cardiologist Dr. Miriam Haverkamp (Bronovo Hospital) are among the team of specialists who are visiting St. Maarten as part of efforts to set up a cardiology department here. The initiative began sometime ago. SMMC is currently in discussions with the government to have tariffs set so that the department can be set up. Once a tariff structure has been set, the opening of the cardiology department can be accelerated.

It has been determined, based on St. Maarten's population, that at least one full functioning cardiologist is needed.

Sedney said it is believed that there are many persons in St. Maarten suffering from heart disease as is the case in other parts of the world. "Our intention is to evaluate them and try to give the medication or other treatments that they would need."

SMMC is expecting an echocardiography machine in about two weeks' time, which will significantly help in the diagnosis of heart ailments. "This is what we really need and it looks like we will have one in two months."

SMMC Communications Officer Juliette Hassell said it will be more cost-effective if cardiology patients can be treated in St. Maarten instead of having to fly abroad.

Clash in Curaçao worries Donner, Dutch Parliament

THE HAGUE--"A highly undesirable situation." That is how Dutch Minister of Home Affairs and Kingdom Relations Piet Hein Donner described the allegations by both Curaçao Prime Minister Gerrit Schotte and Curaçao/St. Maarten Central Bank president Emsley Tromp.

Donner promised the Second Chamber's Permanent Committee for Kingdom Relations during a meeting Thursday night that he would look into the facts of the situation in Curaçao and inform Parliament by way of a letter "as soon as this was possible and sensible."

The minister didn't want to go into details on the clash between the Curaçao government and Tromp, because a Parliament debate will be held on this issue in the foreseeable future.

Member of Parliament (MP) Eric Lucassen of Party for Freedom PVV, earlier on Thursday, requested a debate on short notice to discuss the latest developments in Curaçao. PVV received support from Socialist Party (SP) which has also sought an investigation on previous occasions.

"Often we asked for an investigation into corruption on the islands. Every time we were told that it isn't so bad and as a Parliament we just have to accept it. When these kinds of serious allegations are going back and forth, it is high time for an investigation and Curaçao is a nice start. I say it is time to clean up the mess," said Lucassen.

"This is not just a rumour. It is a serious statement by a very serious person," said MP Ronald van Raak of SP. According to Van Raak, this affects the quality of government and "possibly" Article 43, the guarantee function, of the Kingdom Charter. "That is why I support this request," he said.

Ruling parties, the liberal democratic VVD party and Christian Democratic Party CDA considered a general debate on the Curaçao situation unnecessary. VVD MP André Bosman: "If we had to request a meeting every time these kinds of allegations were expressed on the islands, we would have to reserve the entire agenda of Parliament." Bosman said it was wise to steer clear of "saying things without having the facts."

"In this stage, you should allow further development. There is no reason for a debate at this time," said MP Bas Jan van Bochove of CDA.

The question is when this debate will be held because there is a long waiting list for debates which need handling before the summer recess in July. MP Martijn van Dam of Labour Party PvdA said in the meeting with Donner Thursday night that he didn't want to wait on this debate for four or five months. He asked Donner to report to Parliament by letter within ten days.

"The Prime Minister of Curaçao and the Central Bank president are fighting in the street and calling each other names. It is their fight, but this should not be allowed in a decent country and therefore it is inappropriate in the Kingdom," said Van Dam.

"It strikes me that Prime Minister Schotte speaks about the president as if the latter was his subordinate. That fits the way the Curaçao Government deals with appointments and dismissals, but the Central Bank is a very important institution and it needs to be able to operate independently," said Van Dam.

Donner said he wanted to write his response about the situation in such a way that it wouldn't add to the public discussion between Schotte and Tromp. But, he added: "My impression of the seriousness of the situation is the same as that of Mr. Van Dam. It is highly undesirable that the government and Central Bank engage in discussions in this manner."

Donner said he first needed to get informed on the facts before deciding whether the Curaçao situation was a matter for the Kingdom. "I will inform the Chamber about the facts and a possible solution as soon as possible."

MP Ineke van Gent of the green left party GroenLinks advised the minister to discuss the matter with Schotte during their next meeting which is scheduled for early next week. Schotte is currently in the Netherlands.

