Tromp: Accountability, transparency essential for growth of new countries

November 03, 2010 2:39 PM

An accountable and transparent government is an important milestone on the path to creating the most prosperous and productive economies –economies that allow individuals, businesses, and governments to create the highest possible standard of living for the largest possible number of people.

This was the central message of the speech delivered by Central Bank of Curaçao and St. Maarten President Emsley Tromp at the sixth Biennial Conference of the Caribbean Ombudsman Association Caroa held in Curaçao this past weekend. The theme of the conference was "Integrity – The Foundation of Good Government."

Tromp told the gathering there was now universal consensus that promoting good governance is essential to creating an environment in which countries can achieve lasting prosperity. He went on to outline five conditions that are essential to good governance.

The first condition necessary for economic efficiency and the eradication of corruption, he explained, is strong management of public resources and establishment of a stable and transparent regulatory environment for private sector activity. "The lack of transparency about underlying economic and financial conditions can feed market uncertainty and trigger large capital outflows that can, in turn, threaten macroeconomic stability," Tromp said.

The second condition is transparent government financial operations. "Maximising this transparency can be achieved by creating systems that limit the opportunities for making decisions on an ad hoc basis and for giving preferential treatment to individuals and organisations," he said.

"For example, we have to simplify our tax systems, labour laws, and business legislation, and strengthen tax and Customs administration by eliminating special exemptions that apply to a privileged few. This is the best way to ensure that adequate revenues are received to finance essential public services and that such services are accessible to the general population."

The third condition for good government, Tromp continued, is transparent budgetary procedures. "We have to strengthen and increase the transparency of budgetary procedures to ensure that government revenues are fully accounted for and used as agreed in the budget.

"We also have to improve the quality of government expenditures by reducing outlays for unproductive purposes. The savings that result will make room for spending on primary health care, basic education, vocational training and essential infrastructure. In this regard, the recently achieved fiscal consolidation in the context of the debt forgiveness programme should not mask the vulnerabilities of our fiscal situation."

The fourth condition needed is more effective and accountable economic and financial institutions. To this end, the adoption of the "Harmonisatie wetgeving," which has been submitted to the parliament of Curaçao, "is essential to improving the quality of financial sector regulation and supervision and enhancing the transparency of financial sector operations," he said.

The final requirement is to have better data available to the public on domestic, economic and financial policies and performance. "I cannot overemphasise the importance of high quality statistical data. Such data are an important factor in improving economic policy and an essential aid to potential investors in evaluating countries' economic policies and performance."

"Good governance is essential for countries at all stages of development – from the recently autonomous Curaçao and St. Maarten, which are still in the process of building up domestic institutions and undertaking the basic reforms needed to accelerate economic growth, to advanced countries such as the Netherlands," Tromp said.

He continued: "While much progress has been achieved in the area of integrity and good governance, we should not forget that integrity is a fluid concept. What may seem harmless today may not be acceptable tomorrow. Given the high and lasting cost that lack of good governance can inflict on a nation, we have to be unrelenting in our efforts to make further advances in this area.

"While we may sometimes be constrained by our limited resources, we should intensify cooperative efforts both in the kingdom and in the region to continue to meet and promote the best internationally accepted practices."

2 November 2010

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