SXM’s Money Mess, about good governance.

Table of Contents

How it’s supposed to work

Normally, it is expected that a company or country has its financial statements for the previous fiscal year approved by May of the following year. However, it is particularly concerning that on the website of the General Audit Chamber of Sint Maarten, the latest available financial statement is from 2021. The financial reports for 2022 and 2023 are still pending. This raises a critical question: how effectively can a country be governed if its financial records are so delayed?

Financial mismanagement

The 2021 Financial Statements of Sint Maarten reveal a troubling landscape of financial mismanagement, characterized by significant reliability errors, delayed reporting, and widespread internal control deficiencies. These shortcomings have far-reaching consequences for the governance of the country. An inability to present a true and fair view of the financial position undermines the government’s transparency and accountability, eroding public trust. Furthermore, non-compliance with legal requirements and inadequate internal controls compromise the effectiveness of financial oversight, increasing the risk of corruption and financial misappropriation.

Government’s incompetence

A country with such poor financial management is also ill-equipped to support its government-owned companies. Countries teetering on the edge of bankruptcy often scramble to find funds for various expenses, leading to contentious discussions even involving the pension fund APS. Sint Maarten is also attempting to secure loans, but given the country’s credit status, attracting credit is exceedingly difficult, or just too expensive due to the high interest rates. Turning to the Netherlands for assistance has become a necessity, which in our opinion can be seen as a testament to the government’s incompetence.

Governance structure

The entire governance structure, from top to bottom, needs thorough investigation. Similar to any other bankruptcy or default situation, appointing a trustee is warranted. Currently, under the guise of resilience, desperate and ad hoc solutions are being sought, such as unaffordable power barges and power plant containers with long wait times. This situation is tragic, as the economy is being hollowed out and the population is growing weary.

Without timely and accurate financial data, policymakers are hampered in their decision-making, leading to inefficiencies and potentially misguided fiscal policies. In the long term, these issues can result in diminished public confidence, lower tax revenues, and increased financial dependency on external entities, thereby threatening the nation’s fiscal stability and sovereignty. To this day, the latest available financial report from the government of Sint Maarten is still the one from 2021, highlighting ongoing delays and a persistent lack of accountability. Addressing these deficiencies is crucial to ensuring sound financial management and fostering a stable, trustworthy government.

Key Errors and Issues in the 2021 Financial Statements of Sint Maarten:

  1. Unreliability of Financial Statements:
  • The 2021 Financial Statements do not provide a true and fair view of the financial position as of December 31, 2021, nor of the income and expenses for the year.
  • Significant reliability errors, including unrecorded cost-of-living liabilities amounting to ANG 120.6 million, and numerous smaller errors totaling ANG 126.9 million.
  1. Delayed and Incomplete Reporting:
  • Financial statements were not submitted on time, hindering timely and accurate financial management assessments.
  • The required memoranda, as stipulated by the National Accountability Ordinance (NAO), were not provided. Only quarterly reports were submitted, which do not meet NAO requirements.
  1. Internal Control Deficiencies:
  • Inadequate internal control procedures across all ministries, leading to material uncertainties.
  • Specific issues with payroll processes, procurement, subsidy payments, and tax collection.
  1. Non-Compliance with Legal Requirements:
  • Expenditures were made without budgetary coverage, and income was either not realized or lower than budgeted.
  • Both the 2021 National Budget and Financial Statements lack the necessary information required by the NAO.
  1. Lack of Policy Information:
  • The budget and financial statements did not include required policy information, making it difficult to assess if policy objectives were achieved.
  1. Persistent Deficiencies:
  • Long-standing issues since October 10, 2010, including inadequate internal procedures and lack of adequate control information for wages, goods and services, tax revenue, social services costs, and scholarships/subsidies.
  1. Inaccuracies in Accountability:
  • Internal control was inadequate in recording outcomes of processes for procurement, subsidy granting, salary payments, and tax collection, leading to uncertainties in accountability.

Recommendations:

  • Improve Transparency and Timeliness: Ensure timely submission of complete and accurate financial statements and adherence to NAO requirements.
  • Enhance Internal Controls: Address and rectify internal control deficiencies to ensure accurate and complete financial reporting.
  • Provide Comprehensive Policy Information: Include all required policy information in budgets and financial statements to enable proper assessment of financial management and policy realization.

These errors and deficiencies significantly undermine the reliability and transparency of Sint Maarten’s financial management for 2021.