THE HAGUE - The Financial Supervision Evaluation Committee has concluded that Curaçao has not yet met the standards for sustainable financial management and budgetary discipline, despite some minor improvements. The evaluation revealed that from 2021 to 2023, Curaçao faced significant budget deficits, leading to the extension of financial supervision.
In 2021, Curaçao recorded a deficit of 822 million guilders in its ordinary service, equivalent to over sixteen percent of its gross domestic product (GDP). Although there was some improvement in 2022, with a preliminary deficit of 31.7 million guilders, the country remained far from achieving a balanced budget. In 2023, another deficit of 30.4 million guilders was recorded.
A major factor behind these budgetary challenges was the COVID-19 pandemic. In 2021 and 2022, Curaçao was allowed to deviate from normal budgetary rules due to these extraordinary circumstances. However, the country still failed to meet several other budgetary standards, such as financial management and the interest burden norm, which were difficult to assess because the collective sector had not yet been established.
Financial Management Issues
Financial management continues to be a significant challenge. The committee pointed out that Curaçao’s most recent approved financial statement dates back to 2018, and the country is behind in approving subsequent statements. Inadequate justifications and explanations remain an issue. Additionally, a fully-fledged multi-year budget is lacking, and there has been criticism of the country’s obligations management. While tax revenues slightly increased in 2023, the overall situation remains insufficient to end financial supervision.
The report recommends removing financial management from the direct influence of politics and assigning more responsibility to the Secretaries-General within the ministries. The committee advises giving them the mandate and financial resources to improve financial management. This would mean the Secretaries-General should play a leading role in implementing improvement plans, with less political interference in their practical execution.
Moreover, the committee emphasized the need for balanced agreements regarding the budget and the necessary implementation capacity to achieve these improvements.
The committee also recommends continuing financial supervision and calls for further improvements, including the development of an assessment framework to objectively evaluate whether standards are being met, as well as creating more room for strategic investments.