~ Good governance, diversification also essential ~
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PHILIPSBURG--Central Bank of Cura�ao and St. Maarten President Emsley Tromp is encouraging the governments of the two countries to apply good public and corporate governance, diversify their tourism products and guard against jeopardising currency stability.
Tromp?s views were outlined in his ?President?s Message? as part of his presentation of the Bank?s annual report last week Friday.
They were given in the context of the need for increasing market confidence and private sector investment, which he stressed are the primary ways for significant economic recovery for both Cura�ao and St. Maarten.
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Monetary Union
Tromp said the unstable international economic climate posed challenges for the monetary union between Cura�ao and St. Maarten. He said that although the authorities of both countries had announced their intentions to create their own central banks, ?we still have to deal with the current reality of the union and, hence, the efforts necessary to defend the stability of the common currency.?
Tromp said policy coordination remained a necessary condition to achieve the objectives of the monetary union. Prominent among them is the stability of the guilder. Given the uncertain global macroeconomic environment, he said, the authorities have to remain vigilant to pursue their domestic policies without jeopardising currency stability.
?Given the anaemic performance of the economies of Cura�ao and St. Maarten, changes in the economies of our main trading partners may have a disproportionate impact on our own economies. The fact that the fiscal situation is in order is not a reflection of the policies pursued, but rather the result of the debt relief programme. The authorities should therefore use this unique opportunity to further strengthen the resiliency of the economy to future crises,? he said.
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Diversification
Oil and food prices are expected to remain high and volatile on the international markets over the medium term, Tromp said. As Cura�ao and St. Maarten are very import-dependent, higher prices on the international markets will worsen net exports. Therefore, he stressed, it is very important that both countries improve their export performance to mitigate, albeit only in part, a further worsening of net exports, which dampens economic growth.
?Although tourism has a high import content, it is still a very important pillar for both economies in terms of exports. Both countries need to further develop and diversify the tourism industry by tapping new markets such as the emerging economies in South America, along with the traditional US and European markets,? Tromp said.
?In addition, we need to further develop and diversify our tourism product towards niche markets such as cultural, conference, and medical tourism. Furthermore, skill deficiencies in the tourism industry need to be addressed to employ local workers whenever possible.?
He said the international financial services industry, which traditionally has been an important pillar of the Cura�ao economy and is a potential pillar of the St. Maarten economy in terms of exports and high-skilled job creation, needed to be strengthened.
?In light of the upcoming Caribbean Financial Action Task Force (CFATF) evaluation, it is important for us to be in compliance with the internationally accepted best practices,? Tromp said.
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Corporate governance
He also pointed out that market confidence and, hence, private sector investment also were encouraged when the government applied the rules of good public and corporate governance. He focused specifically on Cura�ao, where the government does not have a body such as the Corporate Governance Council that is part of St. Maarten?s corporate governance code.
Tromp said recent experiences in Cura�ao underscored the importance of adherence to these principles by the government, in particular when it concerns government-owned companies.
?In Cura�ao, state-owned enterprises are prevalent in several key sectors. Sound governance of these companies is critical to ensure their positive contribution to Cura�ao?s overall economic performance and competitiveness.
?As a consequence, the government should act as an informed and active owner and establish a clear and consistent ownership policy ensuring that the governance of the state-owned enterprises is carried out in a transparent and accountable way, with the necessary degree of professionalism and effectiveness,? Tromp said.
At the same time, he continued, government should not be involved in the day-to-day management of these enterprises and should allow their executive and supervisory boards to execute their responsibilities independently and without interference.
?The supervisory boards of these enterprises should have the necessary authority, competencies and objectivity to carry out their function of strategic guidance and monitoring of the management. At the same time, the state-owned enterprises should recognise the rights of all shareholders, treat them equitably, and provide equal access to corporate information. And, state-owned enterprises should be transparent towards the shareholders and the public in general,? Tromp said.
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