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During a St. Barths territorial meeting recently held to establish budgetary guidelines for 2012, St. Barths president, Bruno Magras, told council members that the island government is going to be tightening its collective belt. Not that it has to. Not yet, at least. With a currently balanced and debt-free budget- a rarity among French local collectivities-St. Barths will adopt the austerity measures being applied in countries around the world as preventive medicine and keep 2012 spending close to the bone.

The precautionary measures come primarily in response to two factors for which the island’s budget must be accommodated. The first is reduced income notably from lowered capital gain taxes. The second is the compensation fee. French law requires the local government to compensate for income France would have received from St. Barths the island’s status not been changed. This fee, or tax, is due annually but has not been paid since 2009. In 2012, St. Barth will be required to pay the cumulative sum of 28 million euros to its French motherland.

President Magras sees St. Barths contribution to the national budget as only natural; nevertheless, he’ll be negotiating with the federal government to see if amounts can be lowered and if payment plans can be established to keep the island financially self-sufficient.

Only two projects, already underway, have been provisioned in the 2012 budget: a medical live-in facility for the elderly and a sewage plant in Gustavia. The future of new projects will depend on available credit lines. It is a reality that is welcomed with neither enthusiasm nor alarm. The budgetary ceilings are coming after a period of heavy government investments to improve St. Barth’s roads in Grand-Fond, Petite Saline, St-Jean, Flamands and a much-needed new parking lot in St. Jean, which will be open for the approaching Holiday season. Other completed or nearly completed projects include roadway improvement of Gustavia’s main street and the extension of Gustavia’s quay in front of the Collectivity House.

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