Curaçao’s Public Finances and the Paradox of a Growing Bureaucracy

Curaçao’s Public Finances and the Paradox of a Growing Bureaucracy

14 September 2025

The Board for Financial Supervision (Cft) recently warned that Curaçao’s 2026 budget risks falling into deficit. This development is not merely a matter of fiscal imbalance; it raises fundamental questions about the functioning of the island’s public sector. Of particular concern is the persistent growth of expenditures on the civil service.

This trend is paradoxical. Several years ago, a voluntary early retirement scheme (VUT) was introduced with the explicit aim of reducing the size and cost of government. In theory, such measures should have created fiscal space, increased efficiency, and promoted generational renewal. Yet, rather than contracting, the personnel budget continues to expand. This suggests that either new employees are being added at a faster rate than retirements, or that salary scales and allowances are rising in ways not matched by productivity gains.

From the perspective of governance theory, this reflects a principal-agent problem. Citizens (the principals) expect the state (the agent) to deliver efficient, transparent, and accountable services. Instead, the bureaucratic apparatus absorbs increasing resources without producing commensurate improvements in performance. The situation is further complicated by a culture of political patronage, where the expansion of the bureaucracy serves as an instrument of clientelism rather than institutional strengthening.

Recent events underscore these dynamics. The forced resignation of the fire brigade commander, after issuing a negative safety assessment of a newly renovated tax office, exemplifies the erosion of bureaucratic independence. The episode is particularly troubling given the substantial public funds allegedly spent on the ceremonial reopening of the building. Here, the incentive structure appears inverted: resources are allocated to symbolic displays rather than to substantive governance capacity.

At the same time, the public image of the civil service suffers from self-representation that undermines its legitimacy. The circulation of social media posts by so-called “young professionals,” celebrating luxury retreats under the guise of team building, reinforces the perception of a bureaucracy disconnected from the realities of fiscal constraint and societal need.

The case of Curaçao illustrates a broader governance dilemma: what is the role of the civil service in a Small Island Developing State (SIDS)? If the bureaucracy becomes primarily a site of employment generation and political loyalty, rather than a neutral instrument of policy implementation, fiscal sustainability and democratic legitimacy will remain fragile.

The warning of the Cft thus goes beyond financial numbers. It highlights the urgent need for a redefinition of the public service, including its mandate, accountability, and independence. Without such reform, Curaçao risks not only recurring deficits but also a hollowing out of the state’s capacity to serve its citizens effectively.

Miguel Goede