According to Caft, they see a positive overview, yet preoccupation remains.

The media recently published comments by the president of the Aruba Financial Supervision Board, CAft, or College (Aruba) financieel toezicht.

Just as a reminder: Aruba and the Netherlands struck an agreement in 2018, then again in 2019 including 2021, that set the budget DEFICIT for GOA for the financial year 2019 at a maximum of 0.5% of the gross domestic product – GDP. Then for 2020, GOA was supposed to show a surplus of at least 0.5% of GDP, followed by a surplus of at least 1.0% of GDP from 2021 and on. That 1.0% of GDP surplus was achieved for 2024.

CAft sends quarterly letters to the people who direct our economy, they usually say the exact same thing over and over. The tone is patient and didactic. Sometimes, the tone is dark and emphatic. But this time, February 2024, the letter was a bit lighter and brighter.

The CAft President commented that Aruba’s economy shows satisfactory growth, and that GOA’s financial situation reflects positively, and now is the perfect moment to realize structural improvements in the country’s finances, with the aim of ensuring resilience.

This was, I must say, the most cheerful CAft ever sounded, no wonder, it’s the high season and tax revenue is abundant.

The president then went on to reiterate that Aruba needs structural reforms in three areas, Social Security, Labor Policy, and Budgeting.

While indeed the 2024 budget followed accounting norms, and now shows a 1% surplus, the island’s expenses on interest are very high, too high, as they represent 20% of our income. One fifth of the budget goes to paying debts, which leaves no money for investment, thus endangering our future. According to CAft, working on debt reduction is of outmost importance to free up more money for investment as started in the famous Land Package, the useful handbook of tips and advice compiled by the Dutch during and after the pandemic.

Now is the ideal moment, Caft suggests, to introduce the necessary reforms in healthcare, though good moves were already made to curb expenses. Now is the ideal moment to make more improvements in Social Security and the Labor Policy to help the market become more flexible and dynamic without any expense hikes.

In the financial realm, the island took steps to improve the tax system, but the indirect tax structure still is fragmented and complicated, Aruba should transition to a simpler system, valued added tax for example, which will result in more compliance.

Bye, until next time. I bet they will be asking for reforms in Social Security, Labor Policy, Budgeting, Healthcare & Taxation, again, in their next round of comments.

 

 

 

 

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March 05, 2024
Rona Coster