Published On: Wed, Oct 11th, 2023

St. Maarten gets low interest rate on refinanced liquidity loans

PHILISPBURG — St. Maarten gets its liquidity loans refinanced against 3.4 percent interest while Curacao, that has refused to accept a Dutch loan to solve problems at insurance company ENNIA, will have to pay 5.1 percent. Aruba, that so far has refused to accept a law that regulates financial supervision, will have to pay 6.9 percent. This appears from a letter State Secretary Alexandra van Huffelen (Kingdom Relations) has sent to the Dutch parliament.

“Ennia’s deficit has increased to 90 percent of the so-called technical provisions and acute liquidity problems are looming,” the letter states. “A solution in the short term is necessary and the governments of the countries are responsible for it.”

A solvent restart with a capital injection of the countries was considered as financially realistic. The costs of a restart are slightly higher than those of a controlled liquidation, though the risks are higher. “Curacao explicitly opted for a restart and St. Maarten agreed with it,” the letter states.

During subsequent discussion with Curacao several options were examined, like a lower loan and the use of the countries’ financial reserves. Curacao suggested to extend the loan to other parties like the Central, Bank, the pension fund for civil servants or a to be established Ennia-fund.

Van Huffelen rejected it, saying that the responsibility and the risk of a solution for Ennia belong to the countries. Van Huffelen also rejected the suggestion to freeze the kingdom law financial supervision.

After the Pisas-government decided to choose for a controlled liquidation, St. Maarten indicated that it was willing to cooperate with that solution.

Van Huffelen states that she regrets Curacao’s decision; the costs are slightly higher but the risks are smaller. The state secretary stated that parties will have to detail the plan for the controlled liquidation and that the Central Bank is prepared to help. “This requires a new agreement. Whether the Netherlands will be a party to that agreement depends on Curacao and St. Maarten’s need for Dutch financing.”

The letter points out that St. Maarten was prepared to sign an agreement about the restart of Ennia and that it is also willing to cooperate with a controlled liquidation.

“The fact that there is no agreement is not due to them,” the letter states. “The cabinet finds it unreasonable to cause damage to St. Maarten because of a decision taken by Curacao. Long-term refinancing is still possible as soon as there is an agreement about Ennia’s controlled liquidation that the Netherlands finds sufficiently sustainable.”

The refinancing loan agreement that is currently on the table regulates refinancing for the period of one year.

In September ruling from the Common Court of Justice that holds majority shareholder Hushang Ansary and others responsible for Ennia’s financial quagmire mentions that the insurance company’s pension scheme had 27,450 participants in 2018. According to Van Huffelen’s letter, 7 percent, or around 1,920 pensioners, are living in St. Maarten.

How the monthly payments to these pensioners will be protected will become clear from an agreement about the controlled liquidation of Ennia Caribe Leven.


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