THE HAGUE--Chairman of the Committee for Financial Supervision CFT Raymond Gradus is advocating to adapt the toolbox that it works with to better supervise the public finances and financial management in the Dutch Caribbean countries.
The CFT is proposing a few changes to the Kingdom Supervision Law RFT and/or a policy rule that would involve the introduction of three norms that see to it that subjects of financial management contribute to the effectiveness of financial supervision.
One of suggested norms is to obligate Aruba, Curacao and St. Maarten to accomplish an unqualified audit opinion of the annual reports within a certain term. “One of the biggest problems within the countries is that financial management is not in order. The countries’ annual reports are too late, countries are not always able to supply the right information and the annual reports of government entities are often not on time,” stated Gradus.
The CFT Chairman was one of the invited speakers at the InterExpo 31st congress and trade mission in The Hague last Thursday that zoomed in on 10 years after the dismantling of the Country the Netherlands Antilles. In attendance were a large number of people’s representatives from throughout the kingdom.
Secondly, in Gradus’ opinion, an enforceable information obligation needs to be introduced in the RFT. This information obligation would force the governments of the three countries to share information with the CFT about the government (owned) entities.
Information is often not shared or is sent too late to the CFT, which has no authority to compel the countries to do so. Information about the government (owned) entities is deemed important due to the (financial) risks that these entities can pose to the country’s budget.
Thirdly, Gradus in his presentation suggested to introduce a debt quota-related norm for the countries in the RFT. This set debt quota norm would be a better boundary for the countries’ debts. The International Monetary Fund (IMF) has advised the countries to stick to a maximum long-term national debt 40-50 per cent of the Gross Domestic Product (GDP).
Aside from expanding the CFT toolbox, the CFT Chairman shared four conclusions with the audience at the congress: financial management and budget management was already not in order before the COVID-19 pandemic, the pandemic further accentuated the underlying problems, a stringent budget policy should go hand in hand with economic reforms, and Curaçao and St. Maarten need to achieve a balanced budget as soon as possible.
Gradus emphasised that good financial management and a tenable national debt were indispensable. “Without solid financial management, healthy sustainable public finances cannot be attained.” He said that, looking back at 10 years supervision since the dismantling of the Country the Netherlands Antilles, financial supervision was not a cure-all recipe, but that it was an important factor in achieving healthy, long-lasting public finances on the islands.
“We came from far. The situation before October 10, 2010 was alarming. Since then, important steps have been taken, also thanks to financial supervision. There were no execution reports, barely any reporting to the Parliament and a deficient transparency. In the meantime, countries report on time and four times a year to the CFT. These reports now go to the Parliaments as a standard practice, and that is important so they can execute their controlling task,” said Gradus.
Financial supervision contributed to the budget discipline, stated the CFT Chairman, who noted that up until now, St. Maarten had not managed to submit a budget in time. Furthermore, financial supervision increased the awareness with regard to the importance, also among the islands’ residents, of solid public finances and good financial management.
Gradus urged the countries to grasp the opportunities offered through the rigorous reforms that need to be implemented as part of the country packages that are tied to the large zero-per cent loans that the Netherlands has supplied during the COVID-19 pandemic.
