THE HAGUE--The governments of the Netherlands and Aruba signed a protocol on Friday that will see to it that the finances of the Country Aruba remain manageable in the coming years. Financial supervision will remain in place for at least another three years and Aruba will have to stick to new budget norms for that same period.
The Aruba government, represented by Prime Minister Evelyn Wever-Croes and Finance Minister Xiomara Ruiz-Maduro, and the Dutch government, represented by Finance Minister Wopke Hoekstra and State Secretary of Home Affairs and Kingdom Relations Raymond Knops, signed the agreement via a video conference call.
The protocol stated that Aruba will keep to the financing deficit norms of minus 0.5 per cent of the gross domestic product (GDP) in 2019, while in 2020 there will have to be a positive budget balance of 0.5 per cent and a surplus of at least one per cent in 2021.
The positive balance of the public sector is needed to continue paying off the enormous national debt that Aruba has and to achieve sustainable finances in the long term. The debt quota will have to be reduced to 70 per cent of the GDP in 2027 and 50 per cent in 2039. The Netherlands will provide technical assistance, if requested by Aruba, to help achieve improved finances.
The cost of personnel has to go down substantially to achieve sustainable finances. Aruba has to take structural measures in this area. The starting point is January 1, 2019, and the annual 479 million Aruban florins that has been budgeted for 2019. From that point on the personnel expenditures will have to go down structurally.
The Aruba Committee for Financial Supervision CAFT will continue to execute its tasks as defined in the Financial Supervision Law for at least the next three years, meaning from 2019 up to and including 2021. The financial agreement that was signed on Friday will be evaluated in 2021 in consultation with the CAFT. There will also be a separate evaluation of the CAFT.
It was agreed that Aruba will start the preparations to implement a Budget Chamber consisting of independent members and experts. The Netherlands will not appoint a member on the Budget Chamber, considering the autonomous task that Aruba has in this area as a country within the Kingdom.
Knops provided a short elaboration after Friday’s Kingdom Council of Ministers meeting where the financial agreement was approved. “Aruba is facing great challenges to turn around the budget deficit into a surplus and to reduce the national debt. Supervision remains necessary. We have come to an agreement on that,” he said.
Knops mentioned the reduction of the cost of personnel as one of the major challenges. “The largest expenditures are personnel and interest on loans. We have agreed that these have to come down in the coming years.”
He said that for now Aruba cannot make use of the favourable arrangement that Curaçao and St. Maarten have to secure low interest loans via the Netherlands. “First there has to be a sustainable financial situation. Aruba first has to show that it can achieve that. When the time is there, we can discuss that.”
