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Archives of Business Research – Vol. 13, No. 03
Publication Date: March 25, 2025
DOI:10.14738/abr.1303.18420.
Cecilia, W. A. (2025). Assessing Good Governance Through Financial Execution: A Comparative Analysis of the Financial Supervision
Board (Cft)’s Comments on the Island Budget Execution Reports of the Public Entity of Bonaire (2018-2024). Archives of Business
Research, 13(03). 69-90.
Services for Science and Education – United Kingdom
Assessing Good Governance Through Financial Execution: A
Comparative Analysis of the Financial Supervision Board (Cft)’s
Comments on the Island Budget Execution Reports of the Public
Entity of Bonaire (2018-2024)
Willem A. Cecilia
Island Registrar Emeritus of the public entity of Bonaire
Address: P.O. Box 103, Kralendijk, Bonaire, Caribbean Netherlands
ABSTRACT
This study explores the intersection between financial execution and governance
quality in the Public Entity of Bonaire, analyzing the Financial Supervision Board’s
(Cft) evaluations of budget execution reports from 2018 to 2024. Through a mixed- method approach integrating quantitative and qualitative analyses, the research
identifies patterns in fiscal management, governance performance, and budget
deviations, assessing their implications for administrative stability and financial
oversight. A Pearson correlation analysis reveals a strong and statistically
significant relationship (r = 0.879, p = 0.009) between budgetary discipline and
governance effectiveness, highlighting that reduced financial deviations align with
better governance outcomes. However, political instability in 2023—marked by an
Island Council election in March and an Executive Council restructuring in
October—exacerbated governance disruptions, leading to financial oversight
failures in 2024. A comparative review of execution reports (UR1, UR2, UR3) from
2023 and 2024 further demonstrates persistent deficiencies in commitment
management, administrative efficiency, and fiscal transparency. Findings confirm
that governance deterioration directly correlates with financial mismanagement.
Without urgent fiscal reforms and strengthened oversight mechanisms, Bonaire
risks continued governance instability. The study recommends enhancing
budgetary discipline, reinforcing financial reporting, stabilizing governance
structures, and ensuring adherence to Cft recommendations to restore financial
integrity and institutional credibility in Bonaire’s public administration.
Keywords: good governance, public finance, transparency, accountability, financial
oversight, budget deviations, fiscal discipline, policy compliance.
INTRODUCTION
The Caribbean islands of Bonaire, St. Eustatius, and Saba (BES-islands) have been part of the
Netherland's constitutional structure since October 10th, 2010 (Cecilia, 2022). The island's new
status is regulated in the Charter for the Kingdom of the Netherlands. The islands have the
status of public entities in the sense of article 134 of the Dutch Constitution. This provides for
a special form of decentralized administration within the Netherlands which is comparable to
municipalities. The administrative structure of these public bodies is based on the Dutch
Municipalities Act.
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Archives of Business Research (ABR) Vol. 13, Issue 03, March-2025
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In 2017 through a new article 132a of the Constitution, the BES-islands were given a special
form of local government which is not subdivided into provincial authorities and for which
different rules can be given regarding tasks and powers. The anchoring in the Constitution
formalized the 'Caribbean public entities' among other things and ensured that the votes of all
Dutch citizens on the islands will count for the elections to the Senate and the House of
Representatives in the Netherlands. Before October 10th, 2010, the BES-islands together with
Aruba, Curacao, and St. Maarten, were part of the Netherlands Antilles. The administrative
structure of these islands was governed by the 'Island Regulation Netherlands Antilles'(IRNA)
based on the political monistic system. The Netherlands Antilles was a constituent country of
the Kingdom of the Netherlands. The country came into being in 1954 as the autonomous
successor of the Dutch colony of Curacao and Dependencies. The Antilles was dissolved in 2010
and the islands of Curacao and St. Maarten became constituent countries of the Kingdom. The
island of Aruba on the other hand had been granted this status since 1986.
