WILLEMSTAD - On July 12, 2019, the Council of Ministers of the Kingdom of the Netherlands decided to give the government of Curaçao a budgetary instruction as referred to in the Curaçao and Sint Maarten Financial Supervision Act.
The instruction aims at achieving a balanced budget in the 2019 budget, offsetting the deficits realized in 2017 and 2018, and possibly 2019, in a three-year period starting in 2020. Finally, the instruction extends to before 31 December 2022 repayment of debts to the General Pension Fund Curaçao and the Social Insurance Bank.
On Friday, August 23, Curaçao submitted an appeal to the Council of State of the Kingdom. This appeal serves to eliminate the instruction, or at least to amend it in such a way that Curaçao compensates the deficits in five years from 2021 instead of from 2020 and in three years as included in the instruction.
The cabinet stands for sustainable government finances. However, public finances do not develop in a vacuum, but are inextricably linked to the island's economy. It is no secret that the Curaçao economy has been in a recession for years. A recession means that there is no growth in the economy. Without a growing economy there will be more unemployment and public services will shrink. After all, there are fewer and fewer resources to invest in society.
The government is of the opinion that only austerity measures are not an answer to the problems with which the Curaçao society is struggling. In the run-up to the meeting of the Council of Ministers of the Kingdom, the government has therefore conducted intensive negotiations with the Netherlands about an agreement of cooperation and support in implementing Curaçao's Growth Strategy. This agreement was also concluded on 12 July and is currently being implemented. The Growth Strategy focuses on the implementation of reforms in the government apparatus and in the economy, which enable Curaçao to face the many challenges it faces.
In its appeal, the government again emphasized that the pursuit of sustainable budget balance is of great importance for the future of Curaçao. However, this budget balance cannot be achieved without economic growth. Investment and time are needed to achieve economic growth. This principle was also recognized by the Netherlands when the Growth Agreement was signed. In addition, the International Monetary Fund has warned against a too rapid reduction in the government's spending ceiling, in view of the severe economic contraction that can be deployed. Such a course of action is therefore counterproductive. The government is therefore of the opinion that the Kingdom Council of Ministers could not reasonably have arrived at the instruction in its current form and looks forward to handling the appeal with confidence.
