Again positive audit review for Saba, surplus over 2017

The Public Entity Saba has again secured an excellent rating for its public finances: the 2017 annual report, which the Is­land Council adopted last Thurs­day, received an outright positive audit review from the accountant. Despite the many challenges that the island government faced, 2017 was closed off with a posi­tive balance of US $1.2 million.

Finance Commissioner Bruce Zagers explained during Thurs­day’s meeting that in 2017, the public entity faced many ob­stacles, both financial as well as disaster-related. However, due to the funding that was received from the Netherlands and the shift of many regular costs to re­covery costs, the island govern­ment was able to end the year with a positive balance of US $1,229,463.
Zagers warned that even though the positive balance was high, the amount was not a reflection of the island’s financial position. “If it had not been for incidental funding this amount would have been significantly lower and pos­sibly negative,” he said.

The Island Council was asked to give the green light to use the positive balance to improve the buffer of the island’s capital and the general reserve by US $765,000. This will in­crease the buffer capital to US $1.2 million and bring it one step closer to the tar­geted goal of US $2 million as a reserve.

“With an increase to US $1.2 million, government would have sufficient re­serves to start rebuilding after a storm or any other disaster much more quickly without the need to wait on the Netherlands for fi­nancial assistance, which was the case after the hur­ricanes in 2017,” stated Zagers. With the approval of the Island Council, the remaining balance of the positive result, US $464,463 was transferred to the gen­eral reserve.

During 2017 a number of activities were financed and executed through the bud­get, of which Zagers gave an overview. Departments responsible for the invest­ments in infrastructure car­ried out projects such as repairs to and raising the height of retaining walls as well as resurfacing and maintaining roads.
Dredging and repairs to the Cove Bay Pond and breakwater were complet­ed in 2017, government purchased the Own Your Own Home (OYOH) build­ing, an access road was created at the back of the runway and repairs to the fencing were completed at the airport.

Other investments includ­ed the purchase of a vehicle for the Public Hygiene De­partment, the replacement of old AC units for various departments and buildings, upgrades and replacements to government’s hardware and software, the purchase of road safety mirrors, a harbour development sur­vey, the purchase of an in­dustrial grade lawn mower for the airport and the pur­chase of a crane for the safe removal of boats in the Fort Bay harbour.

The resurfacing of the Fort Bay Road, part of an agreement with the Min­istry of Infrastructure and Environment I&M for an interest-free loan, was completed in 2017. Projects to improve the water qual­ity and quantity continued in 2017 as part of the water project for which the public entity received two special-purpose grants, one for the quality of water and one for the quantity of water.

The project includes the placing of cisterns in vari­ous strategic locations to reduce the water transpor­tation cost. Also funded through this project were the water subsidy agree­ments which reduced the cost of water per litre for the consumer. The wa­ter project continues in 2018. Renovations to sev­eral homes of the OYOH Foundation took place in 2017. The strengthening of children’s rights protection and child care continued in 2017.

Through a special grant, the project to reorganise the layout of the Customs Office at the harbour start­ed. With this new layout ferry passengers will no longer have to wait outside in order to clear customs and immigration. This project will be completed in 2018. Significant progress was made to prepare a new burial ground, a project that started in 2016 and will be completed in 2018.

The funds from a 2013 agreement with the Minis­try of Education, Culture and Science OCW for an interest-free loan and an additional special-purpose grant will be used for the renovation and expansion of the school buildings at St. John’s, a project which is expected to go on bid in the coming weeks.

The commissioner also provided information on the civil servants’ pension issue. After 2010, it was discovered that the ad­ministration of the Antil­lean General Pension Fund APNA was not up to date and that a number of civil servants were not regis­tered.
Together with Caribbean Netherlands Pension Fund PCN, the public entity de­termined that 32 persons were not correctly recorded in the APNA administra­tion, as was also stated in the 2016 annual report. PCN has now finalised its calculation. Including in­terest the total amount owed is US $ 402,086 which will be paid out of the sur­plus of 2017.

Zagers said that in 2017, government again had to deal with the “big dis­appointment” that The Hague did not substantially raise the so-called free al­lowance (vrije uitkering) despite numerous objec­tive, outside experts advis­ing to do so. According to Zagers, there have been some small improvements in this area which were re­cently formalised.

The free allowance will be adjusted based not only on the price inflation, but now also on the salary inflation, for a total amount of about US $160,000. Saba will fur­ther receive 1 million euros per year for infrastructure maintenance. These two increases will improve government’s financial posi­tion and allow the public entity to present a balanced budget for 2019.

One of government’s greater problems is that the many structural policy projects are being financed with incidental funding. In recent years improvements were made in the areas of the social domain, policy and management, but they were funded via special-purpose grants. “This poses a risk to the continuity. If these special-purpose grants are not made struc­tural via the free allowance we will lose the progress we have made,” stated Zagers. “We have proven over the years to be very responsible with budgeting and spend­ing. We have our financial house in order. If the free allowance is not increased based on the conclusions of the IdeeVersa report or if other structural budgetary measures are not found, the continuity of jobs cov­ered by incidental funds and affiliated programmes may unfortunately end. It is imperative that we eventu­ally see these funds become structural and be part of the free allowance,” he said.

The commissioner said Hurricanes Irma and Maria had brought “one silver lin­ing” and that was the con­siderable financial relief from the Netherlands. This aid will be used to build back better and stronger, to improve the hurricane resistance of many homes, construct a bigger and bet‑
ter harbour, relocate the landfill and make improve­ments at the airport termi­nal building.

Financial management, one of the top priorities, has seen considerable im­provements over the past years. Thus far, Saba re­mains the only Dutch Ca­ribbean island that con­tinues to receive positive audit reviews from the ac­countant. For four years in a row, from 2014-2017, Saba received an unquali­fied (goedkeurend) opinion for the financial statements in both areas of “true and clear view” (getrouwheid) as well as financial compli­ance (rechtmatigheid). “As an island and as a govern­ment we can be very proud of this,” said Zagers.

Solid financial manage­ment was one of the main criteria for receiving funds from the so-called Regional Envelope. As a result, Saba receives 12.5 million euros for the harbour project and 1 million euros to improve agriculture. This translates into Saba receiving 45 per cent of the 30 million cures that the Dutch government is making available for the Caribbean Netherlands via the Regional Envelope.

Zagers concluded his pre­sentation by thanking ev­eryone involved, from the Island Council for its sup­port and what he called his “very dedicated financial team” to the internal con­trol team, the Committee for Financial Supervision CFT and Ernst and Young.

The Daily Herald.