Published On: Thu, Jul 6th, 2023

No support for motion to give St. Maarten more time to repay liquidity loans

THE HAGUE – St. Maarten will not get more time to repay the loans for liquidity support it received from the Netherlands during the corona pandemic. A motion by Green Left MP Kauthar Bouchallikh to give the country more time did not get enough support in the Dutch parliament.

The motion states that Aruba, Curacao, and St. Maarten have to repay these loans during the next couple of months. “They are not able to do that without significant cuts in crucial services or without being confronted with an additional financing deficit.”

Bouchallikh asked to give the countries more time to give them the opportunity to strengthen their economy, but her motion failed to get sufficient support.

Aruba on the other hand may have to deal with tougher conditions. A majority of the Second Chamber supported a motion from MPs Roelien Kamminga (VVD) and Joba van den Berg (CDA) that states that Aruba will not qualify for a favorable interest rate as long as it does not cooperate with the establishment of the kingdom law Aruba financial supervision. State Secretary Alexandra van Huffelen travels next week to Aruba to discuss the conditions for the refinancing of the corona-loans.

The Netherlands granted €1 million ($109 million) in loans against favorable conditions to Curacao, Aruba, and St. Maarten during the pandemic. Aruba received almost half of this amount: €441.7 million ($481.5 million). There was an agreement that Aruba would put reforms in place and establish proper financial supervision through a consensus kingdom law.

A proposal from the Aruban government was presented to the Second Chamber in 2022 and talks about the consensus kingdom law have already been going on for three years.

“The liquidity loans have to be repaid or refinanced by October 10, 2023,” the Kamminga/Van den Berg motion states. “The objective of the Netherlands focuses on long-term refinancing as a contribution to achieving a more sustainable and viable budget.”

However, the parliamentarians note in their motion that Aruba’s debt-to-GDP ratio is far above the desired percentage for a small island economy. Agreements about the budget standards in the national ordinance Aruba Temporary financial supervision have expired and the protocol Aruba-Netherlands ends on December 31 of this year.

“We are of the opinion that proper supervision is essential for a sustainable and healthy future and for sustainable and viable public finances,” the motion states.

Kamminga and Van den Berg ask the government to refinance Aruba’s loans against favorable conditions only after financial supervision has been established by law. As long as this is not the case, the government should apply the regular interest rate charged in the capital market. If Aruba makes meaningful steps towards a kingdom law the loans should be refinanced short-term against an interest rate that is higher than the favorable conditions, until the kingdom law has been established, the motion states.