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Core Tasks and Fiscal Situation under the new constitutional status

Core Tasks and Fiscal Situation under the new constitutional status. Special case : New Country St.Maarten By: drs A.G . Romero April 4, 2008. Role of the public sector. Question:

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Core Tasks and Fiscal Situation under the new constitutional status

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  1. Core Tasks and Fiscal Situation under the new constitutional status Special case : New Country St.Maarten By: drs A.G . Romero April 4, 2008.

  2. Role of the public sector • Question: • How far should the government go with the provision of public goods and services without saddling the community with excessive high tax burden and/or other “forced” and elevated public contributions from the consumers, the producers and the business community? • Answer: • If the community prefers that the government impose the lowest possible taxes, then this can only be achieved if the community is willing to accept that the government van provide only the bare minimun of public goods and servoces.

  3. IMF study “Big Governments, High Debt and Fiscal Adjustments on Small States” • Done in 42 countries • Period 1990-2004 • Main topics 1. Small States tend to have bigger governments and higher public expenditures and taxes. 2. Small States are vulnerable to external shocks. 3. Growing public debt has had negative effetcs on the economic growth in these smaller economies.

  4. General Affairs, Domestic and Kingdom Affairs Economic (Tourism) and Labor Affairs Health Care, Education, Sports and Social aAffairs Finance and Fiscal Affairs Justice, Police, Legislative and National Security Traffic and Communication A possible organizational chart for the country of St .Maarten.

  5. Table 1. Benchmarks from IMF IMF study for country of St. Maarten ( GDP in 2007 is ± 1200 million guilders)

  6. Capital market interest rate x (maximum) public debt = • “rentelast norm”. • (2) 6% x (maximum) public debt = 13 million. • (3) Maximum public debt = 13 million / 6% • (4) Maximum public debt = 217 million.

  7. The End Questions?

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