The College Aruba Financial Supervision (CAft) is positive about Aruba’s plan to become the first country within the Caribbean part of the Kingdom to introduce a clear policy for the management of government participations and dividends.
This policy, together with a new corporate governance code, can help Aruba identify financial risks at state-owned companies at an earlier stage and achieve better results and greater social returns from these companies. Based on past experiences, CAft emphasizes the importance of ensuring that this policy is actually implemented and applied in practice.
Participation Policy
Companies in which the government holds an interest are important to the country, but they also entail financial risks. CAft has seen several examples of this.
At Aruba Wastewater Sustainable Solutions (AWSS), there were plans to take on unnecessarily expensive loans. At Utilities, dividends were used without the consent of the shareholder, and the financing and procurement of several large projects at Refineria di Aruba (RdA) took place under unfavorable conditions.
In the case of the loans at AWSS, timely intervention occurred, partly on the advice of CAft. That is why it is important that roles are clearly defined: the Minister of Finance acts as the government’s representative as owner, other ministers provide assignments, and the companies execute them. This ensures clarity regarding responsibilities.
Aruba is currently implementing policy guidelines for these participations, including rules for dividend distribution. In addition, legislation on good governance is being developed through the National Ordinance on Corporate Governance. These frameworks form a strong foundation for better steering of state-owned companies, provided they are implemented and consistently enforced.
In addition to focusing on government participations, CAft once again specifically draws attention to the situation surrounding Dr. Horacio Oduber Hospital (HoH). The costs of the hospital ultimately fall to the government, while the government cannot exercise control as owner or shareholder. Significant financial risks are involved, and CAft calls on the government to reach a solution together with the hospital and its owner.
Kingdom Act Proposal on Sustainable Public Finances Aruba (RHOFA)
Aruba faces an important decision with regard to the RHOFA. The RHOFA and the accompanying national ordinance provide a framework for financial supervision and offer interest advantages for Aruba.
Through the RHOFA, foreign loans can be refinanced more cheaply through the Netherlands, and Aruba can subscribe to new loans from the Netherlands to finance investments. This could generate interest savings of up to AWG 60 million per year — more than AWG 500 per Aruban resident.
Financial Management
CAft welcomes the progress Aruba has made in clearing backlogs in its annual financial statements. The General Audit Office of Aruba has now received all annual accounts up to and including 2024. Reporting on policy implementation is also up to date again.
Now that the backlog has been eliminated, efforts must focus on improving the quality of reporting. Significant challenges still remain for Aruba in this area.
On February 26 and 27, CAft visited Aruba. During this visit, CAft met with the Governor, the Ministers of Finance, Economic Affairs, Justice, Integration and Public Transport, the Council of Ministers, the Parliament of Aruba, the General Audit Office of Aruba, and companies such as Utilities and Refineria di Aruba.