The prolonging of financial supervision for St. Maarten and Curaçao (see Thursday paper) came as no big surprise. Not that the two Dutch Caribbean countries did anything terribly wrong, but the impacts of respectively Hurricane Irma and shutdown of the Isla refinery combined with the coronavirus-related crisis in both cases made earlier-determined targets impossible to meet.
The Evaluation Committee 2021 recommended an extension because norms set in the consensus law in question had not been complied with during the period 2018-2020. Mainly achieving balanced budgets proved elusive under the dire socioeconomic circumstances.
The Committee for Financial Supervision (CFT) now wants that goal attained in 2023, which seems to be rather ambitious. Although neither Curaçao nor St. Maarten requested liquidity support from the Netherlands for the first two quarters of 2022, they are still projected to end the year with shortfalls and probably will require more loans to cover the gap after June.
Expecting their complete deficits to be eliminated starting next year might not be entirely realistic at this point. Curaçao’s refinery and borders with Venezuela are still closed. St. Maarten’s airport remains in makeshift mode and the destination is just approaching pre-pandemic arrival figures, while room inventory is yet to reach the level of before Irma in September 2017.
The next three-year evaluation of the Financial Supervision Kingdom Act established per 10-10-10 will take place no later than 2024, when perhaps prospects to surpass the current budgetary problems may be better. It would be good if the Kingdom Council of Ministers RMR in The Hague understands this and does not put so much pressure on the governments in Willemstad and Philipsburg regarding fiscal measures that the result could prove counterproductive.
The war in Europe – coupled with shipping and supply issues mainly due to COVID-19 – is causing rampant inflation, so the effects of such, including loss of purchase power, should also be considered when setting objectives and goals. To a certain degree, that makes it a new ballgame.
