WILLEMSTAD – Curaçao is concerned about an accelerated decline in foreign exchange and thus the stability of the Antillean Guilder. To maintain the exchange rate of the guilder, a support facility of 60 to 70 million guilders per month has been requested.

This was reflected in Curaçao’s request to drop the standards in the Financial Supervision Act because of the Corona crisis.

The Financial Supervision Council (CFT) states that the Kingdom Act does not provide direct support for foreign exchange and advises the Kingdom Council of Ministers to have an expert party advise on the aforementioned risks and any measures that must be taken. The Board is thinking of the Nederlandsche Bank.

According to the Cft, it is important to note that countries with a liquidity position that covers a maximum of one month of regular expenditure expect to have a liquidity requirement within a few weeks to cover the expected deficits.

The Cft therefore advises the Kingdom Council of Ministers to finalize an initial tranche of liquidity support before 15 April.

STANDARDS IN THE GOVERNMENT LAW

The Financial Supervision Council advises the Kingdom Council of Ministers to agree to drop the central budgetary standard as set out in the Kingdom Act for Curaçao and Sint Maarten. The same should apply to Aruba, which has to do with a National Ordinance and a separate protocol with agreements.

The Commission thus responds to requests from Aruba and Curaçao to The Hague to adjust the agreements due to the corona crisis. The Kingdom Council of Ministers had asked the Cft for advice and is considering this Friday.

IMPACT ON ECONOMY AND PUBLIC FINANCES

According to the Cft, Aruba and Curaçao will be confronted with declining income and increased expenditure. This will be reinforced by policies that countries will take to mitigate damage, such as direct income support to workers who will lose their jobs in the short term and tax deferral.

The broader the policy measures that the countries are aiming for, the greater the budget deficits and the required liquidity.

It is not yet possible for the Cft to indicate which standards the countries cannot meet and to what extent. It has been established that Curaçao and Sint Maarten will not be able to meet the legal standard of a balanced regular service by 2020.

As stated, concrete information on the impact on the economy, the policies targeted by the countries and the impact on public finances is currently insufficiently available and, in any case, there is insufficient evidence to make decisions with significant and far-reaching financial consequences. For example, it is not yet sufficiently clear what the countries themselves could generate, within the limits of their budgets, in coverage for intended emergency measures, says the Cft.