From 911 million guilders in support, 342 million went to cover Covid expenses

September 11, 2023  –WILLEMSTAD – These days, there is a rather serious discussion in the community about whether the Netherlands should refinance part of the debt with Curaçao, and cancel the other part. The main topic of discussion is the cancellation of the 911 million guilders in support. 

The support funds were intended to cover expenses incurred due to Covid. However, there is still no definite answer. According to statements from the Minister of Finance, Javier Silvania, Covid cost Curaçao 342 million guilders.

This information was disclosed by the Minister of Public Finance during the presentation of the budget to the Curaçao Parliament in December 2022. According to the Minister, direct Covid-related expenses were 152 million guilders in 2020, 185 million guilders in 2021, and 5.4 million guilders in 2022. Meanwhile, most of the financial support during Covid went towards financing the functioning of the public sector, as indicated by Central Bank figures. The Minister did not specify a breakdown of the mentioned 342 million. What is known is how the financing for Covid as liquidity support was utilized. 

Contrary to the intention of providing support to the private sector, funds from the Netherlands went to the public sector during 2020 and 2021. According to Finance Minister Javier Silvania, the private sector made poor use of these funds, where certain companies alone received millions through the NOW program. According to a calculation, over 700 days of Covid, Curaçao accumulated a total debt of 911 million guilders to finance a budget deficit. At least 700 million were attributed to delays in tax collections, while 211 million were needed to finance regulatory deficit due to mismanagement, a recurring issue since 2010 for every sitting government. 

Contrary to the intention of supporting the private sector, funds from the Netherlands went to the public sector during Covid. The spending of Covid funds began in 2020 and continued until the end of 2021 and the beginning of 2022. For example, a compilation of financial information at the end of 2020, during the macroeconomic impact of Covid, the government invested liquidity support to cover its operational expenses and outstanding payments.

For instance, during the last two months of 2020, the Curaçao government paid a total of 121 million guilders to civil servants and their salaries. This included net salaries, financing for the VVU (early retirement), Pension Fund, pension arrears, and Social Security contributions. The 121 million guilders accounted for 42% of the total funds received by Curaçao from Support Funds in November 2020. To break it down, net salaries were 42.6 million guilders, VVU 35 million (a reserve amount), Pension Fund 43.5 million guilders, pension arrears 28 million guilders, and finally, Social Security payments were 16 million guilders. According to a liquidity calculation submitted by the Curaçao government to the Dutch government for financing the financial crisis of Covid-19 in 2020, an amount of 122 million was budgeted to pay the civil servants’ salaries, financed from funds received from Covid. 

In 2021, Curaçao had to borrow more money to continue financing the personnel costs in the public sector. The government had to pay 290 million guilders in salaries during the latter half of 2021, where they needed liquidity support for the second half of 2021 if they wanted to continue paying civil servants’ salaries. These were the figures predicted, indicating that there was a sum of 290 million guilders allocated for salaries to cover the latter half of 2021. This total of 290 million in salaries also accounted for payments for voluntary retirement, totaling 27 million guilders for the rest of 2021. 

For 2022, up until June, there was a budget set aside to cover 257.3 million guilders in personnel costs. For example, in January, 44.3 million guilders were paid out. The Dutch government believes that the cost of living in Curaçao, particularly for civil servants, is collectively too high.