THE BOARD OF FINANCIAL SUPERVISION
The board of Financial Supervision, in Dutch the ‘College financieel toezicht (Cft)’, was
introduced in Bonaire (as well as in Sint Eustatius and Saba) following the constitutional reform
of the Kingdom of the Netherlands on October 10, 2010 (Dutch Ministry of Interior, 2019). This
reform resulted in the dissolution of the Netherlands Antilles and the integration of Bonaire,
Sint Eustatius, and Saba as special municipalities of the Netherlands. The introduction of the Cft
was part of a broader framework to ensure sound financial management and stability in these
newly integrated entities.
Historical Context and Constitutional Reform
• Prior to 2010, Bonaire was part of the Netherlands Antilles, a semi-autonomous country
within the Kingdom of the Netherlands. The Netherlands Antilles faced chronic financial
mismanagement, high public debt, and economic instability.
• The dissolution of the Netherlands Antilles and the integration of Bonaire, Sint Eustatius,
and Saba into the Netherlands as special municipalities required a mechanism to ensure
that these smaller islands could achieve and maintain financial stability.
Need for Financial Oversight
• Bonaire, as a small island with limited economic resources, faced challenges in managing
its public finances effectively. These challenges included:
o Limited revenue-generating capacity due to a small population and economy.
o High dependency on Dutch financial support.
o Risks of budget deficits and unsustainable public debt.
• The Cft was introduced to provide oversight and ensure that Bonaire's public finances
were managed prudently, in line with Dutch standards of good governance.
Legal Framework
• The Cft was established under the Financial Supervision Act for Bonaire, Sint Eustatius,
and Saba (in Dutch: Wet financieel toezicht BES [FinBES]). This act mandates the Cft to
monitor and supervise the financial management of the public entities of Bonaire, Sint
Eustatius, and Saba.
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Cecilia, W. A. (2025). Assessing Good Governance Through Financial Execution: A Comparative Analysis of the Financial Supervision Board (Cft)’s
Comments on the Island Budget Execution Reports of the Public Entity of Bonaire (2018-2024). Archives of Business Research, 13(03). 69-90.
URL: http://doi.org/10.14738/abr.1303.18420
• The Cft operates independently but reports to the Dutch Ministry of the Interior and
Kingdom Relations.
Objective of the Cft
The primary objective of the Cft is to ensure sound financial management and sustainable
public finances in Bonaire. This includes:
• Preventing budget deficits and excessive public debt.
• Promoting transparency and accountability in public spending.
• Ensuring compliance with Dutch financial regulations and standards.
TASK OF THE BOARD FINANCIAL SUPERVISHON
The Cft has several key tasks and responsibilities in relation to Bonaire:
1. Budget Supervision
• The Cft reviews and assesses Bonaire's annual budget to ensure it is balanced,
realistic, and in line with financial regulations.
• It provides recommendations or imposes corrective measures if the budget does not
meet the required standards.
2. Financial Reporting and Monitoring
• The Cft monitors Bonaire's financial performance throughout the year, including
revenue collection, expenditures, and debt levels.
• It reviews periodic financial reports submitted by the public entity of Bonaire.
3. Debt Control
• The Cft ensures that Bonaire's public debt remains within sustainable limits and
complies with legal thresholds.
• It advises on borrowing and debt management practices.
4. Advisory Role
• The Cft provides advice to the public entity of Bonaire on financial matters, including
budget preparation, financial planning, and policy implementation.
• It also advises the Dutch government on financial issues related to Bonaire.
5. Enforcement of Financial Discipline
• If Bonaire fails to comply with financial regulations or faces significant financial
risks, the Cft can impose measures to enforce fiscal discipline. This may include
requiring budget adjustments or restricting certain expenditures.
6. Promoting Good Governance
• The Cft promotes transparency, accountability, and efficiency in public financial
management.
• It encourages the adoption of best practices in governance and financial
administration.
The introduction of the Cft on Bonaire was a response to the need for robust financial oversight
following the island's integration into the Netherlands as a special municipality. The Cft plays a
critical role in ensuring that Bonaire's public finances are managed responsibly, sustainably, and
in accordance with Dutch standards. By supervising budgets, monitoring financial performance,
and providing expert advice, the Cft contributes to the long-term economic stability and good
governance of Bonaire.
