WILLEMSTAD–Curaçao’s 2018 deficit of NAf. 53 million threatens to further increase and become considerably higher than was anticipated. For 2019, the Committee Financial Supervision CFT is taking into account a shortfall of more than NAf. 100 million due to fiscal setbacks.
The CFT did establish that government is taking steps to improve its tax collection. At the same time, effective measures to reduce expenditures are still not being executed. This is necessary and urgent both to decrease the considerable deficits and to control the risks of the dwindling foreign exchange reserves.
The island’s economy has been shrinking for several years now. The ongoing crisis in neighbouring Venezuela is partly to blame, but also the absence of structural economic reforms.
Government is spending too much – the collective sector’s total cost amounts to no less than 51 per cent of gross domestic product (GDP) – and Curaçao is in the disturbing and unsustainable situation of economic contraction, current account deficits, and deficits in the government budget, according to the CFT.
“The country faces a major challenge to get its finances in order and to implement economic reforms. The government of Curaçao, employers and trade unions have a joint responsibility to ensure that this task is realised.”
The CFT expects that, due to setbacks, the deficit for 2019 may increase to more than NAf. 100 million. Previously announced measures aimed at reducing the deficit, such as the commitment stop and preceding financial supervision, have proved insufficiently effective. Improvements in financial management are also lagging.
“Curaçao can no longer wait to take measures with direct and permanent attention to get its finances in order and reduce government expenditure. A reduction in expenditure is not only necessary to reduce the deficits and not allow the debt to further increase; it also contributes to improving the vulnerable situation of the diminishing foreign exchange stock of Curaçao,” said CFT.
During CFT’s recent visit to the island, the urgency with which the various measures must be implemented was discussed. Special attention was paid to measures aimed at controlling healthcare expenses and retirement provisions, seeing that in the coming years rapidly increasing deficits can be expected in the social funds.
The CFT is also concerned about the cost of the new “Hospital Nobo Otrobanda” (HNO) and asked government to take the necessary measures to prevent healthcare expenses from rising unnecessarily. This concerns both measures to control the cost related to the transition and the financing of the HNO, and the realisation of savings in healthcare.
Curaçao entered into an agreement with the CFT in October 2018 to improve financial management and to work towards an unqualified auditors’ report on the 2021 annual accounts. The implementation of this improvement process is lagging and needs to be undertaken with determination, stated a press release.
The CFT visited Curaçao from June 17-19, where it had meetings with Governor Lucille George-Wout, Finance Minister Kenneth Gijsbertha, the Council of Ministers, the financial committee of Parliament, Isla oil refinery “Refineria di Kòrsou”, Curaçao Business Association VBC, Curaçao’s Chamber of Commerce and Industry, trade unions, the Tax Department, and Social Insurance Bank SVB.
Source: The Daily Herald https://www.thedailyherald.sx/islands/88552-cft-curacao-is-faced-with-a-major-challenge
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