Financial Supervision Curaçao and Sint Maarten to Continue
The 2024 report by the Evaluatiecommissie Rijkswet financieel toezicht Curaçao en Sint Maarten (Rft) serves as a comprehensive evaluation of the financial oversight mechanisms in place for Curaçao and Sint Maarten. This marks the fourth evaluation of the Rft, following previous assessments in 2015, 2018, and 2021. The report covers the fiscal years from 2021 to 2023 and aims to assess whether both countries have structurally complied with the financial norms outlined in Article 15 of the Rft, which is key to determining if external financial supervision can be lifted.
Context and Challenges
The report acknowledges that 2021 and 2022 were dominated by extraordinary circumstances due to the COVID-19 pandemic. Both Curaçao and Sint Maarten were allowed to deviate from the strict fiscal norms of the Rft under Article 25, which permits flexibility in the face of exceptional events. The pandemic led to significant economic contraction and forced both countries to implement emergency measures, which impacted their ability to meet the financial criteria.
In terms of financial administration, the pandemic made it even more difficult for both governments to manage public debt, revenues, and expenses. The committee found that while the crisis was a valid justification for fiscal deviations, the underlying structural issues in financial management were not resolved. Specifically, weak financial institutions, challenges in revenue collection, and inconsistent budgeting processes continued to be major obstacles to achieving sustained fiscal health.
Financial Oversight and Norms
The core purpose of the Rft is to guide Curaçao and Sint Maarten toward sustainable public finances, with the ultimate goal of making external oversight redundant. The committee's evaluation hinges on whether the two countries adhered to the financial norms stated in Article 15, which requires budgetary balance, responsible debt management, and sound financial governance.
In the 2021–2023 period, both countries faced challenges in fully meeting these criteria. The committee found that neither Curaçao nor Sint Maarten had sufficiently adhered to the budgetary norms for three consecutive years. This shortfall was partly attributed to the pandemic's impacts, but it also pointed to deeper issues in public finance management that predated the crisis. In particular, the report emphasized that while both countries had made progress in terms of reducing deficits and controlling debt, they had not yet achieved the necessary level of fiscal discipline to justify ending external supervision.
Current Fiscal Balance
Institutional Weaknesses
A recurring theme in the report is the institutional capacity of Curaçao and Sint Maarten to manage their public finances independently. The committee noted that while some reforms had been introduced, both countries still lacked the robust institutional frameworks necessary to sustain fiscal discipline. For instance, delays in financial reporting and inconsistencies in budget execution were highlighted as ongoing problems. The report also pointed out that financial oversight institutions, such as the audit offices and advisory councils, were not functioning at the level required to guarantee long-term fiscal sustainability.
The committee stressed the importance of building stronger institutions that can independently manage public finances without reliance on external oversight. This includes improving the capacity of these institutions to conduct thorough financial audits, produce accurate and timely financial reports, and implement transparent budgeting processes.
Recommendations
The report makes several key recommendations aimed at helping Curaçao and Sint Maarten achieve sustainable financial independence. One of the main suggestions is the development of a standardized framework for evaluating compliance with the fiscal norms of the Rft. This would ensure that future evaluations are more objective and that both countries are measured against consistent criteria.
Additionally, the report encourages the governments of both countries to adopt a more proactive approach to public investment. While fiscal constraints are necessary, the committee recognizes the need for strategic investments in infrastructure and other areas that can promote long-term economic growth. The report advises the governments to seek opportunities for responsible, counter-cyclical investments that can stimulate economic recovery without jeopardizing fiscal stability.
Another key recommendation is to improve collaboration between the governments of Curaçao, Sint Maarten, and the College financieel toezicht (Cft), the body responsible for overseeing the implementation of the Rft. The committee suggests that stronger coordination between these parties is crucial to ensuring that both countries can meet their fiscal obligations and, ultimately, phase out external oversight.
The Path Forward
Looking ahead, the committee advises that external financial supervision should not yet be lifted. Both Curaçao and Sint Maarten still have significant work to do in terms of strengthening their financial institutions and achieving consistent compliance with the fiscal norms. The report recommends that another evaluation be conducted by 2027, giving both countries more time to make the necessary reforms.
In conclusion, the 2024 evaluation underscores the importance of continued financial oversight for Curaçao and Sint Maarten. While progress has been made, the road to sustainable fiscal independence is far from complete. The recommendations put forth by the committee offer a clear path forward, but it will require strong political will, institutional reform, and strategic planning to achieve these goals.
The report ultimately highlights the delicate balance between fiscal responsibility and the need for economic growth, particularly in a post-pandemic world. For both Curaçao and Sint Maarten, the challenge will be to implement these recommendations in a way that not only addresses their immediate fiscal concerns but also sets the stage for long-term stability and prosperity .
