THE HAGUE–The July 12 decree recently published in the National Gazette instructs the Curaçao government to do three things: compensate the 2019 budget deficit, compensate the deficits of 2017 and 2018, and pay off the debt to the Curaçao Pension Fund APC and the Social Insurance Bank SVB.
The Kingdom Council of Ministers on July 12 took the decision to give the Curaçao government an instruction, based on the Kingdom Law Financial Supervision and an advice of the Committee for Financial Supervision Curaçao and St. Maarten CFT.
The decree, published in the Gazette and signed by the King, listed a number of considerations. It was stated that healthy government finances were of great importance to Curaçao’s economic development and stability, and that the financial management has not been in order.
According to the decree, the revenues and expenditures of the Curaçao government were not balanced, and the fiscal year 2019 was expected to be closed off with a deficit of NAf. 98 million. The draft 2017 annual account showed a deficit of 116.8 million, and based on preliminary figures 2018 is estimated to run a deficit of NAf. 52.7 million. The CFT expects the 2018 deficit to be even higher than NAf. 52.7 million.
Cumulatively, the deficits of 2017, 2018 and 2019 amounted to NAf. 267.5 million. Therefore, the Kingdom government orders Willemstad to compensate the deficit of NAf. 112 million on the 2019 regular account to create a balanced budget for this year, and to compensate the deficits on the 2017 and 2018 regular accounts, amounting to NAf. 169.5 million, with the expected surpluses of 2020, 2021 and 2022.
Also, the Curaçao government needs to pay off its short-term debts to the APC pension fund and the SVB per December 31, 2022. The long-term and increasing character of the payment arrears to APC and SVB are in violation of the Kingdom Law Financial Supervision. By not paying the remittances to APC and SVB, the Curaçao government is financing its operating deficit through increasing debts to the APC and SVB.
The Kingdom government stated that it appreciated the steps the Curaçao government of Prime Minister Eugene Rhuggenaath have taken so far. However, these steps will not prevent that 2019 will again end with a large deficit, and that for the third year in a row the legal norm of having a balanced budget was not met.
In the Explanatory Note that accompanied the publication of the decree, the Kingdom government mentioned a number of advices the CFT had given to improve Curaçao government’s finances. The Kingdom government asked Willemstad to consider executing these measures.
It concerned the advice to immediately effectuate the reform measures proposed by the Curaçao government, to strictly adhere to the stop on committing to new obligations, and to stick to the preliminary supervision as instituted by the Curaçao government per January 2019. Also, the tax revenues have to be increased by implementing tax reform before January 2020.
Measures have to be taken to strengthen the government apparatus and associated entities, and to increase productivity and efficiency. This means that the cost of personnel in the collective sector has to be decreased in the coming years, and that the salaries of civil servants have to be lowered.
Measures have to be implemented to lower the cost of medical specialist care, medical referrals and medication, to cover the operational cost of the new Curaçao Medical Centre. Measures will also have to be taken to keep the health and social insurance cost manageable. The old age pension age will have to be increased to 66 years.
Bron: Daily Herald