THE HAGUE – Starting May 1, the Netherlands will increase the interest rate Aruba must pay on its outstanding COVID-19 loan from 5.1% to 6.9%. 

Dutch State Secretary for Kingdom Relations Zsolt Szabó is enforcing the terms of the administrative agreement reached by his predecessor, Alexandra van Huffelen, with former Aruban Prime Minister Evelyn Wever-Croes on June 4, 2024. At the time, the Netherlands agreed to lower the interest on the over 900 million Aruban florins loan to 5.1%, contingent on Aruba’s progress with financial oversight reforms. 

The agreement included a clear deadline: if a new consensus Kingdom Law to regulate financial supervision was not submitted to the parliaments by May 1, 2025, the interest rate would increase to 6.9%. This clause was intended to prompt the Wever-Croes government to act swiftly on drafting and submitting the law. 

However, that deadline will be missed. “It is now clear to both countries that the law proposal will not be submitted to the Dutch Parliament by May 1. As a result, the interest rate will be raised in accordance with the agreement,” said State Secretary Szabó. 

The newly installed Eman III Cabinet is left to deal with the financial consequences of the previous administration’s inaction. This is not the only fiscal setback inherited from the Wever-Croes government. After losing the election, the former cabinet unilaterally reduced the tax-exempt threshold without parliamentary approval, reducing the number of taxpayers from 40,000 to 12,000 and causing an estimated annual revenue loss of 50 million florins. 

In the meantime, civil servants are continuing to draft the proposed Kingdom Law. Once both governments agree on the draft, it will undergo consultation rounds in Aruba and online consultation in the Netherlands. After incorporating feedback, the law will be submitted to the Kingdom Council of Ministers, which will then refer it to the Council of State of the Kingdom for advice. 

It remains uncertain whether the law will make it to parliamentary debate before the end of the year. Once the Kingdom Law on Financial Supervision for Aruba takes effect, the interest rate will be lowered to a market-based rate plus a small premium — currently 3.1%, as applied to Curaçao and Sint Maarten.