The unnecessary grip on foreign exchange released, a tad

The CBA released its grip a bit, effective today June 1st, certain temporary crisis restrictions are eased.

My friends have been saying all along, the Central Bank of Aruba is a financial burden on the economy costing 60M a year, which could be put towards more useful projects. It is a luxury we don’t need; it is a wasteful organization.

Aruba’s florin artificial peg to the dollar and the redundant over-regulation demanded by CBA, also leads many to believe that CBA is using financial instruments of control befitting Cuba, or Venezuela but NOT a country in the Dutch Kingdom.

At the onset of the pandemic, the CBA understandably cracked down on our foreign reserves, they panicked, there were no dollars coming in from export – our tourism product — and we couldn’t afford to spend on imports, buy toilet paper, for example, at the pre-pandemic level. Then in May or June, the Dutch quickly loosened their purse-strings and money started flowing into our economy.

That was the time to ease restrictions, but NO, CBA was not about to do it, because it didn’t know, it wasn’t sure, it was in a crisis mode.

It’s been more than fifteen months now, and the restrictions were just eased somewhat.

As reported by the Aruba Hotel & Tourism Association, payments to non-residents are allowed if they fall under the following categories: Outstanding management fees to a parent company, sister company, or subsidiary company; Inheritance pay-outs; Purchased commercial real estate; Gifts and donations.

With a caveat:

Residents can make payments to their own foreign accounts, with a maximum of AFL 50,000 per year.

Company pension funds can, with CBA supervision: Make foreign investments, with a maximum of AFL 5 million per calendar year; Use local accounts to make foreign payments to their insured, pensioners, and reinsurers.

The CBA opened the tap, but very marginally, imagine as a foreign resident, you sold an asset on the island, you couldn’t take your money out of the country, now you can, just AFL 50,000 in 2021. At this rate it will take you ten years to transfer the funds, to your own account, overseas, where you want them to go.

Our foreign reserves are high now, artificially, as mentioned before, Aruba had been receiving big sums of money from the Dutch and CBA thinks we cannot allow them to bleed out all at once. They are thinking for us.

Some of my friends add that many years ago when Aruba negotiated with the FATF, the Financial Action Task Force, the global money laundering and terrorist financing watchdog, it didn’t really understand the long term implications of its commitments to the organization which over time proved to be a life sentence without parole. Can that agreement be re-negotiated? Who knows, perhaps it can, perhaps it can’t, but our economy is suffering.

 

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June 01, 2021
Rona Coster