WILLEMSTAD - The surplus of 142 million previously reported by the government of Curaçao seems to be disappearing into thin air. Unless more "forgotten" obligations come to light, there might only be a modest surplus of 25 million remaining.
The comment from the Board of Financial Supervision (College financieel toezicht, Cft) on the performance report for the first quarter indicates that Minister of Finance Javier Silvania has far from organized affairs in a proper manner. "The figures he presents - as seen in the approved budget for 2023 - do not provide a sufficiently reliable, realistic, and up-to-date picture," stated the Cft.
In a letter to the minister, the Cft points out that the first performance report for 2023 shows a provisional surplus in the ordinary service of ANG 104 million for the first quarter. The first quarter of 2023 is in line with the budget.
The Cft mentions that it has previously highlighted Curaçao's potential to achieve budget surpluses. This potential is evident, among other things, in higher-than-budgeted value-added tax revenues in the first quarter.
Curaçao presents the provisional results for 2022 in the first performance report. It shows a significant decrease in the expected surplus for 2022. Curaçao also anticipates having to account for additional outstanding obligations in this result. The Cft determines that financial management, including obligation management, is insufficiently functioning. To prevent a similar development for 2023, the Cft advises you to establish prior supervision on entering into financial obligations, accompanied by an appropriate sanction policy. The Cft requests that you report on the measures you have taken or intend to take in the second performance report for 2023.
The Cft once again notes that, despite multiple requests, no provision has been included in the budget regarding the Curaçao Medical Center (CMC). The Cft deems a provision necessary due to the precarious financial situation of the CMC. Since June 2020, the CMC has ceased making repayments on the loan provided to the hospital, emphasizing the need for a provision.
The Cft states that it requests insight into the intended use of the liquid funds once again. The balance of liquid funds at the end of the first quarter of 2023 amounts to ANG 359 million, an increase of ANG 19 million compared to the balance at the end of 2022. A portion of the liquid funds could be allocated for additional repayments to the General Pension Fund of Curaçao (APC) to comply more rapidly with the directive issued in 2019.
The Cft states in its letter that it has identified several deficiencies in Curaçao's approved budget for 2023, which means it still does not provide a sufficiently reliable, realistic, and up-to-date picture of the country's financial position. The Cft made six recommendations to address these deficiencies. Although the realized surplus on the ordinary service for the first quarter of 2023 (ANG 104 million) is in line with the budget, this overall picture remains unchanged. Curaçao maintains a budget balance for the entirety of 2023. If the development of indirect taxes, particularly the turnover tax, continues, and Curaçao can manage its expenses, the country should be able to achieve a surplus for 2023 as well.
For 2022, there initially seemed to be a significant surplus of ANG 142 million. However, despite Curaçao acknowledging the outstanding obligations related to 2022, the first performance report indicates that the surplus for 2022 has decreased to ANG 104 million and is expected to further decline substantially. The country expects to realize approximately ANG 89 million in additional outstanding obligations, resulting in an estimated final surplus of approximately ANG 25 million for 2022. According to the Cft, it is anticipated that certain expenditure categories in the 2022 budget will be exceeded as a result.