Conditions influence interest rates for refinanced liquidity loans
PHILIPSBURG — State Secretary Alexandra van Huffelen is prepared to refinance the liquidity loans for St. Maarten Curacao and Aruba if the islands meet “country-specific conditions,” it appears from a letter she sent on August 25 to the Dutch Second Chamber.
To refinance the liquidity loans the countries received, Van Huffelen offers a 20-year annuity loan. The interest rate depends on the interest the Netherlands has to pay and on complying (or not) with “country-specific conditions.”
If the countries meet all conditions, the interest rate will be 3.1 percent; if they are still negotiating a deal, the rate goes up to 5.1 percent and if they do not want to abide by the conditions at all the interest goes up to between 6 and 8 percent.
What does this mean in real money for St. Maarten? The liquidity loans total 316.4 million guilders ($176.8 million). In a best case scenario the annual interest will be roughly 9.8 million guilders ($5.5 million). At a 5.1 percent rate the annual interest burden increases to 6.1 million guilders ($9 million) and if the government does not agree with any conditions it will have to pay 6 to 8 percent: (18.9 to 25.3 million guilders or between $10.6 and $14.1 million).
Van Huffelen wrote in her letter to the Dutch parliament that the countries have to present a Multi-annual Economic Framework. Aruba has to agree to the establishment of a kingdom law financial supervision, while Curacao and St. Maarten have to come up with a realistic plan to solve the problems at insurance company ENNIA.
In August parties reached an agreement about the main points for such a plan, but it still has to be signed by the government.
The letter states that St. Maarten’s debt to GDP ratio was 50 percent at the end of 2022 and that the loan will be offered interest-only.
“If the main agreement about ENNIA is not signed before the refinancing, the loans to Curacao and St. Maarten will be converted into short-term loans against a higher interest rate,” Van Huffelen’s letter states.
Miguel Goede, who runs Curacao-based Goede Consultants, is baffled about the financial scandal at ENNIA . In a brief statement on LinkedIn he also refers to scandals at Aqualectra and BZV. “A returning theme with these scandals seems to be weak supervision: our corporate governance. It is difficult to understand how bribery on such a scale could take place unnoticed. It is clear that this is not about a few rotten apples. It is more about a deep-rooted problem in our financial sector.”
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