Date March 26, 2021
Concerns Decision-making of the National Council of Ministers on 26 March 2021 regarding liquidity need ACS in the second quarter of 2021
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 were agreed. This with the aim of strengthening the financial, economic, institutional and social resilience of the countries in such a way that the countries will be better able to independently absorb external shocks, such as the current COVID-19 pandemic, in the future. As a condition for receiving the necessary liquidity support for the countries, Aruba, Curaçao and Sint Maarten must implement these reforms.
On March 26, the National Council of Ministers (RMR) discussed the possibility for countries to deviate from the budgetary standards in 2021 as laid down in the National Ordinance Aruba Financial Supervision (LAft) and the Financial Supervision Act Curaçao and Sint Maarten. (Rft). The liquidity support for the second quarter of 2021 was also discussed. This is discussed quarterly in the RMR after advice from the Board of (Aruba) Financial Supervision (C (A) ft).
Degree of deviation from the budgetary norms for 2021
Due to the continuing economic consequences of the pandemic, the countries have each submitted a request to the RMR to deviate from the standards in the LAft and the Rft respectively, in accordance with Article 23 LAft / Article 25 Rft. The RMR decided on December 18, 2020 to agree in principle with a deviation from the standard as contained in Article 15, first paragraph, under a, of the Rft for Curaçao and Sint Maarten for the budget year 2021, and the applicable for Aruba being the financing balance as contained in Article 14, second paragraph, of the LAft and the protocol of 22 November 2018.
Due to the fact that the 2021 budgets of the countries are surrounded with great uncertainty, partly due to the impact of the corona crisis and the uncertainty of the start and extent of the economic recovery in 2021, the RMR decided on 26 February last. to the system as used in 2020. The maximum permitted degree of deviation from the financing balance for Aruba and from the standard as contained in Article 15, first paragraph, under a, of the Rft for Curaçao and Sint Maarten has for the time being set equal to the in 2021
on the basis of Article 23 LAft and Article 25 Rft in 2021, deviations from the applicable budgetary standards are not yet sufficiently determinable. The RMR’s decision on February 26, 2021 therefore remains unchanged. It is now not possible to make a realistic estimate of the liquidity support to be provided to the countries for the whole of 2021, as requested by your House. The RMR has asked C (A) ft to prepare an estimate for the liquidity need for the whole of 2021 as soon as the underlying data for the whole of 2021 is sufficiently robust for this purpose in the opinion of C (A) ft. As long as this estimate is not available, the liquidity need is determined every quarter on the basis of advice from C (A) ft on the basis of the most up-to-date monthly reports of the countries. In addition, an appeal to Article 2.27 of the Government Accounts Act will remain necessary for the foreseeable future.
Aruba
On February 1, 2021, the first implementation agenda for Aruba was adopted by the Prime Minister of Aruba and me. In the RMR of February 26, 2021, it was decided that progress on this implementation agenda is conditional on the granting of subsequent tranches of liquidity support. As explained below, Aruba sufficiently complies with the conditions set for the second, third and fourth tranches, which means that liquidity support can be granted.
Decision-making on liquidity support
have liquidity support and for Aruba supplemented by any liquidity to be raised domestically or abroad (in accordance with the RMR).
The CAft has estimated Aruba’s liquidity need at AWG 237 million for the second quarter of 2021. The RMR has honored Aruba’s request to provide AWG 20 million through the liquidity support for the redemption of treasury bills issued. If Aruba issues additional treasury bills in 2021, this amount will have to be repaid. In addition, the RMR has decided, nadat Aruba has signed the second implementation agenda, to proceed to provide liquidity support of AWG 237 million for the second quarter of 2021.
This liquidity support will be provided to Aruba in the second quarter of 2021. The budgetary consequences of this fifth tranche will be presented to you in an incidental supplementary budget law at the end of next week. Normally, new policy is implemented after the States General has authorized the Budget Act. Since postponement of the provision of the fifth tranche of liquidity support cannot wait for formal authorization from both Houses of the States General, the cabinet will distribute this tranche to Aruba in the second quarter of 2021. This acts in accordance with paragraph 2 of Article 2.27 of the Government Accounts Act 2016.
