Netherlands Antilles: IMF Demands Cause Controversy

Mandy Robinson, Tax-news.com, London

18 September 2000

An IMF delegation has been in the Netherlands Antilles investigating whether to recommend a bridging credit from Holland. When it last week stated that it would not approve the bridging credit unless the Netherlands Antilles agreed to certain conditions, the Minister of the Interior tendered her resignation and the Commissioner of Finance openly expressed her disappointment.

Out of seven conditions, one of the most controversial demands is for a 5 per cent reduction in salary for lower ranking public employees to be introduced in 2001. Commissioner of Finance, Sarah Wescott-Williams, expressed her dismay at the IMF's demands, saying: 'I honestly thought that we had already passed this stage. Here we have the IMF again going into detail as to the measures they are proposing to the government.'

'In other words,' continued a disappointed Ms Wescott-Williams, 'even if the discussion was still at the point where, according to the feeling of the IMF, additional measures are necessary, to me that should have been left up to government as to how they would have complied with that additional request. Overall, I had thought that all indications were after the meeting in Holland that it was just a matter of putting the dots on the I's and crossing the T's.'

The feeling of disappointment at the IMF's decision was underlined by the resignation of the Minister of the Interior, Labour and Social Affairs, Lucille George-Wout. Mrs George-Wout said her reasons for leaving stemmed from the IMF's demand to reduce low-ranking public employees' wages. She said she would not allow legislation aimed at making the labour market more flexible to 'take us back to slavery' and that the main problem was the time-pressure, having to reach agreement with the IMF within a week to secure the Dutch credit. The Prime Minister, Miguel Pourier, has supported her decision to leave. He said: 'Mrs George-Wout and I feel she was right, she felt it was unfair to demand such a far-reaching change on such short notice, as it was something she would want to discuss with the social partners. She also felt ... there was no need for such urgency.'

In the IMF's defence, delegation leader Luc Everaert has laid out the reasons for its firm stance. He stated: 'if the Antilles wants to see a 3 to 4 per cent economic growth in the year 2002 as planned, the recovery process must be accelerated further, otherwise it is difficult to recommend the financial support offered by Holland.' If an acceleration of measures is not agreed between the Netherlands Antilles and the IMF then Mr Everaert claims the IMF will not advise the Dutch government to provide the credit.

However, the country is likely to flounder without an injection of financial aid. Sarah Wescott-Williams told the Antilles press last week that she had forwarded a liquidity prognosis for the period between August 2000 and December 2000 to the Island's Council. During this period the prognosis estimates that NAf 68 million will be needed for the government's monthly expenditures - but without aid the government will only be able to contribute NAf 53 million, although a further NAf 8 million of revenue is likely to be collected. Ms Wescott-Williams stated: 'in this sense we have not taken into consideration any cash injections from the Central Government and with improved collection methods, that should place us at a negative liquidity position of approximately NAf 7.2 million at the end of the year.'

For all the controversy, the Netherlands Antilles needs an injection of cash and its government is likely to agree to the IMF's demands, particularly in light of Mr Everaert's comments that the Dutch government gives more development aid to the Netherlands Antilles than it does to any other country. He insists that the Hollnad now has a decision to make - either it continues with its aid programme which is in danger of creating a welfare state, or it takes an alternative strategy and stimulates the Antilles into investing in its own progress.

.

Recommended

Write a comment