Talks about the Corona Loans are underway

As you know the Corona loans, awarded to Aruba during the pandemic, will mature in October, 2023. Aruba is not alone in feeling the heavy burden of debt, Curacao and St Martin are also under pressure and talks about the conditions under which the money will be repaid are underway, with the Dutch State Secretary, and other officials.

You can imagine that the countries are aiming at some forgiveness, so that the Netherlands would feed some of those signed IOU notes into the shredder, while others could be repaid at a slow pace, at a VERY low interest.

A news item in the media recently described the pace in which Curacao is repaying its debt to the kingdom. They borrowed an extra 800 million during the pandemic — Aruba helped itself to 900 million florins, and at the rate Curacao is currently repaying its pre-pandemic debt, it will have a clear ledger in 290 years, paying poco-poco, refunding 8.2 million a year.

From what I read, Curacao wishes to completely refinance its national debt of more than 4 billion Antillean florin. Is Aruba also attempting to refinance its Awg 6-7 billion national debt? Are they also trying to stretch payments over more years, at low interest?

When Curacao won its Status Aparte in 2010, much of its national debt was wiped clean by the Dutch and Aruba is still resentful about that preferential treatment of Curacao, and believes that it deserves the same.

But Aruba has been dragging its heels about anchoring any arrangements by law.

The agreement with the Dutch about reforms and sane financial management was supposed to be written into a kingdom law. Recently the islands banded together against the idea, and won the downgrade of the agreement from a kingdom law, to a local law, that should be ratified by parliament.

To date, Aruba has not moved to endorse the step-by-step reforms suggested by the Netherlands in the landspakket. They are reportedly doing some work, in that direction, but to date, there is no agreement on Aruba’s financial supervision, and without it, talks to the Board of Supervisors might be impossible.

Our financial supervisors, is now under new leadership: Raymond Gradus, the chair between 2017-2023, retired, and Lidewijde Ongering became the new CAft chair. These good people keep making smart suggestions which our officials never rush to implement.

From what I read it will be impossible to come to an agreement on the terms of the Corona loans without the proper legal paperwork.

Fortunately, or unfortunately, Aruba has been able to drag it feet because its economy bounced back so well, and it is showing a strong recovery. Yet the financial supervisors are of the opinion that additional structural cutbacks are necessary, and GOA must apply the brakes to its own spending.

In a recent visit the financial supervisors pleaded again to make cuts in health care, and social security, they advocated a general reform, especially in the semi-governmental companies.

According to the current positive economic outlook Aruba will be able to reach a 1% budget surplus, which is a Dutch condition to the continued talk, and an important step in achieving sustainable public finances.

I assume, our financial supervisors do not enjoy repeating themselves, but they do, all the time, they talk about improved tax compliance and the need to bring Aruba’s public debt of almost Awg 6- 7 billion to sustainable levels for the benefit of future generations.

Some of their ideas include taxing tips. Many working in hospitality make substantial amounts of money from untaxed tips, a reality GOA is afraid to touch. CAft also suggests simplifying the tax system and introducing BBO at the border this summer. They think our investment budget of Awg 20 million is very low, and we need more of it in infrastructure, climate mitigation and projects that contribute to sustainable economic growth.

According to their calculation, each and every citizen here owes Awg 55,000, an inconceivable debt burden, and we cannot saddle future generations with it.

Thank you dossierkoninkrijksrelaties for your diligent reporting!

 

 

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February 22, 2023
Rona Coster