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Thread: CAft chairman Age Bakker: “Despite efforts made by Aruba, budget not sustainable

  1. #1
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    CAft chairman Age Bakker: “Despite efforts made by Aruba, budget not sustainable

    Published On: Tue, Dec 15th, 2015

    CAft chairman Age Bakker: “Despite efforts made by Aruba, there is no budget that is sustainable in the long run as yet”


    ORANJESTAD – On December 10, 11 and 14, the Board of financial supervision Aruba (CAft) visited Aruba. The consultations that the CAft held were largely about the execution of the 2015 budget and the planning of the adoption of the 2016 budget. In addition, the Public Works Department (DOW) held a presentation for the CAft on infrastructure projects in the form of Public Private Partnerships (PPP’s) which are carried out. According CAft chairman Age Bakker – in line with the agreements established in the Balanced Budget Agreement (BBA) – on an administrative level steps are made in the right direction in order to improve the Aruban public finances. Nevertheless, the budget is not yet sustainable in the long run. So in order to achieve the deficit norms established by Aruba for 2015 and subsequent years, a reinforced and broad-based effort is required.

    Consultations CAft


    During the first day on Aruba, the chairman and the Board members visited the Advisory Council of Aruba, followed by attendance of a presentation of the DOW on PPPs. During this presentation, the Board members were informed in detail about the two major ring road projects in Aruba: the Green Corridor which is under construction since the third quarter of 2015, and the Watty Vos Boulevard, of which the construction is scheduled to begin around March 2016. Furthermore a visit was paid to the Governor, the Minister of Finance, the Council of Ministers and the Committee on Financial and Economic Affairs of Parliament. The Central Bank of Aruba was visited as well. During the deliberations of the CAft information was exchanged amongst others about the financial statements of 2014, the implementation report for the third quarter 2015, the first budget amendment of 2015 and the planning of the 2016 budget.


    Third implementation report and first 2015 budget amendment


    On November 17th, 2015 the CAft received the third implementation report of Aruba. In its advice, the CAft observes that the implementation of the consolidation measures up till September is lagging behind. In its opinion on the first budget amendment of Aruba, the CAft states that the spending growth is not under control, as can be deducted by the excesses that are expected by the end of 2015. Based hereon, extra efforts are required to reach the budget deficit of 3.7% that was planned for 2015.


    2016 Budget


    Despite the efforts that Aruba has made – which certainly includes the efforts at the official level – to comply with the agreements stated in the BBA, the CAft ascertains that the 2016 draft budget currently is not yet sustainable in the long run. Despite the enhancement of its information value, the budget still shows an excessive deficit. In its advice on the 2016 draft budget, the CAft calculates a deficit of 2.9% of the GDP, which is higher than the 2.0% Aruba is counting on. The CAft considers that the expected additional revenues from recovery measures are too optimistic. The expectation as indicated by Aruba itself is that the introduction of the General Expenditure Tax (ABB) in early 2016 will yield additional resources of approximately AWG 50 million, because of inherently higher compliance rates (compliance). On the basis hereof the CAft has recommended to finalize the relevant legislation as soon as possible. If that is not feasible, the CAft recommends for an amount of approximately 1% of GDP (approximately AWG 50 million) be adjusted in expenditures.


    In accordance with the National Ordinance on Aruba Temporary Financial Supervision (LAft) the budget should be adopted at the latest by December 15th by Parliament. The government has requested an extension until January 31st, 2016 and in accordance with the Ordinance the CAft will advise the Kingdom Council of Minister positively about it. The preparation of the 2017 draft budget will have to be accelerated so that timely delivery is achieved by September 1st, 2016. In that case a timely adoption by Parliament before December 15st is achievable.

    http://curacaochronicle.com/economy/...ng-run-as-yet/

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    Senior Member cindyo's Avatar
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    God, that's a mouthful

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    Senior Member schexc's Avatar
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    It it sure is...and I don't even speak Dutch

    Quote Originally Posted by cindyo View Post
    God, that's a mouthful



    OUR COUPLE'S RETREAT. THE PEARL CONDO HOTEL AT EAGLE BEACH. CONDO ACCOMMODATES TWO ADULTS. YOU MUST REQUEST UNIT #8. https://photos.app.goo.gl/lRquP1F4VtxyZhR42 RENTING DIRECTLY THROUGH http://www.thepearlaruba.com/.

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    Senior Member cindyo's Avatar
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    As my kids say..... TMI Mom
    ( to much info)

    no offense meant

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    CK1
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    CAft is the financial supervision in the Netherlands as Aruban government tends to overspend. There is still an excessive deficit.

    There are many projects which PM Mike Eman wants to do. I thought it's good to know that there will be new construction going on beginning in March 2016, the Watty Vos Boulevard. And that the Green Corridor will continue.

    There will be a new tax starting in early 2016, the General Expenditure Tax (ABB) of 1%.

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    Senior Member arubabob's Avatar
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    It says taxes and fees will go up. Same in every language.

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    Senior Member Aruba4ever's Avatar
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    Whats another 1% when they already charge about 23%, lol.

  8. #8
    CK1
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    All the construction is now in full swing.

