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The Government of Saba doesn’t have more leeway to acquire new interest-free loans after securing a US $2.5 million loan for an infrastructural project because of its deteriorated cash-flow situation. This writes The Daily Herald.
The Committee for Financial Supervision CFT stated this in a recent letter to Dutch Minister of Infrastructure and Environment Melanie Schultz van Haegen. The letter, sent on April 9, 2015, has been published on the CFT website.
The CFT was asked to update its February and May 2014 advice, drafted on the request of the Saba Island Council to the Ministry of Infrastructure and Environment I&M to issue interest-free loans to the public entity for infrastructural projects. At the time the CFT rendered positive advice.
The CFT recently took a look at the repayment capacity of the island government in the case that the Ministry of I&M supplied an interest-free loan of US $2.5 million for infrastructural works on the island, namely the S-bend in the Fort Bay Road which is in need of renovation.
According to the CFT, Saba’s cash-flow position has deteriorated since last year’s advice. With this new loan the Island Government would end up below the target balance of US $618,000, which is considered the safe buffer to be able to maintain regular financial management, in other words to pay the bills.
The deteriorated cash position was not of such a worrisome nature that the CFT has decided to render a negative advice on this loan in particular. However, the committee did warn that there was no space for new interest-free loans after the US $2.5 million loan had been approved.
The CFT calculated that Saba had a gross cash position of more than US $4.6 million on January 1, 2015, which will have dwindled to US $550,000 by the end of this year. “The CFT wants to point out to you and to the Minister of Home Affairs and Kingdom Relations that this amount is US $68,000 lower than the target balance,” it was stated in the letter to Schultz van Haegen.
The CFT concluded that Saba would have to generate additional means if it didn’t want to end up below the target balance of US $618,000. Saba would not have to generate additional means and be able to maintain a better cash-flow position if the local government managed to realise a structural cutback in maintenance of US $0.3 million per year as was discussed in 2014.
Aha, Now we find out how Bruce has achieved all the great projects he reported about during the election campaign. He simply went to the bank in Holland and loaned loads of money for the retaining walls, street lights, etc. Who gets the bill: you and me.
CFT says that Bruce has already borrowed more than his capacity to pay back, i.e., our capacity to pay back.
So no problem: increase the local taxes so that Bruce can pay them back comfortably.
It is a pity that we do not have an Island Council that is interested in checking what Bruce is up to. They just always agree with what he proposes.
OK, now we know what we can expect for the coming four years: sorry people, pay off your debts first.
And the government? They keep going on holiday trips. Check out their Facebook page. There you’ll see a happy three persons group in Austin, Texas where they went learn what a hurricane is about. That is necessary because no one on Saba has ever experience a hurricane (they think). Let’s put up the departure tax again so they have more travel budget.