Aruba and the Netherlands are to conclude an administrative agreement
containing agreements on sustainable public finances in Aruba. The agreement is
an important first step towards restoring cooperation on a Kingdom Act. In the
agreement, the countries agree that a Kingdom Act is drafted, including budgetary
standards and financial supervision. With the conclusion of the agreement, Aruba
will start paying a lower interest rate for the Covid-19 loans. The saved interest can
be spent by Aruba on domestic investments.
Lower interest rate on loan
The Netherlands and Aruba have been in talks for some time about making
arrangements for financial supervision. With the aim of sustainable public finances
and more room for investment. This is of great importance for a well-functioning
government and sustainable economic development. The administrative agreement
follows an agreement concluded on 10 October 2023 for the refinancing of the
Covid-19 loan. This loan was provided by the Netherlands to Aruba to cope with the
consequences of the Covid-19 pandemic. In the agreement, the loan has a term of 20
years, at an interest rate of 6.9%. After the administrative agreement has been
signed by both countries, the interest rate is reduced to 5.1%. The interest rate can
be reduced because a Kingdom Act gives the Netherlands more certainty about the
financial capacity of Aruba.
Budgetary standards and financial management
Aruba agreed to a Kingdom Act. This will include the definitions of the budgetary
standards, financial management standards, and the design and operation of the
financial supervision. The Act also regulates that Aruba can use the current
registration under which the Netherlands subscribes to loans. This will open up a
favourable financing opportunity for Aruba. The Aruba Financial Supervision Board
(CAft) continues to advise both Aruba and the Kingdom Council of Ministers in the
context of financial supervision. To determine the new budgetary standards, Aruba
and the Netherlands submit a joint research question to the IMF.
Aruba additionally incorporates supplementary provisions in its own, national
regulations. One example is the quantification of the budgetary standards and the
possibility of establishing its own Budget Chamber as an advisor to the States and
the government. Amendment or adoption of the national regulations can only be
done with the approval of the Kingdom Council of Ministers.
Further interest rate cut on entry into force of Kingdom Act
It was further agreed that if the Kingdom Act and the relevant national regulations
are not enacted as scheduled, the interest rate on the Covid-19 loan shall be raised
again to 6.9%. The proposal for the Kingdom Act should be submitted to the House
of Representatives for consideration no later than 1 May 2025. It was also agreed
that after the Kingdom Act has come into force, the Netherlands shall further reduce
the interest rate on the refinancing of the Covid-19 loan. The Netherlands also
declares its willingness, after the Kingdom Act has entered into force, to refinance
part of Aruba's maturing foreign loans at the interest rate paid by the Netherlands,
with a limited mark-up above that.
Aruba shall also continue to work on the implementation of reforms under the
country package. The draft proposal for the RAft is withdrawn.
