THE HAGUE--The governments of Aruba and the Netherlands on Friday signed a political accord with regard to the third liquidity support tranche. Aruba has agreed to the Dutch conditions and will take 105 million euro, or 209 million Aruban florins in interest-free loans from the Netherlands until the end of this year.
“We have an agreement which was approved by the Kingdom Council of Ministers today,” announced Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops during a press conference in The Hague in the presence of Aruba Prime Minister Evelyn Wever-Croes. Knops and Wever-Croes signed the accord during the virtual press conference.
“We are starting a new stage. Together, we will build a stronger Aruba with at the forefront the human beings,” said Wever-Croes. The trajectory to make Aruba more resilient involves structural, far-reaching reforms and while offers were already made, more offers will be asked, for example from the public sector to extend the salary cuts well into next year.
Aruba has been receiving liquidity support since April this year. In May, the Dutch government decided that there would be conditions aimed at increasing resilience, explained Knops. One of the conditions was the execution of a large number of reforms in the public sector. This was in the interest of the Aruban people. “These are things that we should all want, to make it better,” he said.
Initially, the negotiations went well and started right after the country package was presented in the Kingdom Council of Ministers meeting on July 10. Negotiations could start because Aruba, unlike Curaçao and St. Maarten, already complied with the conditions of the second tranche liquidity support. “Still, it took almost five months to reach a final accord.”
The biggest stumbling blocks in the negotiations were related to Aruba’s autonomous position as a country. Aruba did not want to be added to the Kingdom Law on Financial Supervision which has been in place for Curaçao and St. Maarten since 2010.
Aruba argued that it already had its own national ordinance which regulated financial supervision by the Aruba Committee for Financial Supervision CAFT. The new Kingdom Law proposal which has been drafted to regulate financial supervision specifically for the island is a reflection of Aruba’s national ordinance, “which we already work with,” said Wever-Croes.
Aruba also had a problem with the original Kingdom Law proposal to establish the Caribbean Entity for Reform and Development (“Caribische Ontwikkelings- en Hervormingsorgaan” COHO).
The original proposal would infringe on Aruba’s autonomy. That part has been changed in the negotiations. The COHO will not replace the authority of the country Aruba and as such the autonomy will be safeguarded. “That is very important for us,” said Wever-Croes.
The COHO will, together with the ministries in Aruba, in consultation with the stakeholders and with the approval of the Aruban Parliament, will further work out and assist with the implementation of the reforms.
The COHO will not take over authorities of the Aruban Parliament, the Aruban government and responsible government bodies. This has been specifically secured in the agreement between Aruba and the Netherlands which was signed on Friday. The COHO will be able to supervise the execution of the reforms and take measures in case of insufficient cooperation.
With the signing of the accord, the Dutch government will make 105 million euro or 209 million Aruban florin liquidity support available to Aruba in the form of an interest-free loan. The Netherlands will also assist with the refinancing of more than half a billion of Aruba florins in loans in 2021 and 2022. This will save Aruba some Afl. 80 million or 40 million euro in interest payments.
In addition, 17.9 million euro will become available to strengthen Aruba’s constitutional state.
“Aruba is very grateful for the support. It has been a few intensive months of negotiations, but we are satisfied and look forward to a further cooperation,” said Wever-Croes prior to the signing. She said the cooperation would take place in multiple areas in Aruba, including education, public health, defence, law enforcement and economic development.
The country package with reform measures will be carried out alongside Aruba’s Master Plan titled ‘Repositioning Our Sails,’ which was drafted locally. “Creating opportunities for our citizens will be our main objective,” said Wever-Croes, who called on everyone to unite for this purpose. “This is the time to do things together. We have to work together for Aruba to move forward.”
Knops said that the accord was a “step in the right direction,” but emphasised that “the real work started now.” In a number of areas, such as the pension reform for ministers and members of parliament, Aruba will have to take steps in the short term in order to receive future liquidity support.
And, the reform exercise that is included in the country package will really have to be implemented. “Only then will there be true perspective for the Aruba people. This will require much effort and continuous commitment of the government, the parliament, of everyone. There are unique opportunities to get to work. And we need to be honest: not everything will be solved tomorrow. The road ahead is long and everyone has a role to play. Everyone needs to take their responsibility,” said Knops.
Wever-Croes said that she was positive about the execution of the accord and the associated reforms. “This needs to be done. We have no other choice. These reforms already needed to happen. The COVID-19 crisis gave us a push.” She said that redesigning the Aruba government, making the public apparatus more efficient, leaner and meaner, would go a long way in saving costs.
Knops said the situation was “exceptionally serious” and the “sense of urgency very great.” He said there was no alternative and called on people not to “make up stories,” but to look at the real picture, at the figures. “Aruba has an immense national debt. Much too big for such a small country.”
According to Knops, without the Dutch liquidity support, Aruba would have gone bankrupt, and salaries would not have been able to be paid this month. “This crisis has clearly shown the weak spots. A sustainable balance must be found between revenues and expenditures. The expenditures were way too high, costs which Aruba cannot carry.” He assured that the Netherlands would keep supporting Aruba as long as the country was willing to carry out the accord.
Aruba is the second of the three Dutch Caribbean countries to reach an accord with the Netherlands for the third liquidity support tranche. On November 2, an agreement was signed with Curaçao. There were no negotiations with St. Maarten in the past months because the country did not comply with the conditions of the second tranche. Now that the country has complied, talks have started. On Friday, talks were scheduled on a civil servant level.
