PHILIPSBURG — St. Maarten is in a financial bind because it is unable to repay loans the Netherlands granted back in 2010. The State Secretary of Home Affairs and Kingdom Relations Zsolt Szabó said that he is “not convinced” of the need to refinance these loans but financial supervisor Cft, asked for advice, responded that it does not see another option.
On October 21, 2010, St. Maarten received five bond loans from the Netherlands that expired between ten and fifteen years. They all had different interest rates and St. Maarten was not required to make interim payments. The first loan of 50 million guilders ($27.9 million) expired in 2020 and because St. Maarten was already then unable to repay the full amount, this loan was refinanced.
Now the country is faced with expiring loans totaling 73.5 million guilders ($41 million). The Cft found that St. Maarten has insufficient liquid assets to repay these loans and stated in its advice that refinancing is “inevitable.”
“The Cft supports St. Maarten’s proposal to make an agreement about refinancing together with the Central Bank of Curacao and St. Maarten and the Ministry of Home Affairs.”
At the same time, the Cft advises against new so-called bullet-loans (whereby the principal has to be repaid when the loan expires) but to use loans with annual repayments or payments in annuity. “This will contribute to a phased reduction of the debt, the Cft states.
The Cft has furthermore advised St. Maarten to create a so-called liquidity-buffer that covers at least one month of government expenditures. This comes down to an amount of 50 million guilders. But St. Maarten does not even have that kind of money. According to the Cft, the country will have just 24 million guilders ($13.4 million) of free liquid assets at the end of this year: “The country has insufficient assets to repay the loan partially or completely.”
At the end of this year, St. Maarten’s debt to GDP ratio is 49 percent, just below the threshold of 53 percent recommended by the International Monetary Fund.
To be able to review the country’s interest-burden standard, it has to define the public sector(*) every two years. In this respect, St. Maarten falls short again: it has not established the public sector for 2024 and 2025. The Dutch Central Bureau of Statistics is required to report about expenditures, revenue, deficits and debt figures of the public sector, but it has not yet received the data for 2021, 2022 and 2023. “Therefore, the Cft cannot formally review the interest-burden standard.”
Based on its own estimates of revenue and interest-payments of the public sector for 2025, the Cft expects that refinancing the complete loan will not result in exceeding the interest-burden standard.
Further into the future, new concerns loom for St. Maarten. The Cft notes in its advice that several bond loans will expire in 2030, 2035 and 2040. The total of these loans is 178.6 million guilders ($99.8 million). At this moment, St. Maarten has not allocated any money for the repayment of these bullet loans.
That bullet loans are not really working for St. Maarten is obvious: “Since 2010 they have not resulted in repayments.”
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(*) Publisher’s Note:
What Does the CFT Mean by “Public Sector”?
In its latest reports, the CFT (College financieel toezicht) criticizes St. Maarten for failing to define its ‘public sector‘ for 2024 and 2025 and for not submitting key financial data for previous years. But what exactly does “public sector” mean in this context?
According to the Dutch Central Bureau of Statistics and EU reporting standards (ESA 2010), the “public sector” goes beyond just the central government. It includes a wide range of government-related entities such as social funds, public foundations, non-market government-owned companies, and independent administrative bodies. These must be accounted for because their finances affect the country’s overall debt, deficit, and fiscal health.
Every two years, countries must submit an updated definition and financial overview of their public sector. Without this, the CFT cannot determine whether St. Maarten is staying within its legal debt limits—particularly the “interest-burden standard,” which caps interest payments at 5% of revenue.
By not providing this data, St. Maarten is effectively stalling independent fiscal oversight and risking non-compliance with its financial obligations under Kingdom law.
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Related articles:
Opinion piece: Expensive loans
Editorial: The True Cost of Refinancing
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