Progress Implementation Agenda
Aruba’s first implementation agenda covered the months of February and March 2021, a relatively short period. This period was mainly dominated by getting to know the departments on both sides of the ocean, the
setting up working groups and consultation structures, making working agreements and establishing joint action plans. Not all deadlines were met as planned. Getting the multi-year cooperation between the countries well underway from the outset took in some cases more time than anticipated. In those cases, deadlines for measures have been adjusted or moved to the second implementation agenda.
All in all, Aruba largely complies with the agreements set out in the first implementation agenda. The agreed documents were delivered within the set deadlines. In general, timely and sufficient coordination takes place where necessary.
Financial management (theme A)
Agreements have been made about the prioritization of regulations that need to be adjusted in order to strengthen the financial column (A.1.1) and a research plan has been delivered to carry out a gap analysis (A.1.2). The latter concerns a gap analysis of the current and desired situation of the organizational aspect of the financial column. Both agreements need to be further elaborated. This is included in the second implementation agenda.
A research plan has been delivered for the review of the purchasing function (A.4.1). The investigation is currently underway; The report is expected on April 15.
Costs and effectiveness of the public sector (theme B)
A condition for the third tranche of liquidity support was the adoption of a national ordinance before 1 January 2021, which inter alia pertains to the maximization of the terms of employment of top officials within the (semi-) public sector. Before 1 January 2021, a draft National Ordinance on the Standards of Top Income (LNT) was drawn up and brought into procedure. In response to the advice of the Advisory Board that has since been issued, the Netherlands has been asked a number of questions, which, among other things, led to a comparative study being conducted between the LNTs of the three countries – which is stated in the RMR of 26 February last. has been announced. On the basis of the results of this research, the follow-up trajectory with regard to the LNT is determined. This has been included in the second implementation agenda as B.5.2.
An independent investigation is currently being prepared into the terms of employment of political office holders and civil servants in Aruba, Curaçao and Sint Maarten (B.5.1). after the action plan was adopted by the four countries. This research must result in an overview and comparative analysis of the total of primary, secondary and tertiary employment conditions. The preparation of the study has been actively undertaken by the countries and is now in the tendering phase. The process is delayed due to the multiple quotation process. New data have been included for this in the implementation agenda (Q2).
In addition, an exploration is started into the possibilities of creating a legislative pool for Aruba, Curaçao and Sint Maarten to
(temporarily) strengthen legislative function (D.4.1). Aruba also timely delivered an action plan for the review of the HR function (B.8). First, official agreement was reached on the scope and objective of the investigation (B.8.1.2). Afterwards, Aruba delivered a plan of action in close coordination with the Netherlands. This will be determined soon and follow-up agreements will be reflected in the second implementation agenda.
Taxes (theme C)
Many discussions have been held on the subject of Taxes in the past period and it appears that dSo many investigations have been carried out and recommendations made (including by IMF and Cartac) that extensive further investigations do not appear to be necessary. That is why we are now working towards decision-making on a number of changes to this subject, which must be implemented together. This involves a new tax system, organizational adjustments of the tax authorities and further automation and the elimination of backlogs. For the second implementation agenda, it has been agreed that administrative approval follows a scenario calculation of the VAT system, legislation and follow-up actions.
Financial sector (theme D)
As part of the Article IV consultation, the IMF carried out a “light” review of the financial sector (D.1 and D.2). Aruba is awaiting the report. Aruba has provided a detailed calendar for D.4.1 for the legislation to be amended regarding the deposit guarantee scheme and the fight against terrorist financing and money laundering. Steps from the detailed calendar are reflected in the second implementation agenda.
Economic reforms (theme E)
In close collaboration between Aruba and the Netherlands, a research set-up has been delivered for the analysis of labor market policy and legislation and regulations (E.1). This research design will be determined soon. Follow-up agreements are included in the second implementation agenda. This also applies to the research assignment into illegal employment (E.3) and the entrepreneurship and investment climate (E.6). These two research assignments still need to be refined on a few points and can then be determined. Here too, follow-up agreements will be included in the second implementation agenda.
Aruba also delivered an action plan in good time for the transition of the food aid program (E.4.1). The Netherlands and Aruba are discussing the content of this.
Care (theme F)
Recently, it was agreed in the four-country consultation to start working on hospital cooperation (F.2). A research group is also conducting a study into the possibilities of achieving a future-proof health care system, with which at least part of the research under measure F.3 is already underway. It is still being considered to what extent the current research is comprehensive or needs to be supplemented.