First quarter shows a ‘positive balance’

~ But shortage will use up surplus ~

PHILIPSBURG--Government's total income, less expenses, in the first quarter of 2011 shows "a positive balance" of about NAf. 14 million, Finance Minister Hiro Shigemoto told Parliament in his "Year Notes" submitted on May 16.

However, he added that taking into account the seasonal pattern and the fact that road tax and part profit tax are paid in the first quarter, "this surplus will be consumed by shortages in the coming periods."

As for liquidity, the total of bank balances as of March 31, 2011, amounts to NAf. 90 million – including NAf. 73.3 million in time-deposits.

Total income in the first quarter of 2011 is in line with the first quarter of 2010 and takes into account the change from Island Territory to country.

"There is a decline in wage tax/income tax income and possibly profit tax income, however, this decline is compensated by an increase in turnover tax, transfer tax and concession fees."

Total income for the first quarter of 2011, including accruals for concession fees, amounts to NAf. 109 million. In the same period of 2010, comparable income was also NAf. 109 million. There are, however, reasons that justify monitoring the flow of income carefully and timely so that disappointing income levels can be restored and/or expenses reduced, the minister stated.

Revenue from income and wage tax increased over the last ten years significantly due to strong economic growth, but declined in the last couple of years compared to Gross Domestic Product (GDP). Income- and wage tax as percentage of GDP declined from ten per cent in 2001 to eight per cent in 2010.

Shigemoto said the possible reasons are increase of minimum tax free income level, decrease of compliance/increase informal sector, increase in income tax reimbursements due to elimination in backlog income tax assessments and unreliable GDP figures or actually decline in economic activities.

Specifically, the compliance issue will be addressed by the Compliance Team through its plan of action.

Total operating expenses for the first quarter of 2011 have been preliminarily calculated at NAf. 93 million. Compared to the prorated calculated budget for the first quarter of NAf. 105 million, this means an under spending of about NAf. 13 million. This is mainly due to the fact that because of the lack of an approved budget 2011, actual spending was based on a maximum allowed spending level of about NAf. 30 million per month.

Shigemoto further explained that investments in fixed assets in 2011 are minimal, in total about NAf. 250,000. Study loans paid out in the first quarter 2011 amount to NAf. 1.6 million.

"The fact that the budget 2011 has not yet officially been approved and signed into law, funding for the planned capital investments in 2011 cannot be acquired which leads to a postponement of capital investments in mainly infrastructural works and consequently a slow down of economic growth," he added.

Figures prior to Oct. 10

Tax revenues in the first three quarters of 2010 show "a little decrease" in revenue compared to 2009, from NAf. 192.3 million in 2009 to NAf. 191.5 million in 2010). A substantial decrease (17 per cent) in profit tax income is compensated by increased receipts in all other tax items, except for income tax.

The Tax Office has in the last couple of years reduced the backlog in income tax assessments which has led to more refunds than receipts. Income tax revenues (receipts less refunds) in 2009 was positive NAf. 2.4 million, income tax revenues (receipts less refunds) in 2010 amounts to negative NAf. 1.6 million.

Total income in the first three quarters up to 10-10-10 amounts to NAf. 210 million compared to NAf. 192 million in 2009 over the same period. The increase of NAf. 18 million consists mainly of incidental income items like NAf. 11.7 million from advance settlement dismantling, NAf. 3.9 million newly introduced concession fee for utilities company GEBE and NAf. 3.1 million charges against reserves.

Total income in the first 3 quarters of 2010 up to 10-10-10 amounts to NAf. 210 million or NAf. 10 million below the budget of NAf. 220 million. This difference consists mainly of less income tax receipts than budgeted (NAf. 1.7 million), no condominium fees introduced (NAf. 2.3 million) and less receipts in several charges and retributions (NAf. 6 million).

The budget of operating expenses for the period up to 10-10-10 amounts to NAf. 211 million. This is without back-service premiums that should have been budgeted for. The actual expenses as recorded and reported in the quarterly reports amount to about NAf. 196 million or NAf. 15 million less than budgeted.

Investments in capital goods and study loans amount to about NAf. 14 million.

The total of bank balances as of 10-10-10 was NAf. 78.9 million of which NAf. 77.6 million was in time deposits.

From Oct. 10 to Dec. 31

Shigemoto said that a proper allocation of income and expenses to the various periods to the Island Territory of St. Maarten prior to 10-10-10 and to the Settlement committee for expenses paid related to the previous Federal Government prior to 10-10-10 and the expenses allocated to country St. Maarten as from 10-10-10 still needs to be worked out in detail.

