WILLEMSTAD — As interim-minister of Finance Javier Jardim already indicated last week in a presentation on the financial situation of Curaçao, he had sent a letter – as the highest official of Finance at the time – to former minister of Finance George Jamaloodin. In this pressing letter dated June 29^th, he wrote that an instruction from the National Council of Ministers was inevitable if Jamaloodin didn’t alter his policy. On July 12 – one day before the instruction – Jamaloodin informed the Parliament, after questions about the existence of this letter that he would revert to this. However, he never did.

This newspaper is in the possession of the letter, which states that according to Jardim, the national finances have reached a very critical stage. According to him, a chart illustrated that ‘the budget no longer meets the financial standards as stipulated in the National Regulation Accountability 2010 and the Statute Law financial supervision Curaçao and St. Maarten. The national finances have gone off the rails and the current budgetary dynamic is – with unaltered policy – not lasting’. “An instruction from the Council of Ministers of the Kingdom will then be inevitable”, Jardim wrote in his letter.

He also wrote: “Without changing course the budget will close with a deficit on the normal service for the third consecutive year. The budget on the normal service now shows a negative amount of approx. 193 million guilders in 2012 and approx. 151.1 million structurally. With this the balance on the normal service leads to a deficit of approx. 138.8 million in 2012 and 128 million guilders structurally.” The letter also warns that without any alteration Curaçao risks a possible degrading in the rating from Standard and Poor’s. Last year Curaçao was rated with a ‘stable outlook’ but that could change into a ‘negative outlook’.

Obstacles

Several obstacles stipulated are followed by the many warnings from the Cft at the time. In particular, the question whether the reform of the medical insurance scheme will lead to sufficient economies, that a stagnation is predicted for the tax revenues ‘with increasing risks owing to the uncertainty on the tax on profits’, and the most likely loss of dividend payments from government nv’s the coming years, ‘considering the financial situation of the government companies’. All in all, the letter mentions huge uncertainties regarding the actual amount of the various calculated government revenues for 2012, which requires adjusting. However, the government always insisted, also after the instruction from the National Council of Ministers that deficits would be certainly be solved due to aforementioned matters.

Policy measures

In other words, the recommendations in the letter, including several very concrete policy measures, weren’t acted on, for example a necessary implementation of budget-neutral compensation of setbacks and overrunning of each ministry. These compensations were to be realized within two weeks after the date of the letter. If not, a so-called ‘obligations’ blockade’ was to be introduced. The minister was also advised to consult with the Council financial supervision (Cft) on a ‘sacrifice’ to compensate the deficits in 2012 of approx. 278 million, which is about 5 percent of the GNP in the remaining six months.

The letter reveals that the minister had consulted with his ministry regarding the problems whereby Jamaloodin suggested increasing the OB-tariff temporarily. This levy is not wise, according to Jardim, because it would be an ‘extra negative’ and ‘weak’ impulse toward the economy while the latter should benefit from a ‘balanced government policy to tackle the structural problems and make the climate for investment more attractive’. In that respect the letter also pulls the shoulder tax for free education and the levy of 5 cents per liter of gasoline to finance the district improvement plans to shreds.