Despite the many financial challenges that Saba Government finds itself confronted with. it has remained steadfast in its approach to achieve its goals. with or without a well-financed budget. Finance Commissioner Bruce Zagers stated this during the handling of the 2016 Year Report in the Central Committee and the Island Council on Wednesday.
“Financial management in Saba has rapidly improved and we are the lone example in the Dutch Caribbean.” said Zagers. referring to the fact that Saba for the fifth consecutive year achieved a positive opinion from its external auditor Ernst & Young. In line with the previous year, the auditor was of the opinion that the financial statements gave a true and fair view, he said. “I am extremely proud of what our small organisation with limited resources has been able to achieve not just this year but for the last several years. The positive audit statements that Saba has been able to accomplish arc yet to he achieved by any of the other islands in the Dutch Caribbean. This is something that as an island and as a government administration we should he proud about”, the Commissioner told the Island Council Members.
The 2016 Year Report. which was drafted by Saba’s own Finance Department. met the criteria of the law and this year it was also presented on time. The financial statements showed financial activities on the income side totalling US S14.464.756 and on the expenditure side US $14.395,693. The 2016 Year Report closed with a surplus of about US $69,000 which is considerably lower than the closing balance for 2015 which was US $865.758.
Although the year report was closed with a small surplus, Zagers said it was important to point out that this positive result was influenced by a release of the “allocation reserve maintenance cost” for US $111.688. This reserve kites back to 2013. Without the release of these funds the result would have been US $42.625 negative he said. With the surplus from 2016, the general reserve now stands at approximately US $8.5 million. A few years ago the Island Council agreed to establish a buffer capital reserve which should eventually reach US S2 million. The current amount of the buffer capital remains at US $435,000.
Zagers said that based on the current trend of seeing the surplus decrease drastically for the last three years it would be extremely difficult to increase this buffer capital as long as the local government had to continue working with skeleton budgets. “The closing balance of 2016. when compared to that of 2015, should yet again send a clear message to the Netherlands that the free allowance needs to he adjusted. If this adjustment does not materialise, even though a report commissioned by The Hague stated that an increase was absolutely necessary, 2017 will be even more difficult to manage financially than in 2016.” he said. The Commissioner warned that for 2018 and beyond it would be “almost impossible” to balance the budget and execute any policy especially if the incidental special grants were not made structural by the Dutch Government.
Zagers said the island’s liquidity position remained a concern. “With basically no new structural money coming in and with ongoing investments from both incidental funds and with local funding, we need to keep closely monitoring the liquidity position.”
The Commissioner said that although the Saba Government had a bank balance which showed a “very high amount,” this was “not a true reflection” of the actual liquidity position. “The balance which can be considered free cash is only a small fraction of our total budget. We need to continue being vigilant. We need to continue being responsible not just with budgeting but even more-so with our spending.”
Zagers explained that in October last year, based on the advice from the Finance Department, measures were put in place to control government spending. “I hope that this does not have to happen this year, but had these measures not been taken, the 2016 Year Report would have definitely ended with a negative balance.”
Even though Saba Government has proven that it manages its finances in a responsible manner and that it has a positive track record, without any increases or indexation of the free allowance and the cost of doing business for government increases, it has become increasingly difficult to balance budgets, to balance budget amendments and to ultimately finish the year reports with a positive balance.
Zagers said that this message has been strongly expressed by the Executive Council in the Netherlands and he said he trust that the Island Council would do the same during its visit to The Hague next week. “We have to be relentless with our message. The 2016 closing balance only substantiates government’s case that more funding is necessary to properly execute its legal tasks.”
Saying that naturally the Saba Government was happy with the many compliments for its financial management, Zagers warned that these compliments were “not paying the bills” and not reducing poverty or creating new jobs.
“We receive incidental funds for projects. but the compliments are not keeping these projects operational nor are they paying for the structural maintenance. The issue with the level of the free allowance needs to be addressed sooner rather than later. I hope that the new Dutch Government will once and for all stop treating the islands and the people as beggars and second class citizens.” he said.
The Daily Herald.