THE HAGUE - Undersecretary of Kingdom Raymond Knops explained in a letter to the Second Chamber of the Dutch Parliament about the decision of the Kingdom Council of Ministers (RMR) to grant liquidity support for the rest of the year for 76 million guilders to Curaçao and hold off on the financial assistance to Aruba:
At the end of 2020, an agreement was reached with the autonomous countries Aruba, Curaçao and Sint Maarten (hereinafter: the countries) regarding the country packages, in which reforms have been agreed with the aim of strengthening the financial, economic, institutional, and social resilience of the countries in such a way that countries will be better able to absorb external shocks independently in the future. As a condition for receiving the necessary liquidity support, Aruba, Curaçao and Sint Maarten must implement reforms. A decision on this is made quarterly in the Kingdom Council of Ministers (RMR). The Board of (Aruba) financial supervision (C(A)ft) advises the RMR on the liquidity requirement.
Due to an accumulation of delays in the implementation of measures and the lack of an established implementation agenda for the fourth quarter of 2021, the RMR decided on September 24 to make a decision on the liquidity support for Curaçao for the fourth quarter of 2021 and, as a result, decision-making on the degree of deviation from the central budget norm for the whole of 2021 until a next RMR. I have informed your Chamber about this by letter. At the request of Curaçao, the decision-making took place in the RMR of October 29. With this letter I inform your Chamber about this decision-making.
Progress implementation of the Curaçao country package
Since the beginning of 2021, the countries have been working on the details of the country packages. In the implementation agendas, concrete agreements have been worked out on a quarterly basis that have been made between the respective countries and the Netherlands in the context of the country packages. These agreements indicate which results are intended and when and are leading in the activities that are developed.
Detailed information on progress at country level and per measure is provided in the implementation report for the third quarter, which your Chamber previously received as an appendix to the aforementioned letter on the decision-making process in the RMR of 24 September. The implementation agenda for the fourth quarter of 2021 for Curaçao and Aruba are also attached to this letter as appendices. You also received the implementation agenda for the fourth quarter of 2021 for Sint Maarten as an attachment to the letter on decision-making in the RMR of 24 September.
Curaçao
In my letter on the decision-making process in the RMR of September 24, I informed your Chamber that I was particularly concerned about the lack of the adopted plans of approach, endorsed by the Netherlands, with regard to the reforms of the tax system and the tax authorities, the plan of approach with regard to minimizing the losses at the Curaçao Medical Center and the plan of approach for the implementation of the package of measures with regard to the buffer reserve at the Social Insurance Bank. To be eligible for the seventh tranche, Curaçao also had to determine the implementation agenda for the fourth quarter.
Curaçao has now taken the necessary steps regarding these five points. However, there are still substantive risks and concerns about implementation. To limit this, further agreements have been laid down in the Implementation Agenda and progress is closely monitored by the Temporary Work Organization in order to be able to make timely adjustments.
Liquidity requirement and deviation from budget norm
The RMR has decided that Curaçao has met the conditions set by the RMR and will therefore grant ANG 76 million liquidity support for the fourth quarter of 2021. Enclosed, your Chamber will receive the Assessment Framework with this liquidity loan to be provided.
The RMR has already decided on 18 December 2020 to agree in principle for the 2021 budget year with a deviation from the standard as contained in Article 15, first paragraph, under a, of the Kingdom Act financial supervision Curaçao and Sint Maarten for Curaçao. The Cft then advises to equate the maximum permitted degree of deviation from the central budget standard for 2021 with the liquidity support granted in 2021, the available balance of liquid assets on 1 January 2021 and any liquidity attracted domestically or abroad minus the part of the liquidity support which is spent on capital expenditures.
Based on this advice, the RMR has decided to set the maximum degree of deviation from the budget standard for the regular service for the entire year 2021, in accordance with Cft advice, at 488 million guilders for Curaçao.
Aruba
As a condition for the seventh tranche of liquidity support, Aruba had to inform the CAft by means of a financially substantiated plan of approach about the annual savings at the General Health Insurance of 60 million guilders.
The RMR of 24 September concluded that Aruba had not yet met this condition. In addition, at the time of the RMR, Aruba was still discussing the estimated liquidity requirement for the fourth quarter with the CAft. The RMR has therefore decided to postpone decision-making on the liquidity support for Aruba for the fourth quarter of 2021 and, as a result, also to postpone decision-making on the degree of deviation from the standard for the financing balance for the whole of 2021 until the RMR of 29 October 2021. Now that no documents have been received, the agenda and decision-making have not taken place.