WILLEMSTAD - It is of great importance that the growth strategy that is implemented as a result of the growth agreement with the Netherlands on Curaçao is taken forward energetically.
That is the opinion of the Financial Supervision Board (Cft), which in the 2018 annual report also reflects on the grand plans and the importance of the Rhuggenaath cabinet's growth strategy to achieve sustainable growth.
In October 2018, the government of Curaçao presented the Curaçao, Integrated and Together Growth Strategy. Central to the plan are structural economic reforms, improvement of financial management, and strengthening of the public administration. The structural reforms concern the capital market, the labor market and the investment climate.
The reforms on the capital market consist of intensifying competition in the banking system and the establishment of an investment fund, Invest-Curaçao, which focuses on financing economic policy advocated by the government and is capitalized by combining existing development banks, sales proceeds from privatization and through funds obtained through the government's capital service.
The labor market reform consists of a relaxation of dismissal law in combination with protective provisions for strengthening the labor market position of employees (flexicurity). The immigration policy for specialized foreign workers is being relaxed. The investment climate is being reformed by reducing the administrative burden (red tape) for business and improving the business climate, which includes the simplification of issuing economic permits. It is of great importance that the growth strategy is taken forward vigorously.
The Cft also warns against the borrowing behavior of not only Curaçao, but also Aruba and Sint Maarten.
The islands - according to the committee - have to deal with drastic circumstances that have an impact on public finances. “After a long period of stagnation, Curaçao has now been confronted with a contraction of the economy for a number of years, partly due to the decline in oil refining. This has put further pressure on government revenues.
In addition, the Curaçao government has been spending too much for years with large deficits as a result and necessary reforms are being postponed. Adjustment of government revenue and expenditure is desperately needed to achieve budget balance.”
For Curaçao, the debt in the first quarter of 2019 already exceeded the level that the Cft advises as a maximum. “The level of the debt ratio and the low expected economic growth require extreme caution when taking out loans, which lead to higher debts,” the Cft said.