ARUBA – With the purpose to speedily reach the path towards sustainable public finance, the Board of financial supervisoion for Aruba (CAft) has made three recommendations.
During its visit the CAft observed that these recommendations have sufficiently been carried out. For now this gives the CAft sufficient trust. Considering the worrisome state the public finance is in, the CAft has again referred to the necessity to attain as soon as possible a new legal standards framework.
In order to accomplish a sustainable improvement of the public finance and a decrease of the debt position, it is required to obtain as soon as possible a surplus on the budget.
Recommendations sufficiently accomplished
In anticipation of agreements between Aruba and the Netherlands on a legal standards framework for 2018-2021, the CAft has made three recommendations in June in response to the adopted budget.
Firstly, it is recommended that the financing deficit in 2018 be lower than the deficit in 2017. In recent weeks, Aruba has provided information and with that has indicated that the non-tax revenues of 17,5 million guilders from Refineria di Aruba (RdA) are sufficiently realistic.
An amount of 9.9 million guilders has already been transferred in 2018. In addition, it is recommended that the multi-year personnel costs should show a downward trend. With regard to staff expenses, Aruba has presented a personnel plan in which it is aimed to reduce the nominal multi-year staff costs.
For 2018, measures will be taken to reduce staff costs by 12 million guilders. Herewith the request of the CAft to not raise the personnel costs compared with 2017 is also met. It is however important that Parliament adopts the related budget amendment as quickly as possible.
Finally, the CAft recommended that the maximum debt ratio of 90% GDP should not be exceeded. Aruba has promised that it will not take out more (short-term) loans in 2018 and 2019 than necessary, as a result of which the debt ratio will remain below 90% GDP.
New standards framework
The CAft has already concluded that the deficit compensation over 2017 cannot be realized in 2018 as prescribed by the National Ordinance Aruba for temporary financial supervision (LAft), and that the LAft norm of a surplus of 0.5% GDP for 2018 is therefore out of reach.
In order to arrive at a path towards sustainable public finances within the foreseeable future, a new legal standards framework is needed. Talks about this subject between Aruba and the Netherlands are ongoing, yet the CAft has once again insisted on a legal standards framework for 2018-2021 and, as soon as possible, a surplus on the budget, so that the steps on the path towards sustainable public finances can be made.
Last visit Board members Sybilla Dekker and Robert Croes
Apart from discussing the results of the first quarter, this visit was also marked by the departure of the Board members Sybilla Dekker (member upon the proposal of the Netherlands) and Robert Croes (member upon the proposal of Aruba).
Both departing members have been involved, as from the start of the CAft on August 1st, 2015 and both membes look back on a increasingly improving cooperation with Aruba. Sybilla Dekker about her period at the CAft: "By maintaining a steady conversation with each other, Aruba and the CAft have been able to take the necessary steps in the further development of financial supervision for the benefit of sustainable public finances".
Robert Croes confirms this and adds: "It was an honor to be able to be a member of the Board upon the proposal of my country. I have always acted in good faith".
Work visits CAft
As usually during the visits of the Board to Aruba, meetings were held with the Governor, the Minister of Finance, the Council of Ministers and the Parliamentary Committee of Finance, Economic Affairs and Government Organization.