Statistical News Release from the Central Bank of Aruba

Last week a Statistical News Release from the Central Bank of Aruba snuck into my mail box. I almost missed it.

Even if you understand very little of the following text – some parts are a mystery to me — let your eyes run over the STAGGERING amounts, we should all have an idea, albeit a vague one, of what’s happening, and the extent of the plunge taken by our economy. This is the news release in its entirety.

Date: March 16, 2021

Government debt surged in the fourth quarter of 2020

The government’s financial surplus of Afl. 19.0 in the fourth quarter of 2019 – that was an assumption, not a fact — turned into an Afl. 280.2 million deficit in the fourth quarter of 2020

The government recorded Afl. 5,145.6 million in outstanding debt at the end of December 2020, i.e., Afl. 826.7 million MORE than at the end of December 2019.

Source: Department of Finance; Tax Collector’s Office; CBA.

Financial operations

The government’s total revenue fell by Afl. 39.1 million to Afl. 316.0 million in the fourth quarter of 2020, compared to the fourth quarter of 2019.

This decline resulted from a decrease in tax revenue of Afl. 56.6 million, which was counter balanced by a growth in nontax revenue of Afl. 17.7 million. (Fines? What was that income from?)

The fall in tax revenue was mainly due to lower income from wage tax (-Afl. 22.3 million), income tax (-Afl. 21.5 million), turnover tax (-Afl. 16.8 million), and import duties (-Afl. 16.8 million).

In contrast, income from profit tax (+Afl. 38.4 million) and land tax (+Afl. 3.3 million) increased.

Total government expenditure rose by Afl. 260.5 million to Afl. 592.7 million in the fourth quarter of 2020, compared to the same quarter of 2019.

The upturn resulted primarily from higher spending on transfers and subsidies (+Afl. 155.4 million), transfer to General Health Insurance (AZV) (+Afl. 92.5 million), goods and services (+Afl. 22.1 million) and interest (+Afl. 6.8 million), and lower spending on wages (-Afl. 11.6 million) and wage subsidies (-Afl. 5.0 million).

The financial deficit is calculated according to the cash-adjusted compilation method of the CBA and may differ from third-party publications using an accrual method of compilation.

Period        Amount of Cash

Q1 – 2019 Minus Awg 37.5M

Q2 – 2019  Awg 54.1M

Q3 – 2019 Minus Awg 38.8M

Q4 – 2019 Awg 19.0M

Q1 – 2020 Minus Awg 29.1M

Q2 – 2020 Minus Awg 301.1M

Q3 – 2020 Minus Awg 203.0M

Q4 – 2020 Minus Awg 280.2M

Government Financial Deficit Source: Department of Finance; Tax Collector’s Office; CBA.

The government’s wage-related spending fell by Afl. 18.0 million to Afl. 132.3 million in the quarter under review.

This resulted from decreases in wages (-Afl. 11.6 million), wages subsidies (-Afl. 5.0 million), and employer’s contribution (-Afl. 1.4 million).

In the quarter under review, the wage-related outlays to total-tax-revenue ratio noted an increase of 2.9 percentage points to 48.7 percent up from 45.8 percent in the fourth quarter of the previous year.

(Am I reading this correctly? 48.7% of the government income in the 4th quarter, went to salaries and benefits)

Source: Department of Finance; Tax Collector’s Office; CBA.

Outstanding debt

The government’s total outstanding debt increased markedly by Afl. 826.7 million or 19.1% to Afl. 5,145.6 million at end of December 2020, compared to the end of December 2019

This increase resulted from higher foreign debt (+Afl. 741.0 million) and domestic debt (+Afl. 85.7 million).

The growth in domestic debt resulted from increases in both negotiable debt and non-negotiable debt of Afl. 71.4 million and Afl. 14.2 million, respectively.

The expansion in negotiable debt is attributed to a rise in treasury bills (+Afl. 45.0 million), government bonds (+Afl. 21.4 million), and cash loan certificates (+Afl. 5.0 million).

The increase in non-negotiable debt resulted from a growth in non-negotiable long-term debt of Afl. 48.5 million, which was largely offset by a decrease in non-negotiable short-term debt of Afl. 34.2 million.

Non-negotiable long-term debt expanded due to an increase in private loans (+Afl. 52.6 million).

Meanwhile, non-negotiable short-term debt dropped due to lower suppliers’ credit (-Afl. 13.5 million), short-term liabilities to APFA (-Afl. 10.8 million) and other non-negotiable debt (-Afl. 9.9 million).

The growth in foreign debt resulted from higher net claims of other countries (+Afl. 423.5 million) and the Netherlands (+Afl. 411.2 million), mostly related to loans granted because of the COVID-19 situation.

Source: Department of Finance; APFA; CBA

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March 26, 2021
Rona Coster