KINGSTON, Jamaica – The Caribbean Development Bank’s (CDB) Board of Directors on Monday approved a USD50 million Policy-Based Loan to the Republic of Suriname to urgently address the country’s fiscal imbalances, through support for energy sector reforms.
Suriname has already begun implementing a series of institutional, policy and legislative reforms to stabilise the economy, primarily to address the challenge of a weak operational, policy and regulatory environment in the energy sector. CDB’s loan assists the Government of Suriname with its adjustment programme.
“CDB recognises the urgent need for significant reform within Suriname’s energy sector, which has tremendous potential to transform the economy,” said Dr. Justin Ram, Director of Economics, CDB. “This Policy-Based Loan signals a collaborative effort to build a sustainable and efficient power sector in Suriname, which can provide an enabling environment to improve competitiveness and improve the prospects for private sector led growth.”
CDB’s support complements the Inter-American Development Bank’s (IADB) ongoing contribution to the institutional and operational strengthening of Suriname’s energy sector. The loan is being provided to Suriname on the basis of a shared policy matrix with IADB under the existing programme between the Government of Suriname and IADB.
The reduction in global commodity prices caused a reduction in Suriname’s economic growth, which is highly dependent on the extractive sector. By the end of 2015, the country’s international reserves had declined to crisis levels—less than two months of import cover. The level of debt more than doubled to 43.3 percent of the Gross Domestic Product, compared to 2011.
The Bank’s Policy-Based Loan forms part of wider financial support for the Government of Suriname from multilateral financial institutions. Donor financial resources will:
The Loan aligns to CDB’s Country Strategy Paper for Suriname 2014-2018, which supports the development of legislative, regulatory and institutional reforms in the power sector, and the expansion of physical infrastructure to meet the electricity needs in rural and urban areas.
PHILIPSBURG, St. Maarten - Leader of the Democratic Party the Honorable Sarah Wescot-Williams last week questioned the government’s plans for the short and medium term plans for changes to the islands tax system.
Among the proposed changes relates to the implementation of the Value Added Tax (VAT) system.
We asked the DP leader about the discussions on this matter within the confines of the coalition.
It should be noted that she also seemingly was seeking more information on other tax proposals that are currently in the hands of government.
More now via PodCast.
NASSAU, Bahamas – On its current development path, the Caribbean in 2050 will face unmanageable debt, poor growth, and greater socio-economic problems, warns a Commonwealth report launched today at the Fourth Global Biennial Conference on Small States in Seychelles.
The report, Achieving a Resilient Future for Small States: Caribbean 2050, considers current policies and trends in six Caribbean countries – Bahamas, Barbados, Jamaica, St Lucia, Grenada, Trinidad and Tobago and Guyana – and makes a 34-year projection across different sectors. The research shows five out of the six countries would have a debt-to-gross domestic product (GDP) above 100 per cent – dangerous levels if growth continues to lag. Projections also suggest interest expenditure on debt is likely to sap public finances, reducing funds for development and giving rise to greater socio-economic problems.
The Caribbean faces mounting challenges, according to the report, and unless there are seismic shifts in policy-making, the outlook is stark. Sluggish growth, spiralling debt, high youth unemployment, rising crime rates, piecemeal investment and low productivity all pose serious threats to the region’s future. Climate change also casts a long shadow; small island developing states are most vulnerable to extreme weather, rising sea levels and diminishing natural resources but lack the funds to plan ahead and minimise risks. The report challenges the status quo and sets out policy interventions in targeted areas aimed at tackling persistent barriers to the region’s growth.
“This publication offers strategies that seek balance for the Caribbean in the survivability of today and the sustainability of tomorrow,” said Commonwealth Deputy Secretary-General Deodat Maharaj. “We have taken on board current and future threats facing the region, such as lack of competitiveness, human and financial resource constraints, crippling debt and limited access to development finance and put forward practical steps that set out a new trajectory to help realise the full and rich potential of the region.”
So how can the region transform? The report provides recommendations on productivity, export growth, increasing youth employment and fiscal reform. Findings show a two per cent a year increase in productivity would have the greatest impact on development and growth among the Caribbean countries profiled. And if a regional focus on productivity is combined with policies aimed at stimulating export growth, the report points out, it is likely growth and debt targets set by governments will be met.
The islands of the Caribbean have made good progress relative to their short-lived independence, the report states, but a number of crises brought about by societal change, natural disasters and economic shocks have created major setbacks. For example, the region has struggled to make progress on development goals because of the protracted economic downturn. The report attributes the overall decline in economic development to ‘a lack of systemic transformation’ and calls for policy-driven innovation in partnership with the private sector. It also makes a strong case for deeper regional integration.
