The Executive Council recently sent a letter to the Second Chamber’s Permanent Committee for Kingdom Relations in which the Committee was reminded of Saba’s problematic financial situation due to the lack of structural funding from The Hague.
The Committee members were asked to give special attention for Saba’s dire financial situation as long as the Committee was still in place in its current composition. A number of Committee members will not be returning to the Second Chamber after the March 17 elections. The letter started out by thanking these members for their efforts and trust.
It was explained that the current structural funding and the free allowance (“vrije uitkering”) were insufficient to cover the government’s operational costs and for the Public Entity Saba to execute its legal responsibilities.
In 2012, an external research bureau set a top limit and a bottom limit for the free allowance. Ultimately, the Dutch government decided to use the lower limit for the free allowance. In the opinion of the Saba government, the free allowance was set too low, especially considering the backlog that needed to be cleared in areas such as infrastructure and know-how. Issues such as good governance and the social domain were not discussed at that time. In the meantime, it has become clear that in backlogs need to be cleared in these areas as well.
In 2015, the Ministry of Home Affairs and Kingdom Relations (BZK) asked the same research bureau to update the reference frame for the free allowance. The result of this assessment was that the free allowance needed to be raised by US $1.1 million and that another US $1 million needed to be added in order to fully cover the legal obligations. “Unfortunately, this report has not resorted in an adaptation of the free allowance,” it was stated in the letter to the Committee.
Because of Saba’s solid financial management, the local government was able to secure the trust of various ministries, which has resulted in incidental funding. The government said it was very grateful for these funds which made it possible to get rid of some backlogs and to develop in several areas. Even though this was deemed as very positive, the incidental funding also has a negative spin-off.
In the letter, the recycling project was mentioned as an example. In 2014, the Ministry of Infrastructure and Water Management (IenW) invested some US $1.5 million in recycling. However, Saba was made responsible for the management and upkeep of the recycling facility, which cost the government the additional US $500,00 per year.
Saba has had to borrow money from the Netherlands to carry out a number of infrastructural projects, including the S-turn in the road to the harbor. “The repayment of these loans is a heavy burden for our budget for years and continues to be so.”
Where it comes to Saba generating its own income, it was explained in the letter that this is not easy due to the island’s small scale and the lacking of income-generating sectors. While the harbors of St. Eustatius and Bonaire can generate their own income by visiting oil tankers and cruise ships, Saba’s harbor is unprofitable. Aside from the contributions of the Dutch government, Saba’s own income is generated through limited tourism and its population, of which a large part lives under the poverty line.
Saba’s free allowance is reportedly not increased because of the effects that this would have on the other two Caribbean Netherlands islands. Saba last year had a US $0.6 million deficit and the 2021 budget shows a deficit of US $1.3 million which needs to be compensated from the already low reserves. The multi-annual perspective is worrisome. “It seems that our strong points of solid financial management and being pro-active are working against us.”
The Committee was asked to again bring Saba’s need for fitting structural financial means and a higher free allowance to the attention of the relevant ministries. “A clear signal of the members of the Kingdom Relations Committee is very valuable,” it was stated.