Stimulus plan asks Netherlands for 254 million

PHILIPSBURG – “The budget cannot finance the measures necessary to safeguard the health of the population and avoid social unrest and disruption of the already fragile economy. We need support from the Netherlands,” the Stimulus Relief Plan presented by Finance Minister Ardwell Irion states. The plan was completed on April 4 and sent to parliament on April 13. It asks the Netherlands for 254 million guilders (almost $142 million) in support to cover expenditures for the months April, May and June.

The plan assumes that 50 to 80 percent of St. Maarten’s gross domestic product (GDP) is depending on tourism. It paints a dark picture of the near future, expecting that economic recovery will only start to take shape in the fourth quarter and that tourism numbers will not bounce back rapidly but rather over a twelve-month period.

The plan expects zero income from tourism during the first three months (April-June), 50 percent of previous levels from July to September and 75 percent during the months October to December. But the plan also considers a more somber scenario whereby tourism-income remains zero for six months and only recovers to 25 percent of previous levels from October to December.

The plan mentions conflicting numbers for income-support programs. The Central Bank estimate varies from 118.65 to 125.9 million guilders and the finance ministry’s estimate also mentions two amounts: 152.55 and 161.87 million guilders. These are the amounts needed for income support during the first three months of the corona-virus crisis.

The plan proposes 80 percent payroll support for qualifying companies with a minimum payment of 1,150 guilders ($642) for a full-time employee. Companies must prove a drop of at least 20 percent in revenue over the months February and March (compared to 2019). The payroll assistance will support 40 percent of the labor force.

Sole proprietors could get up to 1,150 per month; the costs budgeted for this measure is 1.34 million guilders.

For soft loans, the stimulus plans wants 33 million guilders. Businesses “with a viable business plan” could get loans against 2.5 percent interest, with a 6 month grace period, followed by minimum monthly repayments of 3 percent of the principal for a period of two years. For the three years after that, the interest will double to 5 percent.

The Ministry of Public Health, Social Affairs and Labor expects it will have to support 5,000 jobless citizens for three months if it does not get financial assistance.  With financial help that number could drop to 2,926. Per individual the support would amount to $806 per month.

The impact of the corona-crisis on government-owned companies is 12.4 million guilders according to the plan. But an accompanying table shows only a drop in Central Bank payments of 2 million and a drop in dividend from these companies of 1.2 million. Combined with some slight projected increases in revenue from Bureau Telecommunication and Post and GEBE this adds up to just 2.58 million. It remains unclear why the projected impact is almost 10 million guilders higher.

After Hurricane Irma, the ministry issued 3,000 food vouchers that supported 1,700 families. Currently there are 15,000 households of which 60 percent consists of less than three people and 40 percent of more than three.

The ultimate worst case scenario is that the government will have to provide food packages to the entire population in case of a complete shutdown of supermarkets, the plan states. It budgets 3.42 million guilders per month to distribute food packages (worth $47) to a population of 40,616.

The plan also sheds some light on the situation at some government-owned companies. For two of them, the plan does not ask for financial support: GEBE  and TelEm.

The airport has 270 employees and a monthly payroll of 2.3 million guilders; for the harbor, the plan does not specify the number of employees but it mentions a monthly payroll of just over 1.1 million guilders.

At TelEm (137 employees, payroll of 1.6 million) there is no need for financial assistance. The company is able to continue without any income until June.

At Winair – where all activities have ceased, the situation is different. It has 3.2 million in cash, 1.2 million in receivables and 2 million in payables. March and April will deplete the airline’s cash reserves completely.

All financial assistance will have to come from the Netherlands. According to the plan, the Kingdom Council of Ministers has ordered that the money remaining in the post Hurricane Irma trust fund at the World Bank cannot be used to fight the effects of the corona-crisis.

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