The Island Council during a meeting on Wednesday, July 14, approved the 2020 Year Report of the Public Entity Saba. As Commissioner of Finance Bruce Zagers pointed out, Saba was again able to achieve an unqualified audit opinion with regard to the ‘true and fair view,’ as well as the regularity of the data presented. Saba remains the only island in the Dutch Caribbean that has achieved such audit results. The reputation for strong financial management is a direct result of the efforts from Saba’s financial team for which Zagers expressed his gratitude.
The financial statement for 2020 ended with a positive balance of US $962,000. The Island Council was requested to allocate part of the surplus to the general reserve for the amount that was released to cover the 2019 negative balance of almost $622,000. The remaining amount will go towards the current COVID-19 relief measures.
“Not only is Saba known for its solid financial management, we are also, unfortunately, becoming known for the island that is constantly expressing the need for an adequate free allowance. The pleas for a correction of the free allowance have been ongoing since it was first set at the bare minimum in 2012,” said Zagers.
Sound the alarm
Year after year, and again during the recent working visit to The Hague of both the Island Council and Commissioner Zagers, Saba continued to sound the alarm that the finances are not sufficient for the local government to properly carry out its legal obligations. “Had it not been for funding received due to COVID-19 subsidies and reduced activities caused by the pandemic, the financial statements for 2020 would probably have shown a deficit just like it did in 2019.”
According to Zagers, the Public Entity is still suffering from the decision to set the free allowance at the minimum. The concerns about government’s financial situation have also been addressed by the Committee for Financial Supervision CFT and by the island’s accountant Ernst and Young. The Island Council continues to be very vocal about the financial situation. The ministries and the First and Second Chamber of the Dutch Parliament acknowledge that there is a problem with the free allowance and that a structural solution is needed.
Zagers noted that during his visit in May this year, caretaker State Secretary of Home Affairs and Kingdom Relations Raymond Knops too confirmed these sentiments. “However, yet again we are faced with another obstacle. This is a situation we have sadly become used to. Whether it has been the need for a new study, an unfavorable exchange rate, or a refuge problem, we have heard all the excuses as to why something isn’t being done.”
This time around, Saba was told that the matter of raising the free allowance has to be decided upon in the new governing accord. “This probably means that we will be in a position once again where we are not able to present a balanced budget for 2022. Even with this renewed momentum, there remains a risk that if a new free allowance is determined, it won’t reflect the true needs of our organization. Until a decision is known whether there will be an adjustment or not, we will have to assume that the preparations for the budget 2022 will be based on a very bleak reality.”
For several years now, Saba has had to work with a skeleton budget due to the lack of structural funding. Only because of non-structural funding and a very conservative spending policy was it possible to function as we have. Incidental funding for often structural tasks has become almost the norm for this administration. During the fiscal year 2020, the finance department managed 80 different incidental subsides, many of which branched off into multiple projects. Had it not been for these incidental funds, the quality of government and its ability to function would be further severely hampered.”
Over the years, the Public Entity Saba has been able to take advantage of opportunities to enhance the government organization by improving government services to the public. The most recent examples are the improved operations at the landfill, upgrades to the island infrastructure, government buildings, and to the homes of people in need of assistance. “This was mainly possible because we have our finances in order. However, it comes at the price of rigorous reporting and often funding structural tasks with incidental funding,” said Zagers.
“The sentiments surrounding the 2020 financial statement are bittersweet. On one hand, the Public Entity has been able to replenish its general reserve while slightly seeing an improvement in its liquidity position. On the other hand, we know that the positive result is based on the developments that no one could have predicted or expected. The coming months, while we wait for a new governing coalition in the Netherlands, will be important for the Public Entity and for the development of our organization and island. We can only hope that discussions like these in the future should actually be based on what’s in the budget, such as policy, rather than simply focusing on the realities of having to work with a free allowance which everyone agrees is too low,” concluded Zagers.