Published On: Tue, Jan 8th, 2013

VBC: Too much emphasis on additional burdens

WILLEMSTAD — The Association Business Community Curaçao (VBC) thinks the draft budget, which the Parliament is discussing,  puts too much emphasis on measures leading to additional burdens. The VBC wrote this in a letter to the Parliament. The letter also mentioned other concerns about the budget. “The numerical data emphasizes on revenue-increasing measures for the government but additional burdens for the citizens and the entrepreneurs, while it focuses less on a structural reduction of the government expenditure. To illustrate VBC mentions the personnel costs, which, despite ‘the measure for control personnel costs’ (natural retrenchment), show a rising trend. Also the National Dialogue revealed a balanced approach was lacking and that one must focus more on reducing the government’s expenditure considering the latter is too high structurally compared to the revenues.” The VBC has the impression that ‘the reconstruction process in the public sector is insufficient and that the bearing of pain is not divided up proportionally. Employees in the public sector are given a preferential treatment.


In the letter dated January 4th the VBC also wonders if it’s wise to contract loans: “According to the draft budget one of the main viewpoints of the policy is focused on (temporary) increasing the national debt by contracting loans with the aim to stimulate economic growth. Is this observation correct, and if so, is contracting loans the best alternative? Incurring debts was also used in the recent past and hadn't led to financial and budgetary discipline and prudent financial management but a serious downswing in government finances and the macro-economic stability.”

Social system

The VBC further mentions the using up of the reserves on a large scale with the social insurance system. “A broad fluctuation fund will be set up for this purpose. Will this not have a negative effect on solvent funds? How and when will this practice of capital deterioration be compensated?” VBC reports that compared to the region the public health costs on Curaçao are two to three times higher. “The media recently reported that the costs of public health on Curaçao amounts to over 13 percent the GNP. Does this mean that the number of sick people exceeds that of the region or is there an excessive consumption of public health?” The VBC wonders if the retrenchment of medical insurances was well-considered.

The VBC thinks it’s justified that the budget concludes a continual economic growth is necessary to solve the financial-economic problems. “The indicated incentives for economic growth, however, are meager. Flanking policy in the form of improving the investment climate is hardly noticeable. The suggested implementation in the budget of a differential OB-system doesn't contribute towards improving the competitive position. On the contrary, increasing the rate in combination with accumulation leads to an even worse violation of neutrality in competitiveness. Moreover, this seriously affects the tourist sector, one of the few sectors showing economic growth. Is this the intention?”

In conclusion the association wonders if there is support for the numerous measures mentioned in the budget and if the figures – especially those in the Note on Finances – aren't based on too many estimations and assumptions.

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