It took me some time to read the Dutch language document, plus I had to interview a million friends about the subject. On June 7th, CAFT, the Dutch financial supervisory body overseeing our finances published their interesting quarterly paper, with their findings regarding our economy.
So in June they wrote about the first quarter and most probably in September, they will be reporting on our second quarter that is now coming to an end. If they do not see improvements, they declared, by the second quarter report, they will recommend financial measures to compensate for the probable national deficit. But then the elections will take place and whoever is in government in October, will have to deal with the consequences of overspending and under-earning.
The document makes us look bad and for the benefit of those who have not seen it, this is just a small summary: CAFT believes that the figures for the first quarter of 2017 give cause for concern. The deficit of Aruba is significantly higher than predicted. Several larger amounts of money that were supposed to alleviate the distress did not materialize. For example? The income from the refinery, and the sale of an asset, Fuels Marketing & Supply Aruba, FMSA for 40M. Some other returns fell short of the budget, in particular the income of payroll tax and BBO, and the estimated revenue from improved compliance efforts. There was apparently the goal of an annual saving of 5% on staff costs, but that was not accomplished, and it seems the number of employees in service, is on the rise again. In addition, CAFT expects that, on the basis of the estimates of AZV, the balance will deteriorate over the course of the year, even further. Based on their findings, CAFT has serious doubts as to whether the agreed upon deficit level will be achieved.
So basically GOA’s debt rose to Awg 4.086 million at the end of March which is 84% of the most recent GDP for 2017.
(If we stand to earn Awg 1,000 this year, we already owe Awg 840!)
Buy the way, the MinFin denies rising number of employees, but I think most probably manpower was recruited in honor of the coming elections.
The overall message of the report is that GOA isn’t showing any discipline and continues doing what it does best, spending more of our money, and reporting late on its spending.
In reality, CAFT is just there to prepare a report and in the spirit of “You can lead the horse to the water but you can’t make it drink,” cannot really do anything to change our spending habits.
One of my learned friends pointed out that the report only gives The Hague Holland arguments to refuse the securing of capital on international markets against lower interest rates under the Dutch AAA credit rating … which means our interest rates will be much higher.
He also points out that the original protocol signed between Aruba and CAFT/Holland was to make STRUCTURAL changes, and in lieu they found some cosmetic changes, Trickonomics, the sale of an asset which artificially dressed the budget up and some windfall gains from a new profit tax law that was bulldoze through parliament to pull profit tax revenues into the 2015 fiscal year. These profit taxes would otherwise have been collected in 2016. Also in 2015 the Social Security Bank, SVB, granted a debt pardon to GOA for 51 million… so this alleviated GOA’s balance sheet. Just Temporarily.
You could say that based on the report, the refinery was the one supposed to save us, but as you know, nothing is happening there, so there will be no choice but to tighten the belts after September.