Dear Editor,
Did the CFT set the Kingdom on fire (1)? On April 7th last, when the whole world was battling the coronavirus, the CFT struck a blow to the public trust in its raison d’être with a devastating recommendation to the RMR that was potentially worse than the coronavirus itself.
The advice of the CFT was devoid of any compassion or sense of solidarity and showed complete disregard for the scale and ferocity of the corona outbreak. At issue here was the request made by the various countries of the Kingdom on this side of the Atlantic for budget support from the financially better off partner of the Kingdom. These countries need financial support to overcome the social, health, and economic consequences of this crisis, unprecedented in both magnitude and scope.
In its analysis, the CFT seems to have taken an insular approach to a crisis that does not recognize borders. To effectively contain the spread of this virus in the islands, the authorities implemented a total lock-down. Needless to say, the lock-down, while necessary, has had a crippling effect on the economy. It has brought the most important foreign exchange-generating sector of the economy to a virtual standstill.
To preserve the productive capacity of the islands and to protect public health, immediate and determined action was necessary. As in many other countries, the authorities presented rescue plans for coping with this dreadful crisis. However, the price tag of the rescue packages exceeded the lending capacity of these countries, which are just emerging from an already nagging economic crisis.
Sint Maarten is still recovering from Hurricane Irma, while Curaçao and Aruba are coping with the spillover effects of the crisis in Venezuela.
While the CFT has recommended that the request be partially honoured, it contends that the islands need to make the necessary fiscal room for this financial support in their own budgets.
What the CFT does not seem to grasp is that this pandemic is not an economic crisis, but rather, a complex public health crisis with far-reaching social and economic consequences (2). Even if we are successful in winning this battle locally, we will not be able to lift the lock-down until this pandemic is won globally, without risking a resurgence of this virus.
We are engaged in a war against an invisible foreign enemy that does not recognize borders. This brings us into the areas of defense and foreign affairs—a purview of the Kingdom government. The legitimacy of the Kingdom lies in providing for this fundamental need throughout its realm. Therefore, one can argue that the economic consequences of this war should be viewed as the cost of defending the Kingdom against a foreign invader—namely, the coronavirus.
By advising against the full financing of the requests, the CFT has unleashed a wave of protest tantamount to setting on fire the very basis of the Kingdom. While this pandemic may be temporary, the consequences of the CFT’s advice may be with us for a long time.
The leaders of the Kingdom need to manage this crisis so that when we declare victory against this pandemic, the Kingdom also will emerge as a victor.
By Emsley Tromp
Dr. Emsley Tromp is the former President of the Central Bank of Curaçao and St. Maarten
- On April 8, 2020, I issued a comment on the CFT’s advice to the RMR that focused mainly on the internal inconsistencies of their advice. The subsequent decision of the RMR yesterday, however, led me to this afterthought.
(2) I am in agreement with both the CFT and the RMR that the path of the agreed upon fiscal consolidation has to continue albeit corrected for the current crisis. To argue now about this agreed upon path will only make what has to be done now to overcome this crisis more difficult.