“At a time when policy-makers are loathe to look beyond the short term, this book takes a long view of the policy challenges facing the Caribbean and reminds us of what could happen if we do nothing today. In doing so, it also initiates a much-needed dialogue on what might be an alternative scenario, and the social and economic policies that could take us there,” said Wendell Samuel, an official from the International Monetary Fund attending the conference.
One of the recommendations to free up revenue and boost growth, the report suggests, is for Caribbean governments to actively pursue sustainable energy systems by investing in new technology and improving efficiency. Living standards will increase, foreign investment will go up because of lower business costs and damage to the environment will go down. This it says will also provide the region with a moral high ground in global climate change negotiations and signal to the rest of world that transitioning from fossil fuels to renewable energy is indeed possible.
CAY HILL, St. Maarten – APS, St. Maarten’s general pension fund administrator, has completed a restructuring process, which has resulted in the reorganization of the organization. The reorganizing brought with it the naming of a new Chief Executive and addition of a Secretary of Board to the APS organizational structure.
The restructuring completion comes five years after the original establishment of St. Maarten’s first general pension fund administrator, as result of St. Maarten becoming a country in October 2010.
Appointed as new managing director is Nadya van Putten, who brings a wealth of experience to the organization, among which are her contributions made while in service of the financial supervision entity, CFT. Her appointment as APS managing director became effective on May 1, when she began leading the operational organization of APS.
Appointment of a new Managing Director signals arrival of a crucially new phase for the organization.
Like other pension funds around the world, APS has had to cope with and prepare for ongoing developments such as the increasing average life expectancy. The latter entails that pensions have to be paid out for longer than anticipated periods.
With an introduction made by APS chairman of the board, Franklyn Richards, St. Maarten’s Minister of Finance, Richard Gibson, recently welcomed the new Managing Director and wished her much strength and success on her assuming the challenge of leading the pension fund.
It was noted how the incoming chief executive officer would not only be expected to continue building on the achievements booked over the course of the past years, but also to adequately prepare for the pending changes related to the payment of pensions.
Globally, governments and pension providers have been addressing reforms with which to make their pension systems more sustainable and affordable.
A major challenge continues to be the extremely low level of interest rates generated by pension funds. Funds are thus forced to reserve additional capital in order to pay pensions now and in the future. One more concern has been that of volatile financial markets and increased legislation and regulation, leading to higher costs and strict requirements imposed on pension funds and their boards.
The situation on St. Maarten and the role of APS in addressing these issues, has been no different than counterparts worldwide.
Ms. Van Putten succeeds Ms. Kendra Arnell, who as of the launch of APS in 2010, provided exceptional managerial leadership to the organization. Her doing so, with great dedication, is today heralded as a major contribution in the building of the fund.
Ms. Arnell has now advances to the new position of Secretary of the Board and Senior Advisor Research and Development. The position is one that falls directly under that of Board of Directors and is one entailing working closely with the Managing Director.
With this different role, Ms. Arnell has been entrusted with the management and coordination of a number of ongoing and future APS projects.
Among these is the managing of developments related to the APS acquisition of Mary's Fancy estate in 2014.
Some of the developments are taking place this month. They include the submission of bids for the renovation of the rock walls as well as the subsequent opening of bids by the consulting engineering firm, ICE, and APS officials. This is to be followed by a review of bids and preparation of an advice for the APS board.
The board approval would precede the awarding of a contract and approval of the necessary budget, where after contractors can be informed and the mobilization officially gets underway, with a rock laying ceremony.
Further developments related to the Mary’s Fancy project are the upgrading of the trench as well as construction of the entrance and exit road to and from the Mary's Fancy property.
The Secretary of the Board is delegated with the ambitious project of constructing some 60 homes at Welgelegen, construction of a much needed vehicle parking structure with offices on ground floor.
Spearheading essential pension reforms is likewise delegated to the board secretary.
PHILIPSBURG, St. Maarten - Democratic Party leader and Chairlady of Parliament the Honorable Sarah Wescot-Williams Monday held a press conference during which she addressed a number of matters.
Among them the medium and long term financial outlook for St. Maarten which was addressed last week in Parliament by the Minister of Finance the Honorable Richard Gibson.
The Chair-lady of Parliament the Honorable Sarah Wescot-Williams has many questions about previous proposals that are currently in the hands of government aimed at addressing the island tax system in particular.
Among them a proposal for the implementation of the Value Added Tax system (VAT).
More now via PodCast.
PHILIPSBURG, St. Maarten - The Dutch Caribbean is an area that depends solely on foreign investments to survive economically and subsequently the Government covers the National Budget through tax collections. The collection takes place by any means necessary, which is considered unconstitutional by some experts in human rights in the Netherlands.