A point of attention remains the cuts of AWG 60 million, which have been imposed by the Netherlands. There is discussion about this task at the administrative level. However, a platform, partly consisting of healthcare providers and the MWV insurer, is being commissioned by Aruba to find a way to fulfill this task.
Education (theme G)
The screening of education has now started. Agreements have been made about the follow-up and these have been included in the second implementation agenda.
Strengthening the rule of law (theme H)
The vast majority of measures to strengthen the rule of law have been taken up vigorously. The countries in the Kingdom agreed on a new protocol to strengthen border control on 4 February last. Your House was informed about this on 18 February. Furthermore, Aruba, Sint Maarten and Curaçao individually concluded an administrative agreement with the Netherlands to honor the commitments made for the material replacements from the Long Term Plan 2019-2028 Carib Coastguard. In addition, the Commandement der Naval Force in the Caribbean and the government of Aruba signed a covenant on 12 February last that supervises the Social Training Program, whereby the Ministry of Defense offers young people the opportunity to rehabilitate with the cooperation of Aruba.
Curacao
Decision-making on liquidity support
For Curaçao, the Board of Financial Supervision Curaçao and Sint Maarten (Cft) has established that the country still has sufficient resources for the second quarter of 2021 and that the liquidity need is therefore nil.
Progress Implementation Agenda
The first implementation agenda of Curaçao also only covered the months of February and March 2021, and for Curaçao it also applies that properly setting up the multi-year cooperation from the outset took more time than anticipated in some cases. In those cases, as with Aruba, deadlines for measures have been adjusted or moved to the second implementation agenda.
In general, constructive cooperation has taken place in recent years to progress the implementation of the measures included in the implementation agenda (Q1). Several important steps have been taken, but there are also a number of topics that require further attention.
Financial management (theme A)
An action plan has been drawn up together with the Ministry of Finance of Curaçao to improve the quality of the budget process. This will be done in two stages ghappen. First of all, the current budget process will be analyzed, looking at its structure, existence and operation. In the second phase it is investigated which measures the effect of
improve the budget process. This review will be carried out in the coming period. The aim is also to provide insight into how the government’s policy objectives are involved in the budget process. In addition, the plan of action for optimizing the subsidy policy is in the final phase.
Costs and effectiveness of the public sector (theme B)
Within theme B (Costs and effectiveness of the public sector), progress has been made in various areas. For example, the legislative function will be examined and a start will be made on the possibilities of creating a legislative pool for Aruba, Curaçao and Sint Maarten to (temporarily) strengthen the legislative function. The comparative study of the primary, secondary and tertiary employment conditions of political office holders and civil servants in Aruba, Curaçao and Sint Maarten, already referred to in Aruba under theme B, has been delayed due to the multiple quotation process. Progress has, however, been made with regard to the intended strengthening of the government organization and in particular the HR function. To this end, various milestone moments will be included in the new implementation agenda, which are largely in line with agreements that had already been made under the Growth Agreement. With regard to government housing, a blueprint has been drawn up for a new government housing system as a first step towards a 20% cost reduction on housing by 2025. This housing system, as part of the Land and Real Estate Company, will be further elaborated in the next implementation agenda.
The decision-making regarding the extension of the carens days (B.12) and the maximization of the duration allowance (B.13) has not yet been completed. Curaçao has provided the requested substantiation. However, the substantiation for B.12 is still insufficient. With regard to B.13, the substantiation has led to additional questions that must be answered before decision-making can take place.
Taxes (theme C)
In the meantime, a start has been made on drawing up the action plan for the measures associated with the tax system and the tax authorities. This theme is lagging behind schedule, because going through all the information made available by Curaçao takes more time than anticipated. For this reason, new data will be included in the new implementation agenda (Q2). There is constructive consultation about these measures and the necessary information is properly exchanged. This theme is of great importance, given the need to increase income for Curaçao.
Financial sector (theme D)
The necessary measures for the financial sector are being taken by the Central Bank of Curaçao and Sint Maarten (CBCS) and the Dutch Ministry of
Finances tracked and on schedule. In the past period, the International Monetary Fund has drawn up two reports, in which the financial sector of the monetary union Curaçao-Sint Maarten and the system of supervision of the financial markets have been reviewed.