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RESEARCH OBJECTIVES
This study aims to conduct a comprehensive analysis of financial execution and governance
trends in the Public Entity of Bonaire, focusing on the comments of the Financial Supervision
Board (Cft) on the Island Budget Execution Reports (UR) of the local government from 2018 to
2024. The research will assess these findings in the context of good governance principles, such
as transparency, accountability, efficiency, fiscal discipline, and public sector integrity.
Specifically, this study seeks to:
1. Evaluate the financial execution of the island budget in relation to good governance
principles, identifying patterns in budget realization, expenditure control, and revenue
management that reflect the degree of transparency and accountability in financial
administration.
2. Assess governance trends and fiscal discipline by examining how the local government
of Bonaire adheres to budgetary compliance, administrative accountability, and
responsible financial management as monitored by the Cft.
3. Compare and contrast Cft’s comments on execution reports to determine recurring
governance weaknesses, such as policy inconsistencies, lack of financial discipline, and
transparency gaps, as well as improvements in fiscal oversight and institutional
performance.
4. Analyze the relationship between financial execution and governance quality,
particularly how budget deviations, administrative inefficiencies, and fiscal
mismanagement correlate with governance performance and the extent to which
financial oversight enhances institutional credibility.
5. Investigate the impact of Cft’s interventions and recommendations on strengthening
governance structures, promoting effective decision-making, and ensuring adherence to
internationally recognized good governance standards in public finance management.
6. Identify key governance challenges and structural deficiencies within Bonaire’s public
administration, such as weak internal controls, lack of financial forecasting, and political
influence on financial decision-making, which hinder the effective implementation of
good governance frameworks.
7. Propose policy recommendations that align with the principles of good governance,
including greater financial transparency, enhanced public accountability, improved
fiscal discipline, and institutional reforms to strengthen budget execution and
government integrity.
By integrating good governance principles into the evaluation of financial execution, this study
will provide a critical assessment of the effectiveness of financial oversight, the quality of public
sector governance, and the sustainability of Bonaire’s fiscal and administrative framework.
LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT
Good governance is a fundamental principle in public administration, ensuring transparency,
accountability, and efficiency in financial management (World Bank, 2021). This literature
review explores the intersection of financial execution and governance quality, focusing on
fiscal oversight, budget execution, and institutional accountability. The role of financial
supervisory bodies, such as the Financial Supervision Board (Cft) for Bonaire, is examined
within the context of public sector governance and financial discipline. The review draws upon
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Cecilia, W. A. (2025). Assessing Good Governance Through Financial Execution: A Comparative Analysis of the Financial Supervision Board (Cft)’s
Comments on the Island Budget Execution Reports of the Public Entity of Bonaire (2018-2024). Archives of Business Research, 13(03). 69-90.
URL: http://doi.org/10.14738/abr.1303.18420
existing theoretical frameworks, comparative case studies, and empirical research to evaluate
whether budget execution reports reflect good governance in the Public Entity of Bonaire.
Definition and Principles of Good Governance in Public Financial Management
Good governance in public financial management is defined by international organizations,
including the United Nations Development Programme (UNDP, 2025), (World Bank, 2021), and
Organisation for Economic Co-operation and Development (OECD, 2025). According to the
(UNDP, 2016), governance in the public sector should be measured by:
• Transparency: Ensuring financial information is publicly accessible.
• Accountability: Holding public officials responsible for financial decisions.
• Efficiency: Ensuring optimal allocation of public resources.
• Rule of Law: Enforcing legal frameworks for financial management.
• Participation: Engaging stakeholders in budgetary decision-making.
The International Monetary Fund (IMF) Fiscal Transparency Code (IMF, 2018) emphasizes the
need for independent fiscal oversight to ensure good governance. The IMF Fiscal Transparency
Code serves as a practical instrument for advancing good governance in public financial
management by promoting transparency, accountability, and effective fiscal policies. The Code
helps governments build stronger institutions and foster public trust. According to the IMF,
fiscal transparency provides legislatures, markets, and citizens with the information they need
to hold governments accountable for their fiscal performance and use of public resources.
