Wednesday , June 7 2023

CFT again compliments Saba for sound finances

The Committee for Financial Supervision CFT has complimented the public en­tity Saba for yet again achieving a positive result in its financial management. For the fourth time in a row, the island’s annual account, in this case the 2017 finan­cial statements, received an un­qualified audit opinion for both trustworthiness and legality.

“Despite the difficult circum­stances due to Hurricanes Irma and Maria, and the additional (administrative) work as a re­sult of these hurricanes, Saba has been able to maintain the fi­nancial administration at an ad­equate level,” stated CFT Chair­man Raymond Gradus in a letter he sent to Saba Island Governor Jonathan Johnson on August 8. The CFT also noted that Saba had submitted the 2017 annual account and the auditor’s re­port to the CFT before the legal deadline. “The CFT compliments your Executive Council with this result,” Gradus stated. Saba has already received several compli­ments from the CFT in the past for its sound financial manage­ment.

The accountant concluded from the 2017 annual account that a few financial risks of previous years were partly mitigated and they were therefore qualified as a low risk. Two report findings were qualified as a middle or high risk: the insufficient resilience and too-large dependence on inciden­tal income from the Netherlands, and the financial risks due to the pension regulation for (former) politicians.

Regarding the resilience and the dependence on income from the Netherlands, it was observed that in 2017, about one third of the total expenditures were paid from incidental income. It is an­ticipated that in 2018 even greater use will be made of this incidental income.

In the CFT’s opinion it is undesirable that Saba’s budget is greatly influenced by the mutations in the pen­sion regulation for (retired) politicians. The CFT will analyse the pension regula­tion and its financial con­sequences, and discuss this with the Saba government. If possible, the CFT will draft a proposal that will make the budget less dependent on the pension obligations.

Saba’s Executive Council has already indicated that it continues to take actions to reduce the financial risks. Talks with the Ministry of Home Affairs and Kingdom Relations BZK will again take place to structurally strengthen Saba’s financial position, while the talks with the CFT and the BZK Min­istry will continue regarding the financial risks of the pen­sion regulation.

The 2017 annual account showed total revenues of a little more than US $18 million. The expenditures amounted to $16.7 million. This means that there was a surplus of $1.2 million, which is higher than the budgeted $440,000. The larger surplus is largely due to the fact that as a result of the hurricanes a part of the regular policy ex­ecution could not take place. Saba’s structural revenues in 2017 consisted of the free remittance ( “vrije uitker­ing”) of $9.3 million and own revenues of $950,000. In ad­dition, Saba received $5.5 million in special allowances from the Dutch ministries and $1.7 million in special al­lowances for the reconstruc­tion after the hurricanes. Saba managed a total of 63 special allowances and 10 special allowances related to the reconstruction during 2017.

“It is important that Saba with these incidental revenues only engages in in­cidental commitments to pre­vent future budgetary risks. However, the size of these incidental special allowances compared to the structural revenues has a large impact on the execution of policy,” stated Gradus.

Saba collected about $950,000 in local levies in 2017, which is slightly lower than the $992,000 in 2016. This is mainly due to the higher revenues in 2016 from the collection of road tax ar­rears and Saba’s accessibility after the hurricanes which had an adverse effect on the volume of the harbour, air­port and tourist fees.

Saba’s allocation or resil­ience reserve late 2017 stood at $435,000. Government’s ambition is to increase this reserve to $2 million. There­fore, the Executive Council requested the Island Coun­cil’s approval, during the pre­sentation of the 2017 annual account, to add $765,000 of the 2017 surplus to this re­serve. The Island Council ap­proved this proposal.

The pension omission in the administration of the Carib­bean Netherlands Pension Fund PCN was corrected in 2017. An investigation by the PCN into the omission whereby a number of em­ployees of the former Island Territory Saba were not cor­rectly included in the Neth­erlands Antilles Pension Fund APNA was concluded in 2017. As a result, Saba made an additional payment of $402,000 in 2017 so the situation could be corrected.

The Saba government sub­mitted the 2017 annual ac­counts of the Saba Telephone Company, the Saba Electric Company and the Saba Bank Resources to the CFT. The CFT reminded government that as yet it had to receive the 2017 annual account of the Netherlands Antilles De­velopment Fund OBNA.

Bonaire, on the other hand, is not complying with the le­gal obligation to submit the annual accounts of its gov­ernment-owned companies and government founda­tions. The Bonaire govern­ment so far has only submit­ted a few annual accounts and it has not given an indi­cation when the missing re­ports will be sent to the CFT.

Gradus sent another re­minder to Bonaire’s Execu­tive Council on August 8, pressing the local govern­ment to comply with its ob­ligations. The fact that so many annual accounts of the government-owned compa­nies and government founda­tions are lacking complicates the task of the CFT to report to the Dutch government on Bonaire’s finances.

The Daily Herald.

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