Economic reforms (theme E)
Work is being done constructively on drawing up an action plan to analyze labor market policy (E.1). The action plans for this process and for conducting an investigation into illegal employment of foreign workers (E.3) are in the final phase. A draft action plan has also been drawn up to achieve the sustainable affordability of the social system (E.4.1). This action plan is being worked out in more detail and will be adopted shortly. A new measure has been included in the new implementation agenda (Q2) for taking measures to keep the social system affordable in the short term. These measures require attention because of their great importance for the national budget. A major concern is the transition of food aid. The protocol for the transition of the food aid program to Curaçao (E.4.2) is not yet ready. In the RMR of March 26 last I explicitly requested attention from Curaçao for this.
An action plan has been drawn up with regard to the measures to promote the entrepreneurship and investment climate. Based on the studies that Curaçao has already commissioned in recent years, it will be examined whether there are still blind spots in the approach, so that the policy can be improved integrally. Even in the short (er) term
To achieve results, concrete measures are proposed to tackle the red tape approach and to draw up a comparative study of the cost of doing business. Curaçao has also decided to set up the new Land and Real Estate Company. The cooperation between Curaçao and the Netherlands on this point still stems from the Growth Agreement. The Land and Property Company, part of the Ministry of Traffic, Transport and Spatial Planning, will implement a land policy in line with the market in order to be able to carry out land exploitation that contributes to the financial strengthening of the national budget.
Care (theme F)
Recently, it was agreed in the four-country consultation to start working on hospital cooperation (F.2). In order to conduct research into the efficiency and effectiveness of care, an action plan has been drawn up that focuses on the funds managed by the Social Insurance Bank. This action plan contains good elements and will be worked out in more detail. A new measure has been included in the new implementation agenda (Q2) for taking measures to keep the health care system affordable in the short term. These measures must be further elaborated in the coming period.
Education (theme G)
Based on the action plan that Curaçao has drawn up, the baseline measurement has already been started by Curaçao. This baseline measurement will be part of a joint process with the Netherlands from April 2021. The Netherlands has, by agreement on the mutual arrangement for the Curaçao Land Package, released an amount of 30 million euros for investments in educational housing in Curaçao. The first 0.5 million euros of this was made available to Curaçao in January 2021 to solve the worst needs. Curaçao has used this money to repair leaking roofs of various school buildings. The preparations for making an integral strategic housing plan
For the purpose of spending the other resources, a start has been made in good mutual consultation.
Rule of law (theme H)
The vast majority of measures to strengthen the rule of law have been taken up vigorously. The countries in the Kingdom agreed on a new protocol to strengthen border control on 4 February last. Your House was informed about this on 18 February. Furthermore, Aruba, Sint Maarten and Curaçao individually concluded an administrative agreement with the Netherlands to honor the commitments made for the material replacements from the Long Term Plan 2019-2028 Carib Coastguard. An action plan has also been drawn up for the further professionalization of the Curaçao military personnel (CURMIL) and updating the conscription bye-laws, and the covenant to implement the Social Training Program is ready for adoption. What is worrying is the stagnation in the development of the modernization and reform of the offer of online games of chance. Despite repeated requests, the requested information on this has still not been shared with the Netherlands
It is important to note that Curaçao has not yet met a number of conditions for the third tranche of liquidity support. This concerns the following conditions:
- Adopting the national ordinances before 1 January 2021 that pertain to the 25% reduction in the total package of employment conditions of Parliament members and Ministers as of 1 July 2020.
- The adoption of the national ordinance before 1 January 2021 that pertains to the maximization of the terms of employment of top officials within the (semi-) public sector and the discount on the total package of terms of employment by 12.5% of staff and top officials of the government. affiliated entities.
Until Curaçao enacts these national ordinances and allows them to enter into force, the country will not be eligible for further tranches of liquidity support.
St Martin
Because Sint Maarten later started the cooperation process, no implementation agenda had yet been set for this country. A first implementation agenda must be signed no later than 1 April. In recent weeks, my ministry has drawn up this implementation agenda in close collaboration with Sint Maarten. In addition, concrete agreements have been made in a constructive manner regarding the implementation of the national package. On March 17, the Prime Minister of Sint Maarten informed me by letter that her Council of Ministers agreed with this implementation agenda. In principle, this clears the way for this document to be signed by myself and the Prime Minister of Sint Maarten.