The phenomenon of an unbalance National budget is attributed by overexposure of the administrative structure costs combined with taxation collection shortages.
The Dutch Taxation culture is characterized by its impact on the lower social class citizens and it impedes the middle class citizen to improve his position in the social ladder. Decades of the same taxation method has proven to be unsuccessful, inefficient and circuitous in its application. Fact is that the more financial pressure any Government applies on the community, it reflects immediately in the increase of criminality, which demands more financial means to the Justice Department and housing for the perpetrators.
People in the lower part of the social ladder lands in prison, and the individuals in the Elite social class engage in Tax Fraud or Tax evasion while consultants weave Tax structures for tax deviations.
Comparing wages in the Netherlands to the Dutch Caribbean is an unbalanced equation, but still the Dutch Caribbean Government is fixated on applying the same taxation method derived from the Dutch Taxation Culture method. Measuring the current taxation methods effectiveness within the Dutch Caribbean islands, any tax paying individual will observe that the entire taxation system is inefficient and obsolete. The applicable taxation method kills investments, creates unemployment, impedes development of the middle size entrepreneurs, threats business continuity directly and triggers tax evasion practices.
The Governments of the Dutch Caribbean islands have been weathering the Dutch Taxation Culture without success for decades, which consists mainly of MORE taxation without measuring the impact in the community. The Aruban Government with assistance of renown consultants, in an attempt to boost the economic growth of the San Nicolaas district, introduced 2 years ago a Tax incentive plan, which unfortunately was ineffective and the results inconclusive. This indicates that addressing the national deficit using the Dutch Taxation models is obsolete and must beconsciously adapted to improve the economic situation of the island in crisis.
Soon the involved party will present the concept in a press conference to explain the developed Tax Plan that will ensure an antidote for the existing financial crisis in SXM.
PHILIPSBURG, St. Maarten – On Friday 22 April, PwC Dutch Caribbean organised a seminar titled “The tax world is changing, and so is St. Maarten”. The event was well attended by a large group of participants working in the private as well as in the public sector.
The Prime Minister of St. Maarten, Mr. William Marlin opened the seminar, followed by PwC’s tax experts from the Netherlands, Aruba, Curaçao and St. Maarten. The speakers discussed the latest developments - globally as well as regionally- in the tax world and how these developments affect the way of doing business in St. Maarten.
The Prime Minister indicated in his opening speech how significant tax laws and regulations are. He mentioned the importance of remaining up to date on of the developments in the tax world for the private- as well as the public sector in St. Maarten and applauded PwC for this initiative.
“The last few years changes in local and international tax law are applied consecutively and at a faster pace. For example the new bilateral tax agreement between the Netherlands and St. Maarten, the US-FATCA legislation and the Base Erosion and Profit Shifting (BEPS) report issued by the Organisation for Economic Cooperation and Development (OECD). In addition, the demand for tax transparency is becoming increasingly important and the public opinion about tax avoidance nowadays has a major impact on an organisation’s reputation. In line with our globalizing economy, these changes also have an impact on our way of doing business in St. Maarten. These developments strengthened the idea to organise an event where we could share information and deliberate on these topics”, says Paul van Vliet, Director in charge of PwC St. Maarten.
One of the key speakers at the seminar was Prof. dr. Roland Brandsma, Partner at PwC Netherlands. Brandsma is heading the Task Force Special Affairs at PwC Tax in the Netherlands and is a member of the Opinion Committee of PwC Tax. Furthermore he is Professor Tax Law, Tax Economics and Taxation of Cross-Border Operating Companies at several Universities in the Netherlands. At the event Brandsma discussed the new Bilateral Agreement between St. Maarten and the Netherlands, which came into force on 1 March 2016. In his presentation he shared some examples on how this new agreement will work in practice. Additionally he discussed financing through so-called intercompany loans which are not concluded under arm’s length conditions. Brandsma concluded that businesses should be aware that loans between affiliated companies in the Dutch Caribbean will draw attention of the tax authorities. As is the case in the Netherlands.
Steve Vanenburg, Partner at PwC Dutch Caribbean and responsible for PwC’s tax practice within the Dutch Caribbean, reflected on Action 6, the abuse of tax treaties, mentioned in the Base Erosion and Profit Shifting Report (BEPS) of the OECD, and the potential impact of the requirements for companies. Vanenburg indicated that implementation of the BEPS package will result in better alignment between the place where taxable profit is reported with the place where economic activities occur and where value is created.
Subsequently, Ms. Nicole Duyvelshoff, Manager at the Aruba office of PwC provided a brief introduction on the new court procedure that will come into effect in St. Maarten by the end of this month. She shared some experiences that Aruba has with this procedure since it entered into force in January 2015. According to Duyvelshoff, taxpayers should actively monitor and manage their objections submitted. If not, they might risk losing their rights to appeal or further appeal in the Court of First Instance at a later time.
