One of the largest annual expenses facing Aruba is the interest payment on existing loans, reaching nearly 300 million florins per year. However, the implementation of the ‘Hofa Constellation’ opens the door for a considerable reduction in these costs, which would allow the government to invest millions into vital sectors for the people. But this does not come without a price—namely, surrendering your freedom.
The Impact of High Interest on Public Finance Currently, Aruba pays high interest on acquired loans, especially those taken during the COVID-19 crisis, though Aruba is fully complying with the payments. According to Minister Geoffrey Wever, figures indicate that for COVID loans, an interest rate of 6.9% is being paid, while on the international market, the average is around 6.5%. This means a significant portion of citizens’ tax money goes directly to foreign banks instead of remaining within the local economy.
Flexibility and Financial Supervision The current discussion regarding the Kingdom Law on Sustainable Public Finances (Hofa) centers on the need for a legal framework that gives Aruba the room to refinance its debts at a much lower interest rate. Although the Netherlands has no legal obligation to assist with this refinancing, they have expressed a willingness to do so under the conditions of the new law, according to Minister Geoffrey Wever.
Under the Hofa constellation, financial supervision would become much more flexible compared to the current system, but with conditions ensuring Aruba can never again escape the influence of Dutch decision-making. According to Minister Wever, HOFA would give the Government of Aruba more “breathing room” and space to manage the country’s finances more efficiently.
The primary goal of these negotiations is to save a substantial annual sum in interest in exchange for the financial freedom for Aruba to decide for itself where it wants to invest in its country. The freed funds could be re-injected directly into the Aruban community, but only with authorization from the Netherlands; without authorization, this cannot happen. Among the priorities mentioned for investment are:
- Education: Better resources for our schools and students, if the Netherlands approves.
- Infrastructure: Maintenance and development of our roads and public buildings, if the Netherlands approves.
- Public Health: Strengthening care for our elderly and youth, if the Netherlands approves.
With the reduction of interest costs, the Aruban people’s money would stay in Aruba, providing the possibility to elevate the quality of life for all inhabitants—but only if the Netherlands approves.
