THE HAGUE, WILLEMSTAD - The Netherlands must partially withdraw the financial instruction it gave Curaçao, the Council of State has ruled. Due to the intervention of Undersecretary Raymond Knops in 2019, Curaçao was obliged to compensate the budget deficits from 2017 to 2019 within three years, an amount of almost 250 million guilders.
Curaçao appealed the instruction because it felt that the terms of the Netherlands were too unreasonable and it did not give the government enough time to apply them. The Council of State now agrees with Curaçao. The Dutch government would not have paid enough attention to the resilience of the Curaçao economy, partly because of the crisis in Venezuela.
In assessing the conflict, the Council of State also states that the financial instruction was not necessary. Both countries had meanwhile concluded a Growth Agreement aimed at achieving a structural budgetary balance and compensating for deficits. Government debts would also be reduced, and measures taken to achieve sustainable public finances.
The decision of the Council of State is in The Hague, but its effect is negligible. In the light of covid-19, the Growth Agreement has since been dropped and has now been replaced by a multi-year aid program to combat the negative consequences of the corona crisis.
The budgetary norms in the Financial Supervision Act that were exceeded, and which resulted in an instruction, have in any case been abandoned until next year. The new permitted budget and financing deficit is now determined in the Council of Ministers of the Kingdom of February 2021 based on Curaçao's liquidity needs.
The new multi-annual support program will be implemented by the yet to be established Caribbean Body for Reform and Development (COHO). This gives the Netherlands even more say in the government finances of Curaçao. The island needs liquidity support because it has hardly any income left due to the loss of tourism due to corona. The Netherlands has made the aid dependent on the cooperation of Curaçao in the COHO. The Council of State still has to give advice on this too.
Curaçao has welcomed the decision of the Council of State. But Prime Minister Rhuggenaath now wants to close the chapter and focus on a good relationship with the Netherlands and on the agreements to give shape to structural reform through the COHO.