Aruba has six weeks to get budget in order

THE HAGUE/ORANJESTAD–The Aruba Government has to get its budget in order and reduce its deficit by April 30, otherwise the country will receive an instruction from the Kingdom Council of Ministers.

Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops told the media after Friday’s meeting of the Kingdom Council of Ministers he was hopeful a solution would be found within the next six weeks.

Aruba’s precarious financial situation was discussed in Friday’s meeting of the Kingdom Council of Ministers, but no decision was taken to give the Aruba Government an instruction. “The situation is very worrisome: there is a large deficit over 2017 and the 2018 draft budget anticipated an even bigger deficit,” said Knops.

The Aruba Board for Financial Supervision CAFT has advised to reduce the 2018 budget deficit, as well as the ever-growing national debt. Knops confirmed that the Aruba Government has until April 30 to present a budget that complies with the requirements of the CAFT. This means that the 2018 budget deficit cannot exceed the 2017 budget deficit of 155 million Aruban florins.

According to Knops, intervention is direly needed. “Otherwise the situation will get worse. The deficit will further rise as will the national debt. And that will make it only harder to solve the problem. This will demand a lot from Aruba, from both the coalition parties and the opposition.”

The State Secretary said it made little sense to point fingers as to who was responsible for the current debacle. “It is important to look forward now and to take solid measures. These measures will undoubtedly be painful, but taking drastic measures is necessary in the interest of the Aruba people in the long term.”

Aruba Prime Minister Evelyn Wever-Croes of the MEP party did point fingers. She is squarely blaming the former AVP government of Mike Eman for creating the financial disaster. She said at a press conference on Thursday that however unfortunate an instruction of the Kingdom Government, secured in a Royal Decree, would be, it would be a justified decision due to the many violations that the former AVP government committed.
“Aruba is in a terrible situation. I am telling nothing new. The situation is very worrisome with the figures telling us where we really stand. We are being confronted with violations of the former government against the financial supervision law,” said Wever-Croes.

The Prime Minister said the first violation concerned the large 2017 deficit of Afl. 155 million whereas it had been agreed by the AVP government that there would be a surplus. “During the campaign year, the irresponsible AVP government promised a whole lot of permits and contracts. A lot of people were employed.”

The second violation, according to Wever-Croes, was that the AVP government did not submit the 2018 budget on September 1 as prescribed by law. “Instead, the AVP was busy buying votes, while causing an Afl. 155 million deficit.”

The third violation in her opinion was that the former government tied the current MEP/POR/RED coalition government to an Afl. 275 million deficit for 2018, whereas there should have been an Afl. 25 million surplus. “This is the reality that Mike Eman has left behind for the Aruba people,” said Wever-Croes.

Fact is that Aruba has not complied with the financial norms in 2017, while another major deficit was projected for 2018. This would lead to a further increase of the national debt to 91 per cent of the Gross Domestic Product (GDP).

It is anticipated that the 2017 budgetary year will be closed off with a 3.1-per-cent deficit. The 2018 draft budget shows a deficit of 3.9 per cent. This means that again the financial supervision norms will not be met, stated Knops. The CAFT and the previous AVP government had agreed on a 0.5-per-cent surplus for both 2017 and 2018, needed to mitigate the high national debt.
Aruba needs to have an approved 2018 budget that complies with the financial supervision norms before April 30. If not, the country will face an instruction from the Kingdom Government. The CAFT has advised the Aruba Government to keep the 2018 deficit well under the 3.1-per-cent deficit of 2017.
Prime Minister Wever-Croes stated during Thursday’s press conference that her government would not fight the decision to give an instruction, but that her government would still try to prevent this drastic decision.

Doing nothing was not an option, she said, as this would have adverse consequences for Aruba. “The risks of doing nothing are too great. The pain will be worse when we lose our financial credibility on the international market by doing nothing and letting the situation escalate.”

Aruba Minister of Finance Xiomara Ruiz-Maduro will be travelling to the Netherlands on Monday, right after the Aruba Day celebration on Sunday. She will present a financial rescue plan in The Hague containing steps to get Aruba’s public finances back in order.
“There is a lot of speculation and many concerns about what is coming. That is not helping us. This government will carefully consider the steps that need to be taken and we will announce the plan as soon as it is ready, explaining what the effects will be,” said Wever-Croes.

“This is a painful situation that I hoped not be find myself in as the new Prime Minister. You have a vision and dreams for the community. You want to fight poverty, give children a better future, and help single mothers and the elderly. But the reality is that we now have to attend to the financial situation before we can do other things,” said the Prime Minister.

Source: The Daily Herald https://www.thedailyherald.sx/islands/74727-aruba-has-six-weeks-to-get-budget-in-order