Political situation
On March 10 last, however, I had to learn through the media that the Choharis Law Group “on behalf of the parliament and the people of Sint Maarten” has submitted a petition to the SpecialRapporteur Racism and the United Nations (UN) Working Group of experts on people of African Descent. It is striking that among the parliamentarians who have explicitly expressed their support for this petition, mainly are members of the Sint Maarten coalition parties.
The petition targets alleged ongoing acts of racial discrimination and alleged human rights violations by the Kingdom of the Netherlands against the residents of Sint Maarten. Specifically, according to the petition, the process surrounding the COVID-related liquidity support and the establishment of the COHO is seen as contrary to international human rights and also racist. The petition requests, among other things:
(…)
(iii) terminating the COHO proposal and ensuring that no new Dutch entity or person (s) assumes similar powers,
(iv) ensuring that the powers proposed in the COHO legislation and other executive and legislative authority remains exclusively with the elected island governments;
As I previously informed you in response to questions from members Bosman (VVD) and Van Raak (SP), I have taken note of this petition with great astonishment. The content of this petition, as well as the language used in it, cannot be reconciled with the previously expressed support for the national package and the establishment of COHO. As you know, this support was expressed by a large majority of the members of Parliament at the time and, when requested, confirmed in writing by the President of the Parliament on 14 December 2020. With this statement, it was clear that there was support in the States for the country package and the conditions set for the third tranche of liquidity support, which was of crucial importance to the signing of the mutual arrangement on 22 December 2020.
The continued support of the entire government and parliament is still indispensable for the success of the trajectory that the Netherlands and Sint Maarten have embarked on. After all, the measures that we agree with with the aim of improving the economy and the living environment of Sint Maarten for all its residents can only be implemented if there is sufficient support from parliament, especially when changes to legislation and regulations are necessary. . And the consideration of the COHO bill requires consensus on the part of Sint Maarten. Now that the petition submitted shows that a majority of the States of Sint Maarten, including the coalition parties, are rejecting the COHO bill and the associated national package, I sent a letter to the Prime Minister on 16 March.
The government, via a letter from the Prime Minister dated 17 March last, quickly complied with this request and unambiguously confirmed its support for the process. I did not receive a letter from the President of the States until shortly before the Council of Ministers of the Kingdom, on 24 March. Although this letter states that a majority of the political groups in the States still support the national package and the path towards it. The COHO Act, the letter does not provide any clarity about how this support relates to the petition submitted, which is also supported by a majority of the States. This gives rise to questions for the RMR, because how can there be support for the national package and the process towards the COHO Act, but also for a petition expressly requesting the stopping of exactly this process? For this reason, the RMR has decided to request Sint Maarten once again for clarification regarding the support of Parliament for the national package and the process for the realization of the COHO Act, in relation to the petition submitted and any other ongoing processes in the context of the adopted motion of 5 November last. As long as the situation that has arisen and whether or not there is political support for this process is clarified, the Netherlands cannot be required to provide further liquidity support.
Decision-making on liquidity support
of Sint Maarten, in which the government and the States of Sint Maarten are requested to reaffirm their support for the agreements made in the mutual arrangement for the Sint Maarten Land Package and with regard to the process towards the realization of the COHO Act.
As described earlier in this letter, the Cft has estimated the liquidity need of Sint Maarten for the second quarter of 2021 at ANG 39 million. However, given the current political situation as described above, the RMR has decided not to provide further liquidity support to Sint Maarten at this time. Until berryInformation about the liquidity support for the second quarter of 2021 (fifth tranche) can be proceeded as soon as sufficient clarity has emerged about Parliament’s position.
Finally
I deeply regret that parts of the advice of the Council of State on the bill for the Kingdom Act on the Caribbean Body for Reform and Development have already been leaked to various media. In accordance with the usual procedure, I have submitted this advice confidentially to the three Prime Ministers of the countries for response. Because the confidential advice has apparently already been leaked and widely distributed, which I regret, I have now published the advice and the underlying bill on the advice of the Council of State and in coordination with the countries. This happens exceptionally and because of the specific nature of consensus government legislation. I refer you further to my letter of March 26 on this subject, which I will discuss in more detail here.
The signing of the implementation agendas for the second quarter of 2021 is scheduled for Monday, March 29, 2018. You will be informed about the content of these implementation agendas shortly thereafter.
Your House will receive enclosed the Assessment Framework for Risk Schemes Central Government Liquidity Support fifth tranche to Aruba.
The State Secretary for the Interior and Kingdom Relations,
drs. R.W. Knops