The Netherlands is helping Curacao to get the economy out of the doldrums

5 juli 2019
2e woning op Curacao als belegging

The Curaçao economy is in a slump – and ‘necessary millions’ from the Netherlands must do something about it

The Isla refinery in the port of Willemstad, which until recently was run by the Venezuelan state-owned company PDVSA. Image Daniel Rosenthal
The Netherlands is taking a guiding role in the attempts to get the economy of Curaçao out of the doldrums. The Reich Council of Ministers may decide to do so on Friday via a so-called instruction. But more importantly, the Netherlands will use money and experts to aid the autonomous Caribbean island.In the past three years, the economy of Curaçao has shrunk by about 5.5 percent. An important cause for this is the crisis in Venezuela, the large neighboring country 80 kilometers away. The refining of oil from that country has virtually come to a standstill and Venezuela has millions of euros in debt to Curaçao.
But other economic sectors are also doing badly on the island. Only tourism is thriving. Prime Minister Eugene Rhuggenaath’s government has been unable to get the budget in order for a long time. Previous advice from the Financial Supervision Council (Cft) to this effect has proved inadequate or has not been implemented.

Debts are increasing

In June, the Cft came with sharp criticism. In Curaçao, “effective measures to reduce expenditure are still not forthcoming,” the College said. Debt is mounting, tax collection is inadequate, education and health care are under increasing pressure and the stock of foreign exchange is rapidly dwindling.
Prime Minister Rhuggenaath admits the problems are “serious.” His government can count on a lot of sympathy within the Dutch cabinet, but within his own circle Rhuggenaath finds a lot of opposition to his attempts to take tough austerity measures. Yet they are necessary, admits a senior Curaçao official: “We really cannot continue like this.”
The Netherlands also thinks that, as the most powerful country within the kingdom, it realizes that an increase in Curaçao problems will eventually also be on The Hague’s plate. For example, because people from Curaçao who remain unemployed on their own island decide to come to the Netherlands.
Dutch and Curaçao experts are therefore working on a new agreement. In January this year, Rhuggenaath and Prime Minister Mark Rutte already signed a covenant in Willemstad for a “Growth Strategy”, but that has not yet been fleshed out enough. The new agreement, which may be made public on Friday, is more concrete, according to discussions with those involved. And it also means that the Netherlands is taking the lead.
At the end of this year, the lease by Venezuela of the refinery in Curaçao will end. If no new operator is found by then, the island’s economy will shrink by another 2 percent. The closure of a company that, thanks to Shell, has been very important for the prosperity of Curaçao for decades can also lead to social unrest. The Netherlands knows the oil industry well and makes that knowledge available for the search for a new operator or an economic alternative.
Help from the Netherlands
Curaçao would like temporary freedom by taking out new loans. The Rhuggenaath government says it is supported in this by an earlier report by the International Monetary Fund (IMF). The Hague is afraid of new debts. Nevertheless, it will give Curaçao the opportunity to take out loans on the Dutch capital market at a very low interest rate.
The Netherlands will also make people available to help make the government more efficient on the island. The civil service is too big and costs way too much money. The tax authorities have a considerable backlog in collecting assessments, which means that the government misses out on many millions.
Dutch support is also coming to the business community in Curaçao. This should make it easier for investors, for example, to buy government land and cover their financial risks.
Exactly how much the Netherlands will allocate for the new aid to Curaçao is still unknown. But by making manpower and loans available, insiders say it will amount to “the necessary millions.” Dutch supervision falls under State Secretary Raymond Knops of Kingdom Relations.
source: Volkskrant

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Categorieën: development curacao, News

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