WILLEMSTAD, THE HAGUE – Problems within Curaçao’s financial sector formed part of the Dutch government’s assessment of whether the country had complied sufficiently with earlier conditions before receiving the third tranche of COVID-19 liquidity support in late 2020, newly released government documents show.
The documents were made public by the Dutch Ministry of the Interior and Kingdom Relations under the Open Government Act (Woo) and provide a more detailed look behind the scenes of the negotiations over financial assistance and reforms.
Before Curaçao could qualify for the third tranche, the Netherlands examined whether the country had adequately implemented conditions attached to the second tranche of assistance.
The financial sector was among the issues reviewed.
According to the documents, Curaçao had provided information concerning financial institutions facing problems and had involved the Board of Financial Supervision (Cft) because of the potential consequences for government finances.
The Dutch assessment also considered governance at the Central Bank of Curaçao and Sint Maarten (CBCS).
One of the relevant requirements was that the CBCS board once again consist of at least three directors. According to the documents, Curaçao had ensured that this requirement was met.
Based on the information provided and the measures taken, the Netherlands concluded that Curaçao had complied sufficiently with the conditions attached to the second tranche.
That conclusion was important because it formed part of the process leading to further financial assistance.
Curaçao’s total liquidity requirement for 2020 had been calculated by the Cft at XCG 668 million. Approximately XCG 382 million had already been provided through the first two tranches, leaving XCG 286 million for the remainder of the year.
Access to that final amount was subsequently tied to Curaçao’s unconditional acceptance of the conditions for the third tranche and the signing of the country package.
Curaçao formally agreed on November 2, 2020. An initial XCG 105 million was then made available, followed by an additional interest-free loan of XCG 181 million for the remaining liquidity needs in November and December.
The financial-sector review is noteworthy because it demonstrates the breadth of Dutch scrutiny during the negotiations. The conditions were not confined to reducing government expenditures or reforming the civil service. The Netherlands was also examining risks within institutions that could potentially have consequences for Curaçao’s public finances.
The country package that followed eventually covered a wide range of areas, including public-sector reform, economic policy, healthcare, education, the rule of law and financial governance.
The newly released documents do not establish that the conditional nature of Dutch COVID assistance was previously secret. Both the conditions and the political controversy surrounding them were widely known in 2020.
Their significance lies instead in the detail they provide about how the Dutch government assessed Curaçao’s compliance and how those assessments were connected to subsequent financial decisions.
They show that before hundreds of millions in additional liquidity became available, the Netherlands was examining not only Curaçao’s budgetary position but also whether specific institutional and financial-sector requirements had been implemented.