Published On: Sun, May 16th, 2021

Curacao also puts liquidity support at risk

WILLEMSTAD — Just like St. Maarten, Curacao is also playing a poker game with Dutch liquidity support. If incoming Prime Minister Gilmar Pisas sticks to his refusal to participate in the Caribbean Development and Reform Organization (COHO) the Netherlands will stop liquidity support and demand the repayment of outstanding loans, State Secretary Raymond Knops writes in a letter dated May 5 addressed to Pisas and to incoming Minister of Social Development, Labor and Welfare Ruthmilda Larmonie-Cecilia.

With its intention to step out of the COHO, the new government in Curacao puts more than $463 at risk. “If you do not participate in talks about the follow-up report COHO the support from the Netherlands to Curacao ends,” Knops writes. “This means that the liquidity support will be terminated together with the non-mandatory part of one-time investments in schools (€29.5 million, or $35.7 million) and economy (€20 million or $24.2 million).

The already provided liquidity loans (€333.5 million or $403.5 million) will have to be repaid starting in April 2022. The pre-COVID bullet loans will also have to be repaid at the end of their term.

“I am looking forward to hearing from you that you will abide by what has been agreed to in the Kingdom Council of Ministers on October 30, 2020,” Knops writes. “I am also looking forward to discussing the exact setup of the Kingdom law COHO and the possible use of the International Monetary Fund for the execution of the country package. Otherwise I would like to receive confirmation of your wish to cancel the agreements we made. Obviously it is up to Curacao to make that choice.”

Knops refers to a letter Pisas wrote to him on May 5, announcing Curacao’s intention to step out of the COHO. “The Netherlands and Curacao have entered into a mandatory cooperation and based on it the Netherlands has provided substantial liquidity support. This was a non-binding offer and Curacao agreed to it,” Knops writes, adding that these agreements remain the point of departure for the Netherlands. “Participation in the Kingdom law COHO is a condition for getting liquidity support from the Netherlands.  I have made that clear during our first meeting on April 1.”

Knops supports however Pisas’ suggestion to adjust the country package based on a financial analysis by the International Monetary Fund. “I see possibilities to do this within the context of the reform entity.”

.Knops points out that the IMF already is involved in the country package’s theme that deals with the financial sector and that its technical assistance with others themes is a possibility.

The state secretary does however emphasize the importance of Pisas’ participation in talks about the Kingdom law COHO and its executive organization. “Outgoing Prime Minister Rhuggenaath has agreed to facilitate administrative support. The support from the Ministry of Home Affairs and Kingdom Relations is also available since a couple of weeks, but up to now you have not made use of it.”