The Role of Budget Execution in Good Governance
Budget execution is a key indicator of governance quality (Schick, 1998). According to Allen
and Tommasi (2001), well-executed budgets ensure that allocated resources align with policy
priorities, and unapproved spending is avoided. Andrews, Pritchett, and Woolcock (2013)
argue that frequent budget deviations weaken governance, increase policy unpredictability,
and reduce public trust in institutions. The World Bank (2021) outlines three key aspects of
budget execution affecting governance:
1. Revenue Collection – Accuracy in forecasting and actual revenue generation.
2. Expenditure Control – Adherence to approved budgets.
3. Fiscal Oversight – The role of independent financial bodies in ensuring transparency.
The Purpose of Financial Supervision in Public Governance
Public finance is subject to external oversight mechanisms to prevent financial mismanagement
(OECD, 2024). According to Fritz, Verhoeven, and Avenia (2017), strong financial oversight
reduces fiscal risks and improves governance outcomes.
The Cft, which oversees financial management in the Dutch Caribbean, plays a crucial role in:
• Ensuring compliance with balanced budgets (Cft, 2023).
• Evaluating fiscal risks and issuing recommendations.
• Monitoring the financial execution of island budgets.
According to Schick (1998), effective financial supervision leads to better governance
outcomes, but weak enforcement or political resistance can hinder reform implementation.
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Cft’s Role in Bonaire’s Fiscal Oversight
Since its integration into the Netherlands, Bonaire has been subject to Cft supervision under
BES financial regulations. Key governance issues highlighted in Cft reports (2018-2024)
include:
• Persistent budget deviations affecting fiscal stability.
• Lack of financial planning for unexpected fiscal shocks.
• Administrative inefficiencies leading to delayed reporting (Cft, 2023).
Studies on fiscal oversight in small island economies (Haque, Knight, & Jayasuriya, 2012)
suggest that smaller public entities struggle with financial discipline due to limited
administrative capacity and external dependencies.
Challenges in Public Financial Management in Small Island Developing States (SIDS)
Research on public finance in SIDS highlights common governance challenges, including:
• Weak tax collection mechanisms (Moore, 2013).
• Frequent budget overruns and poor fiscal forecasting (Jensen, 2019).
• Political influence on budget execution (Nguyen, 2023).
Ferguson (2018) found that Caribbean governments frequently underreport budgetary
shortfalls, over-rely on external supervision, and delay implementing necessary reforms due to
political pressures.
Comparative case studies: Sint Eustatius and the Impact of Financial Oversight
Sint Eustatius faced severe governance and budget execution failures, resulting in direct Dutch
intervention in 2018 due to:
• Chronic budget mismanagement.
• Failure to comply with financial oversight recommendations.
• Inadequate financial accountability.
Following the constitutional transition of October 10, 2010, concerns regarding potential
financial mismanagement emerged. In November 2011, with the enactment of the law ‘Wet
Financiën Openbare Lichamen BES’ (FinBES), a system of prior financial supervision was
introduced for the budget of St. Eustatius. This regulatory framework mandated that nearly all
public expenditures required prior approval from the Minister of the Interior and Kingdom
Relations (BZK). In 2015, based on the recommendation of the Cft, the government of St.
Eustatius received a formal directive aimed at improving financial management. The authority
conferred by FinBES to implement prior budgetary supervision was reaffirmed for the fiscal
years 2016 and 2017. However, these financial oversight measures appear to have been largely
ineffective, as the government of St. Eustatius systematically disregarded the financial
regulations established under FinBES (Bakhuis, 2020). The persistent and concerning situation
prompted the Minister of the Interior and Kingdom Relations (BZK) to establish a ‘commissie
van wijzen’ (committee of experts) following consultations with the Island Council and the
Executive Council. The mandate of this committee was to conduct a comprehensive
investigation into the functioning of the public entity, encompassing all aspects of governance
and its implementation (BZK, 2025). The government concurred with the assessment of the
committee of experts that there was a case of gross negligence in the performance of duties by