The seminar was concluded by Paul van Vliet, Director Tax at PwC and in charge of the St. Maarten office. With his presentation “Doing tax smart business in St. Maarten”, Van Vliet compared the differences within tax laws and regulations in the Dutch Caribbean. He determined that other jurisdictions in the Kingdom are becoming more attractive for setting up businesses, while St. Maarten is becoming less competitive due to the level of its Corporate Income Tax rate. With regard to Personal Income Tax, the tax expense in St. Maarten is the highest of the former Netherlands Antilles islands.
On the other hand the total employer’s expenses for Social Security is relatively low, but according to Van Vliet, premiums may have to be increased to cover deficits. As a final conclusion Van Vliet indicated that by smart (re)structuring or redesign of businesses the overall group tax expense can be reduced.
THE VALLEY, Anguilla – The state-owned National Commercial Bank of Anguilla Ltd (NCBA) began operations here on Monday, less than a week after the St. Kitts based Eastern Caribbean Central Bank (ECCB) announced the closure of the National Bank of Anguilla Limited (NBA) and the Caribbean Commercial Bank (Anguilla) Ltd (CCB).
ECCB Central bank Governor Timothy N. J. Antoine late last week announced that the two banks would cease performing banking business here effective immediately.
Chief Minister Victor Banks said that the new institution is now operating under the new banking act “which makes provisions for certain guidelines to ensure we have more frequent onsite examinations, foreclosure legislation…(and) all those issues we were concerned about in the past…”.
The ECCB had intervened in the operations of the bank in August 2013 and according to an ECCB statement “after comprehensive analyses of the operations and financial positions of the banks, the decision was taken to transfer the operations of the NBA and the CCB to a newly established bank, the National Commercial Bank of Anguilla Ltd (NCBA)
The ECCB serves as a central bank for Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, Montserrat, St. Kitts-Nevis and Anguilla.
PHILIPSBURG, St. Maarten - The recently approved 2016 budget by the Parliament of St. Maarten has also met the approval of the CFT.
This was communicated in a letter to the Minister of Finance, the Honorable Richard Gibson on Tuesday.
In his letter, the Chairman of the CFT, Age Bakker complimented the Minister of Finance for his effort in realizing a balance budget, and at the same time, complying with the instructions issued by the Kingdom government.
This was disclosed to journalists on Wednesday by Minister Gibson, who also noted that St. Maarten now has access to 77.6 million guilders for investment in capital expenditures of which 35 million guilders are in the bank.
However, the CFT has also cautioned St. Maarten to limit its borrowing as much as possible.
Whilst addressing that issue, the Finance Minister also indicated that from the budget point of view, things look pretty good for 2016, 2017 and 2018.
More now via PodCast.
BES Islands - The average price level in the Caribbean Netherlands has risen in Q1 2016 compared to a year ago. The price increase comes after a period of negative inflation.
On the basis of the consumer price index (CPI), Statistics Netherlands (CBS) reports that consumer prices rose on all three islands of the Caribbean Netherlands in Q1 2016.
The inflation rate on Bonaire has risen to 0.5 percent over the first three months of 2016. For the first time since Q4 2014 consumer prices are above the level of one year previously.
This is largely due to petrol price developments. The price of petrol continued to fall, but on an annual basis the price drop in the past quarter was much more substantial than in this quarter. Electricity and gas price developments also contributed to the higher inflation rate.
Clothing and footwear also became more expensive, but year-on-year food and soft drink prices have declined by 2 percent during three consecutive quarters.
The rate of inflation on St Eustatius rose 0.4 percent in Q1. On St Eustatius too, year-on-year consumer prices have risen for the first time since Q4 2014. Electricity price developments contributed most to inflation.
The price of electricity remained stable but fell by nearly 12 percent one year ago. Initially, this price drop pushed inflation down but the effect has worn off by now. Petrol price developments also contributed to inflation.
Petrol became cheaper on St Eustatius, just as on Bonaire, but on an annual basis the price drop in the past quarter was much larger than in this quarter. Food and soft drink prices curbed inflation: prices of eggs and potatoes dropped by more than 21 and more than 11 percent respectively.
The rate of inflation on Saba was 0.4 percent in Q1 2016, versus - 0.6 percent in Q4 2015. Food and soft drink prices rose relative to the preceding quarter. The price of flour increased by nearly 20 percent, fruit juice by nearly 12 percent and fresh fruit by 7 percent.
The price of petrol is also higher than last quarter, but still more than 15 percent below the level of twelve months previously.
The status of data referring to Q1 2016 is provisional and will become final simultaneously with the publication of data over Q2 2016.
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