WILLEMSTAD — Speakers, panel members, and many others from the audience complimented Minister Ersilia de Lannooy (Finances, PNP) yesterday on the organization of the conference regarding opportunities and risks of dollarization of the new countries Curaçao and St. Maarten. Nevertheless, after five speeches concerning content, three panel discussions, and a recapitalization, there was still no consensus on what would be the best option. In particular, those you saw no point in the dollarization, were very expressive in their opinion.
MAN Party-leader Charles Cooper in the Island Council appreciated the argument – which came up a few times during the conference – that there will be steep price increases when retailers switch from guilders to dollars. Cooper thinks that the local authorities will not have sufficient human force to stop these price hikes.
"Leave the lion alone. I don’t want to wake him so that he can bite me with inflation and other undesired developments", said Cooper.
Head of Directorate Economical Affairs (DEZ), Ramón Chong is of the opinion that price increases are controllable. For that matter, the local population is more familiar with the dollar than the Dutch population was with the euro – the scenario that is often referred to as an example of price hikes. A long transitional period, during which guilders and dollars are used, should be helpful. On the price hike scenario, Richard Doornbosch of the Dutch Ministry of Finances stated that ‘there was a difference between the perception and the reality’. There were price hikes in the catering industry, but elsewhere – living expenses, insurances, kitchen articles – showed price decreases.
Those present in the BNA-auditorium responded with disbelief on the statements made by Chong as well as Doornbosch. A further, broadened social discussion on this subject is considered essential to make a choice that is supported by everyone, or at least by a large majority.
‘If it ain’t broke’
During the first panel discussion in the afternoon, Chairman Eric Garcia of the Curaçao Bankers Association stated that the subject had to be viewed from all sides before a choice could be made. He emphasized that there is ‘no turning back’ once the choice for dollarization has been made.
"I will also not deny that we bankers are not raring to go for the dollarization", Garcia candidly admitted. "The revenues which will disappear in connection with the currency differences, forms the second source of income for the local banks after interest yields. However, if dollarization is the best choice for the island, then we will support that choice. Nevertheless, after having heard everyone this morning, I am not convinced that we should choose for dollarization."
Many shared this sentiment, which Garcia brought up. For example, it was pointed out that all experts agreed with the main lines, and that the islands could function excellently with or without dollarization. Hence, the overtone ‘If it ain’t broke, why try to fix it’.
Furthermore, those wishing to continue with the current dollar link are of the opinion that it has not been demonstrated how the dollarization will remove the deficit on the import- and export-balance.
The most prominent supporter of the dollarization, president-director Emsley Tromp of the BNA, is of the opinion that in connection with the ‘if it ain’t broke’- point of view, "the current system is indeed adequate in an ideal world. However, a possible new international financial crisis should be considered. One small, open economy such as ours will not be able to cope with such a serious issue if the choice for dollarization has not been made".
Courtesy of www.amigoe.com