Willemstad – The Board of financial supervision (Cft), on Monday April 1st, advised the Kingdom Council of Ministers to give an instruction to Curaçao to balance the expenses and income in its multi-year budget.
The income and expenses of the country of Curaçao are not balanced and the financial management is not in order. The 2017 financial year closed with a deficit of ANG 116.8 million and the provisional deficit in 2018 amounts to ANG 52.7 million. Since 2016 Cft has been expressing its concern about the financial situation in Curaçao. In this regard Cft refers to over-optimistic revenue estimates, deficiencies in financial management and a lack of budget discipline, as reason why expenditures in Curacao, do not remain within the budget.
The 2019 budget threatens also to have a (substantial) deficit of around ANG 100 million. Despite some meaningful measures the country of Curaçao wants to introduce as per July 1st, the legal standard of a balanced common service will not be met for the third consecutive year. More is needed than the currently announced measures, to balance the income and expenditures of the country. A change of course is really needed.
The Cft realizes that the task at hand is considerable for Curaçao, however, structural reform is inevitable. Structural reform is needed to ensure the continuity of the collective social securities, to create space to compensate for referred deficits as of next year and to make additional investments in among other things education and training. Allowing for the deficits to continue to increase would result in further growing public debt, which will be passed on to the next generations.
The strengthening of Curaçao’s economy requires primarily private investment. A necessary basic condition to that effect, is sustainable and sound management of public finances. After all, private investors are interested in limiting their risks and they want to be able to rely on the stability and quality of the civil service and administrative apparatus. In this area as well, progress will have to be made in the coming years.
In view of the above observations, the Cft has decided to advise the Kingdom Council of Ministers to issue an instruction to the government of Curaçao. It is up to the Kingdom Council of Ministers to decide whether the instruction will be given and, if so, what exactly will be the content. Before the instruction is given, the Curaçao government is offered the opportunity to present its vision.
With the entering into force of the new constitutional relationships on 10 October 2010, and with a debt restructuring by the Netherlands, Curaçao, Sint Maarten and the Netherlands agreed to regulate financial supervision through a Kingdom Act. Financial supervision is exercised by the Kingdom Council of Ministers, whilst the Board of financial supervision has a signaling and advisory role. The purpose of the Financial Supervision Act (Rft) is to bring and to keep the financial housekeeping in order, to prevent new financial problems and to achieve sustainable public finances.