Published On: Thu, Oct 20th, 2016

Minister Gibson: mixed feelings about new loan agreement

GREAT BAY – Finance Minister Richard Gibson disagrees with the opinion of financial supervisor Cft that the 2016 budget no longer meets the requirements of the kingdom law financial supervision. The Cft informed the kingdom government that St. Maarten does not qualify for new loans because of the budget-situation.

“They do not take into consideration information we have provided,” Minister Gibson said, adding that this information included an expected dividend payment from the Central Bank. The government has in the meantime received this payment of 9.2 million guilders.

“Not only that,” Minister Gibson said yesterday. “There is also another windfall coming from the amassed revenues from water reserves and Gebe. There is a fixed proposal on the table that will hopefully be finalized next week and produce another 17 million guilders in revenue.”

The casinos have also paid “substantially” on their arrears, though the receiver can no longer collect part of these arrears due to the passage of time. Minister Gibson said that the casinos are now staying current with their payments and that they have all signed agreements for monthly payments.

The minister referred to the worldwide economic decline that has also affected St. Maarten. He mentioned the loss of cruise ships and the decline in payments of turnover tax due to lower economic activity.

“The Cft disregarded all this information we gave,” the minister said. “They wrote to the kingdom that the budget no longer meets the requirements and as a result we cannot roll—over the 26 million guilders debt that dates back to 2010. The kingdom no longer wants to subscribe to this loan. Instead they offered to extend the existing loan for 7 years at 0.5 percent interest with no payment during the first two years. From 2019 we have to pay off 5.2 million per year.”

Minister Gibson has “mixed feelings” about the agreement. “It is attractive because of the favorable interest rate, but we lose the long-term repayment scheme we would have had with the bond issue. With this method we will pay off the loan in seven years instead of paying only interest for the next fifteen years and having a balloon payment at the end of those fifteen years.”

While the Cft stated in a letter to Gibson that it expects the deficit for 2016 to be around 22 million guilders, the minister disagrees. “I cannot express with certainty what the situation will be at the end of the year. But I think the budget will end up as projected. It is futile to make an issue out of it now with the Cft. When we have the proof on the table I will be able to speak louder about this.”