Friday , December 9 2022

The need for Buffer Capital explained

Commissioner Bruce Zagers explained during Tuesday’s Central Committee meeting the need for the Buffer Capital proposal submitted for adoption in the Friday’s Island Council meeting, as was reported by the Daily Herald. He explained that allocating such resources would allow the executive to cover unbudgeted costs while at the same time aligning the island to the required legal framework, FinBES and BBVBES. The fund is expected to increase the financial resilience of the island particularly with regards to assessed high risk such as energy prices or unforeseen investments in communications infrastructure. Other high risk areas to be covered are public housing and the “pension plan for former persons in authority” as well as damage to government buildings. Commissioner Zagers explained that Saba ought to seek to allocate more that the average 5 to 10 per cent allocated in The Netherlands for damage to government property since Saba is in the hurricane belt with properties on a mountainous terrain. The capital, once set aside, would ensure the maximum financial impact on the island by avoiding high insurance fees once properties are assessed.

Councilman Carl Buncamper questioned if the financial high-risk areas noted by Ernest and Young should be the only ones to be considered for the buffer capital. He argued that medium to highrisk areas such as public health expenses, social issues related to vulnerable groups should also be considered. Those aspects not addressed by the central government’s social affairs pillar should be taken into account as a local government financial risk. With regards to public health crises, Buncamper pointed to unforeseen costs associated with dengue or other such issues. With regards to Saban vulnerable groups excluded from social affair provisions, he noted that island government would have to pick up where the central government fails to provide and that this should be brought up within the remittance level allocation.

Commissioner Chris Johnson expressed interest in this approach stating “this is a discussion worth having.” Johnson gave the example of Statia’s government attempting to augment the social pension and being denied last year. The basis for the central government’s decision is believed to be that low levels of social benefits are due to lower taxation on the islands.

Buncamper noted that the beneficiary group for social benefits in the European Netherlands is just as poor of a tax contributor as Saba’s socially vulnerable group. At the same time the European vulnerable social group has access to better social packages than Saba’s and as such an argument is to be made about the island government needing to allocated buffer funds for such challenges. “We need to eliminate being measured by different measuring sticks,” Buncamper stated.
buffer-capital

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