While much attention is focused on Aruba’s macro-economic figures, the fine print of the HOFA Kingdom Law (Houdbare Overheidsfinanciën Aruba) hides a radical change in how semi-public entities will be managed. The era where the Government could use NVs and foundations as an “emergency cash register” to plug budget holes is coming to an end.
The legal document, presented in its draft phase, extends the arm of supervision far beyond the ministers in Oranjestad. The structural control that the Netherlands is demanding via this Kingdom Law will have direct consequences for the boards of NVs like SETAR, WEB, and Elmar, as well as large foundations such as AZV and SVb.
The Concept of “Collective Sector” The fundamental change lies in the definition of the “Collective Sector.” Under HOFA rules, the finances of foundations and public entities are counted as an integral part of the Country of Aruba’s accounts. This means if a foundation has an unexpected deficit, it is automatically counted as a failure of the entire Country to comply with the Kingdom Law norms. The goal is to eliminate “creative accounting,” where governments could hide spending or debt outside the central budget to present more favorable figures to Parliament.
The End of “Dividend-stripping” One of the most used practices in recent decades is requesting extra or “special” dividends from state companies when the Government’s coffers are empty. The HOFA Kingdom Law steps in to put a brake on this:
- Predictability: The law stipulates that dividend income must be structural and planned.
- Investment Protection: The Begrotingskamer (Budget Chamber) will monitor whether withdrawing money for the Government endangers the financial health and investment capacity of the NVs themselves. For the citizen, this could mean a better guarantee that the money from these companies stays for maintenance and investment in services (like water and electricity) instead of paying for the government apparatus.
Control over Loans and Reporting Duties Another point that touches the autonomy of these entities is the capacity to borrow money on the international market. Under the new framework:
- Loan Ceiling: All large loans by NVs or foundations must be evaluated by the Begrotingskamer to ensure they do not affect Aruba’s national debt position.
- Absolute Transparency: The obligation to submit annual accounts and quarterly figures becomes much stricter. A failure in reporting by a large foundation could cause a “red flag” for the entire Country in the Kingdom Council of Ministers (RMR).
Conclusion: Autonomy Under the Microscope The HOFA Kingdom Law creates a “transparent wall” around the public and semi-public sectors. While this can be seen as a positive step for transparency, it signifies a reduction in the political flexibility of local officials. The Hague no longer just watches the Ministers’ budget; they have a direct view into the “vaults” of the entities that carry Aruba’s economy.
This implies that Dutch authority has not only imposed itself on Parliament and the Government but also on all entities and funds that Aruba generates through state-owned companies and foundations. Is this what Aruba voted for? Did you vote for AVP–FUTURO politicians to lose your autonomy?