There are no final figures for Oct 10 to December 31, 2010, as yet. Preliminary calculations indicate that income (NAf. 80.4 million) covers most expenses (NAf. 80.9 million) in this period.

Income of the country in this period amounts to NAf. 80.4 million. This included taxes that previously were part of the Netherlands Antilles like the two per cent of the turnover tax (NAf. 11.5 million), the transfer tax (NAf. 0.8 million), the gasoline excise tax (NAf. 1.1 million), the bank licenses fees (NAf. 5.6 million), the bureau telecommunication fees (NAf. 1.7 million), and others like stamp tax, penalties, deposit permits, and inheritance tax.

Total operating expenses for the mentioned period amounts to NAf. 80.9 million which includes the expenses of the tasks taken over from the Netherlands Antilles like the police force, prison, tax office, federal receiver's office and others.

The total bank balance as of December 31, 2010, amounted to NAf. 77.8 million, of which 73.4 in time deposits.

GDP rating

A list of 132 countries (CIA Factbook) shows national debt ratios varying from 3.3 per cent (Libya) to 226 per cent (Japan). St. Maarten has a debt/GDP ratio of 23 per cent increasing to 31 per cent in 2011 if all capital investments planned for 2011 according to budget will be funded and executed, Shigemoto stated. "A 31 per cent debt/GDP ratio brings us at the level of countries as Canada, Taiwan, and Trinidad and Tobago."

According to the same list, Aruba's debt/GDP ratio is 46 per cent, the Netherlands 65 per cent.

"Without debt relief, the financial situation would be quite different with the obligation to take over high interest bearing debts of over NAf. 480 million which together with existing interest bearing backlog in pension premiums of over NAf. 65 million would result in interest expenses of at least NAf. 40-45 million yearly." At present with the debt relief, interest expenses including interest over extra funding for capital investments in 2011 amount to only NAf. 11 million.

Tromp must step down, says MAN

WILLEMSTAD--Curaçao coalition party MAN says Central Bank director Emsley Tromp must resign to open the way for a thorough investigation at the highest financial institution on the island. This is according to the blue party's Secretary General Giovani Atalita.

MAN wants both the controversial three-million-guilder loan without collateral that Tromp was reportedly involved in, and his corruption accusations against three members of the Schotte cabinet to be looked into.

The director of the Central Bank of Curaçao and St. Maarten (CBCS) has meanwhile filed an official complaint regarding the latter with the Public Prosecutor's Office, which had already decided to investigate the matter on its own.

New in Tromp's complaint is the claim that Finance Minister George "Jorge" Jamaloodin (MFK) threatened Radio Direct owner/director Jachmine Pinedo that he would put drugs in her office if she broadcast negative stories about him. There is apparently a recording of that conversation.

MAN reasons that since Tromp said earlier he had considered stepping down he should now do so in order not to obstruct the probe that must be conducted as quickly as possible.

The coalition party said Tromp's accusations against several cabinet ministers damaged not only the government, but the entire country. "If one or more ministers were to be declared suspects by the authorities, they too would have to leave."

Amigoe newspaper has learned that the Dutch Central Bank DNB will conduct an investigation into the integrity of Tromp. He had apparently asked for such himself before, but the government had refused, so it's not clear who gave the instruction.

The entire state of affairs caused Gregory Damoen, former Antillean Parliament and Curaçao Island Council member, as well as ex-head of the Directorate of Finances of the Netherlands Antilles, to frown. He wonders if the government realises what it's doing.

"This is an attack on our legal security and it is even more alarming that it's done by our own government. How could the government possibly leak private information from citizens?

"Bank data are leaked to the press and the government brings this information into the open. I am very concerned about the state of affairs, particularly now that the government indicates it is looking for more information."

Damoen wonders how the government could have obtained private information from citizens.

"Did they exert pressure? Even if they have this information, they are not allowed to use it. The government must guarantee the legal security. It is not about the person Tromp. I do not wish to defend anyone, but it's about the government going after private information from citizens, having obtained such, and subsequently bringing it into the open. In my opinion, this even contravenes the law."

Damoen wonders now what guarantees investors have that their bank data is safeguarded on the island.

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