Published On: Thu, Nov 28th, 2013

Cft: ‘Kingdom countries do not know sufficient about each other’

“We need to work on forming an accurate image, based on facts”

Age BakkerTHE HAGUE - Transparency and openness are essential if one wants to do business with each other, declared the chairman of the Board on financial supervision College financieel toezicht - Cft) Prof. A.F.P. Bakker during the conference 'Duurzaam zaken doen tussen het Caribisch Koninkrijk en Nederland’ (‘Doing business in a sustainable way between the Caribbean Kingdom and the Netherlands’). This conference was held in The Hague in the context of 200 years of Kingdom. "Working together and doing business in the Kingdom presumes that we immerse ourselves in each other, on the basis of equality." Distrust and misperceptions on both sides now hinder a healthy partnership. Forming of the right perception based on facts is something that can be achieved with adequate statistics and the publishing of policy proposals and advises of advisory institutions at a faster pace.

The fact of the matter is according to Age Bakker that much progress has been made with regard to public finance in the Caribbean part of the Kingdom. Based on international standards, Curaçao and Sint Maarten have healthy debt positions of 30 to 35% of the Gross National Product (GNP). Furthermore Curacao has a balanced regular budget - the current income covers the current expenditures - and Sint Maarten is close by. Curaçao and Sint Maarten are however allowed to have a deficit, in order to cover public investments. Cft expects that, if measured similarly, the total deficits of Curaçao, Sint Maarten and the Netherlands, will be moving towards each other in the coming years, approximating 3% of the GDP, whereby the debt of Curaçao and Sint Maarten will remain substantially lower than that of the Netherlands.

Sound

Curaçao has implemented a comprehensive package of measures with the objective to keep its public finance structurally sound. Comparatively, the cutbacks were a multiple of the reduction of 6 billion Euros the Netherlands is now executing. This step is an important prerequisite to obtain higher economic growth, whereby the investment program of the government may also be of great help.

Sint Maarten has performed well economically in recent years. It is the only country in the Kingdom that, with a growth of 20% over the past ten years, is now in a substantially better position than at the beginning of the century. But it is a young country, facing governmental challenges, while the strong growth has not translated into more budgetary space. Increasing tax revenues, which have not kept pace with the growth, is urgently needed to bring to a halt the black economy and the rising income inequality.

Positive

In the Dutch Caribbean the public entities also show balanced budgets, while 2012 will end with a positive result. But we are not there yet; there should be more investments in the economy and therefore administrative power is needed.

The Kingdom is a strong concept that covers three continents, and where the conjuncture is rarely into step. The Netherlands is in the heart of Europe, while the other three countries and public entities lie at the crossroads of North and South America. The Kingdom is a good place to do business and it offers a unique opportunity to work together to take advantage of economic opportunities.

All countries in the Kingdom, including the Netherlands, are under budgetary supervision, with the exception of Aruba. Independent supervision by an outsider is essential for confidence. "Obviously it is difficult to maintain sound public finances on your own sound," said Age Bakker. Financial supervision adds value to the Kingdom and provides a sound financial basis for accelerated growth. It is indeed important for investors to know that the Kingdom is used to a practice of budgetary discipline, with effective financial supervision.

More transparency is a must, and based on its responsibility, the Cft is trying to contribute to a better information provision and strictly steers towards orderly budgetary procedures. This allows the Parliaments – the Staten and the Island Councils – to play a stronger role in calling the government to account for its administration. With the clearing of red tape and bureaucracy much can still be gained, so that doing business would become easier. But above all the Kingdom deserves it that its people work actively on forming more accurate perceptions, that are based on facts.

Photo Caption

Prof. A.F.P. Baker emphasizes that their position offers a unique opportunity to the countries in the Kingdom to work together to take advantage of economic opportunities on three continents.

Photographer: Christopher Lewis

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