CFT advises placing Aruba under financial supervision

THE HAGUE--The Committee for Financial Supervision CFT has advised the Kingdom Council of Ministers to institute independent financial supervision in Aruba's budgetary process.
This could be done through a Kingdom Law, similar to the one for Curaçao and St. Maarten, or a General Measure of the Kingdom Government.
The procedure of the July 11 instruction of the Kingdom Council of Ministers may have concluded with the ratification of Aruba's 2014 budget amendment by the Governor on December 2, but the concerns about the country's finances, the high budget deficit and increasing national debt remain.
"The CFT report gives reason for continuous concern and attention for the public finances of the country Aruba, in particular the importance of independent supervision on the budget," stated Dutch Minister of Home Affairs and Kingdom Relations Ronald Plasterk in a letter to the Second Chamber of the Dutch Parliament on Wednesday.
Plasterk announced that he would bring forward this issue in the Kingdom Council of Ministers "on short term." This newspaper understood that the next Kingdom Council of Ministers is scheduled to take place this Friday.
The Aruba Government stated in a press release on Wednesday, that so far there was no consensus within the Kingdom on the procedure for the 2015 draft budget which Oranjestad has just completed.
Aruba's Finance Minister Angel Bermudez has asked CFT to give advice on the 2015 draft budget. However, CFT has informed government that it couldn't do so, because a legal basis or a request of the Kingdom Government was lacking for this advisory role. "The Government of Aruba and the Kingdom Government so far haven't reached a consensus on the format of how to deal with this matter," it was stated in the press release of the Aruba Government.
Oranjestad has proposed to establish a Fiscal Council, an internal supervising organ in the budgetary process that should be operational by 2016. The Fiscal Council would be advised by the CFT. Budgetary regulations would be added to the country's Constitution.
According to CFT, however, the Fiscal Council didn't offer the guarantee of independent supervision, and the adding of the budgetary regulations to the Constitution wouldn't suffice to guarantee compliance of these regulations. "A yearly advice by the CFT won't remedy this, because it can simply be put aside without escalation possibilities," CFT Chairman Age Bakker stated in a letter to Aruba Governor Fredis Refunjol on Tuesday.
"The entire cycle of the budgetary process has to be tracked and testable norms and sanction possibilities are needed in order to exercise independent financial supervision in a sufficient manner," stated Bakker.
According to CFT, it would be logical to organise financial supervision in Aruba in a similar way as is done in the rest of the Kingdom, whereby the same norms of the Kingdom Law Financial Supervision Curaçao and St. Maarten would be applied.
"Supervision on the budget has to be constructed in such a way that independent supervision is guaranteed. The construction of CFT for Curaçao and St. Maarten has proven successful," Bakker stated. The format for Aruba would be adjusted to the specific circumstances with the possibility for Aruba to nominate a representative for the appointment on CFT.
CFT advised the involved parties, the Kingdom Council of Ministers and the Aruba Government, to come to a Kingdom Law (on Financial Supervision) or a General Measure of the Kingdom Government (Algemene Maatregel van Rijskbestuur) based on article 38 sub 2 of the Kingdom Charter. "The consensus displayed through such a model has worked well in the other countries and deserves to serve as a model for Aruba," stated Bakker.
CFT was critical of the 2014 budget amendment, but nonetheless it positively advised the Governor to ratify the document and to make up the final balance when the 2014 annual account has been drawn up.
CFT called the measures taken as part of the 2014 budget amendment "a step in the right direction." The budget's "reality level" had increased and CFT's recommendations were largely implemented. The ratified amendment increased the budget by 210.8 million Aruban florins, resulting in a 9.3-per-cent deficit and a national debt of 80.8 per cent of the Gross Domestic Product (GDP).
According to CFT, the multi-annual outlook was insufficiently substantiated. The committee was also critical of the move by the Aruba Government to pay out the year- end allowance for pensioners, despite an earlier decision not to pay the allowance this year.
The Daily Herald

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