Semi annual report Curaçao & St Maarten; Cft: “Avoiding supervision menace financial stability”

Strictly maintaining the stipulations in the Kingdom Act financial supervision for Curaçao and Sint Maarten (Rijkswet financieel toezicht Curaçao en Sint Maarten), leads to more usage of financial instruments and cash flow outside of the budget, via governmental companies, foundations and funds that have been created especially for this purpose. By doing so though, the Kingdom Act can still be formally complied with, but this may represent a threat to the financial stability of Curaçao and Sint Maarten. Moreover, the budget right of the Parliament will be jeopardized. This was the conclusion of the Board of financial supervision in its seventh semi annual report.


In the seventh semi annual report the Board extensively elaborates on the developments that led to the instruction the Kingdom Council of Ministers (Rijksministerraad) gave to Curaçao on July 13th last. The Board concludes that Curaçao has a worrisome financial situation and that the financial management was insufficient. The financial situation becomes even more acute on the long run. The costs for the medical healthcare still increase rapidly and the aging population is creating rapidly increasing costs for the provisions of the pension funds. Implementation of necessary measures to change the situation continuously turns out in delays. The institutions outside the government show great deficits; in connection to this the Board mentions care funds and the AOV fund, Aqualectra and the Curaçaose Dok Maatschappij. At the same time reserves are being used to cover old deficits and new financial constructions are introduced, which may indeed not put more weight on the budget on short-term, but are undesired from the point of view of correct financial management. For example the 5 cents tax on every liter of gasoline bought and the financing of free education. The Board is of the opinion that the budget right of the Staten is jeopardized by these measures. Out of a joint investigation from the Board concerning the status of the financial management on Curaçao, it seems that the supervision and he control from the Parliament as well as the follow up on advice from the General Audit (Algemene Rekenkamer) are also already brought forward as points of concern.

The year 2011 was closed with a substantial deficit for Curaçao, which has been communicated long after year end. Because of this it was not possible to take the necessary measures during the year. This deficit has to be compensated in the coming years. That the information has been made available so late is a clear indication that the financial management and especially the provision of information are not well organized.

Sint Maarten’s budget 2012 was approved by the Staten in April. The Board has indicated that this budget may be executed, if setbacks in the tax atmosphere are compensated. This led to the first adaptation in the budget since 10-10-’10. The Board tied a set of conditions to the approval of the budget and the adaption to the budget. In time Sint Maarten will also be confronted with the consequences of an aging population and the increasing costs of health care. The Board is of the opinion that Sint Maarten has to be well prepared for this and has to take appropriate measures as of now. To this end Sint Maarten will have to make a planning of all year long financial developments, including the impact of the financial statements of 2009 and 2010.

Furthermore the Board concludes that the financial management of Sint Maarten has significant short comings. Out of a joint investigation from the Board and the government of Sint Maarten it seems that Sint Maarten scores low on the credibility of its budget and its completeness. The Board finds that this is not surprising for a new country which is still in the construction phase, but at the same time indicates that big steps have to be taken rapidly. Concerning the government companies the Board concludes that these do not constitute a menace in general for the budget, but rather offer opportunities to develop a dividend policy. Yet the Board notices that no progress was made in the area of corporate governance in the recent period.