Finally signed, sigh of relief

The documents signed in the Netherlands on Friday, made the rounds in Aruba. Some members of the media reported they were ready to be signed months ago, only we dragged our heels. MLT released a video offering a historical perspective from a few years ago when financial supervision was first imposed and protested loudly, VS now, when it was welcomed with a sign of relief.

As you know, in order to get the third tranche for financial support 2020, Aruba had to agree to a package of measures/maatregelen that is aimed at structural changes.

To facilitate and introduce these changes Aruba agreed to a Rijkswet, you will hear it referred to as COHO, Caribisch Orgaan voor Hervorming en Ontwikkeling, a supervision organ created by written law.

You should remember this: Rijkswet/Statute, Caribbean Organ for Reform and Development, we will hear a lot about COHO in the coming years and we wish them good luck with all our heart.

Part of this consensus Rijkswet is that there will be different landspaketten, measures in the short term and structural reform for the longer term, attempting to make Aruba financially, economically, and administratively more resilient.

With this agreement, Aruba receives Awg 209M immediately – not enough according to my sources — to cover expenses from July 1st to December 3st.

The Netherlands is willing to funnel this liquidity AND also willing to invest in the development of Aruba, IF we show signs of reform.

The Netherlands is also prepared to refinance the dollar loans 2021 — Awg 177M, and 2022 Awg 346M, at 2%, over a seven-year term, which will save Aruba Awg 82M compared to financing this at market rates.

In Landspakket Aruba, the focus is on the change and reform organ, COHO. In order to get started, they will take inventory, make a study, realize a snapshot of the actual situation in different areas. That overview will help COHO understand our inability to handle public finances.

And COHO has the mandate to help, lending expertise, and recruiting help and resources.

COHO may also initiate projects, offer subsidies to people and companies, and participate in initiatives.

You can all breath again. The wage subsidy is on for now, as long as Aruba adheres to the agreement.

Here is the meat & potatoes of the landspaketten, divided into four categories:

  1. Government and Finance. 2. Economic Changes and Reform. 3. Healthcare and Education. 4. Strengthening the Rule of Law.

Government and Finance: This category is again divided into several sub-categories, such as financial management including budgeting. Here the focus is on getting our financial management and our financial supervision on the same page. Caft, the previous organ of supervision has been doing it for years, but not strongly enough.

Secondly, we also must address costs and the effectiveness of our public sector. Here the high wages of our public servants, and the general cost of the public sector will be addressed.

Thirdly, and this is my favorite, taxes, compliance, and reform, will be tackled, so that more people contribute, instead of a handful few.

The fourth segment of the Government and Finance category deals with our Financial Sector. Here the focus is on the supervisor/toezichthouder – the Central Bank, verifying that they are compliant.

My sources report it is Interesting to note that the document clearly states Aruba’s financial sector is considerably better than that of Curacao and/or St. Maarten — compliment for our CBA; no compliments for Curacao and St. Maarten.

Under this forth segment, we are told that a study will be conducted regarding the Aruban Florin vs the US Dollar. This study, exploring the dollarization of our economy, has to be concluded by an external independent consultant, before 2022.

Under Economic Changes and Reforms, unfavorable conditions will be looked at, such as the labor market hampering growth and the red tape clouding the investment climate. All obstacles to growth will be assessed. Aruba must become a more resilient, dynamic, and flexible economy, most importantly, we have to create a robust and AFFORDABLE social system, where the incentives are in the right places.

In the realm of Healthcare and Education, here the focus is on the hospitals in the different Dutch Caribbean country-islands which must work together on providing quality services. The Dutch will again take inventory, make a study, realize a snapshot of the actual situation in different areas and see where changes or reinforcements are required.

It is important to note that the Dutch have a soft spot for Curacao, and Aruba will have to defend its rights for quality services, such as the ones we already have, radiotherapy, interventional cardiology, eye care, otherwise we will have to run to Curacao for many medical procedures, we could have enjoyed here, taking us back to the 1950s, where health care was mostly available across the pond.

Education: The document has a very small segment about education. Aruba has no consistent school management capabilities. The school system is plagued by antiquated methods, there are no modern teaching aids, and limited budgets for reform. Having stated that, there is no promise of a fat check to fix that. I am disappointed.

The best part, saved for last, is law enforcement. The Netherlands will be of great assistance in enforcing a constitutional state. The myriad of issues Aruba has to deal with such as cross-border criminality, drug trafficking, human trafficking, arms dealing, money laundering, which are part of the regional landscape will be handled by the Netherlands, assuming control of the borders, dealing with financial-economic crimes, and improving our prison system.

A big, fat, warm Thank You to my sources — you did a good job summarizing the Netherlands Aid-Agreement!

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November 16, 2020
Rona Coster