Published On: Fri, Jul 22nd, 2022

Kingdom puts liquidity support on hold

PHILIPSBURG / THE HAGUE — St. Maarten has started to pay out vacation allowances without a positive advice from financial supervisor Cft and without permission from the Kingdom Council of Ministers (KCoM), State Secretary Alexandra van Huffelen (Kingdom Relations) writes in a letter to the Dutch Second Chamber. This way, St. Maarten does not live up to conditions set by the KCoM.

In its meeting of February 4, the KCoM agreed that the Caribbean countries (St. Maarten, Aruba and Curacao) are allowed to create alternatives for the 12.5 percent salary cut for civil servants. The condition is that these solutions cannot be financed with liquidity support. St. Maarten has to submit a proposal to the Cft for advice and it can only execute its plans after approval from the KCoM but so far, St. Maarten has not done this.

Finance Minister Ardwell Irion said rather optimistically during Wednesday’s press briefing that “liquidity support can be disbursed after approval by the Cft.” The minister said that a report is being sent to the Cft to show that measures taken fall within the 12.5 percent salary cut. “When that is updated liquidity support will be granted.”

St. Maarten’s liquidity support for the third quarter is 14 million guilders ($7.8 million). In its meeting of July 15, the KCoM decided to postpone granting the money to St. Maarten “Until it can show a Cft-advice showing that the alternative solution to the salary cut meets the conditions of the KCoM.”

The KCoM mandated State Secretary Van Huffelen en Minister of Finance Sigrid Kaag to assess whether St. Maarten meets these conditions. The Council also ordered the countries to collect salary-subsidies from companies that received too much.

“By signing the loan agreements the countries are obliged to stick to all conditions from the KCoM,” Van Huffelen wrote in her letter to the Second Chamber.

The state secretary wrote that according to the TWO (Temporary Work Organization) progress with the implementation of the country package is “in general sufficient.” However, the TWO has some concerns about the execution capacity of the countries. In St. Maarten the duration of administrative processes is mentioned as a factor that causes delays in the implementation.

Van Huffelen furthermore pointed out that St. Maarten has to inform the Cft about its progress with collecting overpaid salary-subsidies. “The reports, the controls and the results of the collection are insufficient.”