Van Marum: Aruba, Curaçao, and St. Maarten did not submit formal responses to SEO recommendations on Kingdom financial oversight

THE HAGUE--State Secretary Eddie van Marum has informed the Dutch House of Representatives that Aruba, Curaçao, and St. Maarten did not provide formal written responses to the recommendations in a policy review of Article 5 of Chapter IV, Kingdom Relations, despite being invited to share their views. Van Marum said the Cabinet nonetheless considered input previously collected during administrative discussions as it set out next steps on financial supervision, debt refinancing questions, and external shock readiness.

The letter is the Dutch Cabinet’s response to an evaluation conducted by SEO Economic Research covering the period 2016 to 2022. Article 5 concerns the objective of sustainable public finances through implementation of the Kingdom Act on Financial Supervision (Rft) for Curaçao and St. Maarten, including agreements linked to the 10-10-2010 debt restructuring and the Netherlands’ obligation to subscribe to loans if the Board of Financial Supervision (Cft) concludes Rft conditions are met.

Van Marum reported that the review presents a mixed picture. The policy instruments were described as largely effective in improving transparency and insight into public finances, supporting stability, and sustaining market confidence, including during shocks. At the same time, the review found only partial effectiveness in meeting fiscal norms consistently, securing sustainable public finances, strengthening financial management, and advancing structural economic development, which also affected conclusions on efficiency.

The Cabinet response confirms that the core aims of Article 5 remain relevant and outlines how several recommendations will be addressed. On financial management, Van Marum emphasized that responsibility ultimately lies with the countries, while noting ongoing work with the Cft on an assessment framework tied to Rft Article 15(2), focusing on budget completeness, orderliness, auditability, and the adequacy of explanations for revenues and expenditures. The letter also points to reforms supported through the country packages under Article 4 and states that no new Netherlands-led tracks will be launched at this time, with support available upon request.

On fiscal policy, the Cabinet supports development of a long-term vision for public finances and notes that the current Rft framework leaves limited space for countercyclical policy because of balanced-budget and deficit-compensation requirements. The response references IMF guidance that achieving a sustainable debt ratio should come first, and states the Netherlands will work toward agreements, such as policy rules, on what may be feasible within existing legal frameworks.

A key section of the letter addresses refinancing challenges tied to loans with large end-of-term repayments. Van Marum notes that bundling debts into large final payments can be risky, and that both Curaçao and St. Maarten have requested refinancing for comparable loans. He states the Netherlands will offer Curaçao and St. Maarten the opportunity to explore whether a conditional hardship clause can be formulated for future use, within legal frameworks, and notes that more recent refinancing has favored linear or annuity structures over bullet loans.

Regarding preparedness for external shocks, the Cabinet points to lessons from previous Kingdom policy work and proposes offering Curaçao and St. Maarten the opportunity to consider adopting certain process steps, similar to those being developed in the context of Aruba’s draft Kingdom Act on Sustainable Public Finances, while stressing that responses must be tailored to the type of crisis.

The Cabinet also states it will not introduce a fixed weighing framework for crisis support decisions, arguing that such frameworks can restrict flexibility and that financial support remains a political choice.

An updated evaluation is expected before March 1, 2026, focusing on implementation of the country packages and the use and adequacy of deployed funds. The letter indicates that liquidity loans will not be included in that update, citing the limited portion not covered previously relative to the overall total.

Finally, Van Marum rejects a suggestion by the external expert reviewer to introduce financial sanctions when financial management reforms lag, stating that such sanctions would not support Kingdom relations and could undermine fiscal sustainability by increasing expenditures. The Cabinet said discussions with Curaçao and St. Maarten will continue, particularly on clarifying application of certain Rft provisions, exploring options on countercyclical policy within constraints, and improving approaches for external shocks.

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