Published On: Tue, Apr 3rd, 2018

Has the Board of Financial Supervision been asleep or is it a toothless tiger?

Cft Bonaire Sint Eustatius SabaTHE HAGUE - The public finances of Curaçao, Aruba, St. Maarten and St. Eustatius are worse than in 2010 despite financial supervision. Bonaire has a balanced budget, but there are doubts about the quality of financial management. Only Saba, as the smallest of the six, has its housekeeping book in order. Has the Board of Financial Supervision (Cft) been asleep or is it a toothless tiger? Rene Zwart, correspondent for ABC Online media asked this question to Cft chairman Raymond Gradus.

The Financial Supervision Council has been set up to prevent the Caribbean parts of the Kingdom from re-entering into (too large) debts after the debt restructuring of 3.7 billion guilders (1.7 billion euros) paid by the Netherlands.

Your mission is not yet undivided success.

“There is something on all islands. They have their own problems and complexities. And then there are international influences such as the situation in Venezuela. Or take the hurricane Irma. These are all circumstances that could not be foreseen. They are turbulent times.”

Let's look at the islands. Curaçao seemed to be on the right track, but suddenly there was a gap of more than 100 million in 2017.

“Curaçao has had a balanced budget for the years 2013 to 2016. I say that this was mainly due to a great deal of dividend income from the governmental investment tax. Due to economic setbacks, partly due to the situation in Venezuela, the governmental investment institutions pay less dividend. That has a direct effect on government revenue.”

The Cft was there and looked at it.

“As a committee we have pointed out the risk, but it is always good to learn. In the conversation we had with the members of parliament this week, we discussed how we could look more closely at the government entities. I regard that as an encouragement we would like to receive.”

Is there already agreement on the 2018 budget?

“There was a budget deficit of 100 million guilders for this year. We recently received a government budget change announcing measures and answering our questions about the dividend policy. We are reviewing that and will come to a judgment in the coming weeks.”

‘For Curaçao it's exciting times’

Do you think that Curaçao will quickly get the finances under control again?

“For Curaçao, it's exciting times. With the change in the budget, the 2017 financial account has not yet been settled. The National Financial Supervision Act prescribes that deficits in the following year are compensated. Other risks occur in 2018: the new hospital, the refinery and InselAir. We have the agreement with Curaçao that there will be a risk analysis before 1 May. If you know what the risks are, you can manage them. This prevents you from being surprised by setbacks in the course of the year as in 2017. I hope that Curaçao takes our agreement about this seriously.”

The Rhuggenaath Cabinet expects a lot from boosting the economy

“I understand that need, but if one lesson from Aruba can be learned, it is that stimulating the economy with loans and government investments is not an acceptable route. There are other options. The regulatory burden is enormous and the labor market is very rigid. Standard & Poors states that many private parties want to invest in Curaçao, but then that blanket of silted up rules has to be removed.”

Can the instability of Venezuela still have an impact?

“There is a great risk, but we do not know how it develops there. It is therefore wise that Curaçao, like Aruba, assumes a cautious economic growth. Venezuela is one of the risks that you need to include in the risk analysis.”

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