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    CK1
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    Published On: Mon, Feb 5th, 2018
    Region | By Edition

    CAft chairman Raymond Gradus: ”The financial situation of Aruba is of concern; compliance with the LAft norm 2018 getting out of sight”

    ORANJESTAD - The year 2017 is expected to be closed with a financial deficit of 3.1% GDP. According to the National Ordinance on temporary financial supervision (LAft) a financial deficit of 0.5% is allowed. In order to be able to comply with its responsibilities, Aruba has taken out additional loans to the amount of AWG 130 million. It is expected that this will increase the debt quote up to 87% GDP as per the end of 2017. In 2018 the public finances threaten to get in disarray as well. It is therefore of the utmost importance that the government of Aruba presents as soon as possible a financial plan in which measures for 2018 are incorporated. Deficit norm LAft greatly exceeded
    The progress report on the third quarter of 2017 displays a troublesome sight. The collective sector of Aruba has a preliminary deficit of 2.6% GDP over the period up to the third quarter. This is 2.1% more than the lawfully permissible deficit norm of 0.5% GDP for 2017. The memorandum to the 2017 budget amendment shows that the deficit of 2017 has further deteriorated in the recent months and will amount to 3.1 GDP according to calculations. The deficit of 2017 is amongst others caused by dissatisfying (non) tax revenues of AWG 50 million and the write-off of the budgeted earnings of the Refineria di Aruba amounting to AWG 73 million. The loan amount thus had to be increased by AWG 130 million to an amount of AWG 569 million. During 2017 it became increasingly clear that it was no longer feasible for Aruba to comply with the LAft norm.
    Budgetary cuts as of 2018 unavoidable
    Aruba is facing a huge financial challenge for 2018. Based on the LAft, a surplus of 0.5% GDP must be realized, and according to the LAft the deficit of 2017 also has to be fully compensated in 2018. Seeing that in 2018 there is no possibility to spread the deficit compensation over multiple years, the LAft norm seems out of reach in 2018.
    Aruba recognizes the precarious financial situation and wants to come up soon with a financial plan. It is now crucial that these measures start and yield effect in 2018, and form part of the adopted budget for 2018. Actions will also be needed after 2018 in order to get prospect on sustainable public finances. A package consisting of structural measures from Aruba to cut costs is therefore inevitable. In addition, the economy must be strengthened in a sustainable way. The reopening of the refinery has again been delayed and at the moment it is unclear what exactly will happen to the refinery.
    Work visits CAft
    As is usually the case during the visits of the Board to Aruba, meetings were held with the acting Governor, the Minister of Finance, the Council of Ministers and the Parliamentary Committee of Finance, Economic Affairs and Government Organization. The CAft also paid a visit to the Central Bank Aruba and met with the Aruba National Audit Office. Furthermore, the Board received information about the tax system in Aruba and its necessary reform.

    http://curacaochronicle.com/region/c...-out-of-sight/



    Last edited by CK1; 02-28-2018 at 10:59 PM.

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    Instruction Aruba off, but finances remain worrisome

    02 February 2018

    THE HAGUE/ORANJESTAD--With a 2018 budget in sight, although many months too late, Aruba has staved off an instruction of the Kingdom Government. However, the Board for Financial Supervision of Aruba CAFT remains very worried about the country’s financial situation.

    CAFT Chairman Raymond Gradus expressed these concerns in a letter to Aruba Finance Minister Xiomara Ruiz-Maduro, dated January 10, 2018, which was made public on Thursday. The figures in the third quarter report of 2017 submitted to CAFT, confirmed that Aruba’s financial situation is problematic. The report “paints a worrisome picture,” as Gradus put it.
    Aruba’s Gross Domestic Product (GDP) up until the end of the third quarter of 2017 showed a deficit of 2.6 per cent, which is 2.1 per cent above the legal deficit norm of 0.5 per cent. CAFT advised last year to reduce this deficit. However, the newly-elected Aruba Government, headed by Evelyn Weber-Croes of the MEP party, indicated that it was not realistic to achieve the 0.5 per cent legal deficit norm in 2017.
    Instead, the Aruba Government preferred to focus on the 2018 budget in which measures would be incorporated to decrease the deficit and to improve the country’s finances. Oranjestad anticipated that the 2018 budget will have passed the Parliament no later than April 30, 2018.
    “Even though this means a substantial delay in the budget process, there is factually a draft budget in sight within a reasonable timespan,” Gradus stated. As such, CAFT has not moved to advise the Kingdom Council of Ministers to give an instruction to the Aruba Government. “Considering the worrisome financial situation in Aruba, the Kingdom Council of Ministers has been informed about the current situation.”
    A 2017 budget amendment, drafted in December last year, calculated the 2017 deficit at 3.1 per cent, which is even higher than the 2.6-per-cent deficit presented in the third quarter report. “This is a big deviation from the 0.5-per-cent norm,” stated the CAFT Chairman, who reminded Aruba that the 2017 deficit will have to be compensated in the 2018 budget, taking into consideration the 2018 budget surplus norm of 0.5 per cent GDP.
    “Aruba is facing a major exercise requiring structural measures to bring back in line the government’s finances in a sustainable manner,” stated Gradus. The new Aruba Government has informed CAFT of the necessity of measures. “In your reaction, you stated that sustainable public finances are one of the main objectives of the Aruba Government.”
    Oranjestad is currently working on a plan which will define a number of cost-saving measures. Besides the reduction of cost in areas such as personnel, which is the highest expenditure post on the budget, the government will look at a more efficient tax system which will secure economic development and tenable public finances on the long term. The plan should be executed this year.

    https://www.thedailyherald.sx/island...main-worrisome

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