Published On: Thu, Feb 15th, 2018

Parliament authorizes 50-million guilders loan

PHILIPSBURG – The Parliament approved on Thursday the ministerial regulation that authorizes Finance Minister Mike Ferrier to enter into a 50-million guilders ($27.9 million) loan agreement with the Netherlands. The money will be used to shore up the country’s collapsed liquidity-position. With the approval of financial supervisor Cft, the government will also free up 21.7 million guilders ($12.1 million) from the capital investment budget for liquidity support.

The parliament handled the matter in two sessions: at 10 a.m. in a central committee meeting and at noon in a public meeting of parliament.

There was little discussion about the need to approve the regulation. The Council of Ministers approved it last Monday, but the regulation requires the parliament’s approval.

UP-MP Tamara Leonard asked assurance that the loan is not a part of the €550 million recovery fund.

“That is correct,” President of Parliament MP sarah Wescot-Williams answered. “This is one of three financial trajectories: the early recovery funds, liquidity assistance and the creation of the bigger fund at the World Bank.”

The country’s estimated liquidity need, as established in a meeting on December 29 when the parliament handled an amendment to the 2017 budget, was 66 million guilders. That money is needed for salaries, subsidies and to pay creditors and contractors who took part in the port-Irma cleanup.

The 50-million guilders loan will be extended at zero interest and repayment has to begin five years from now, in 2023.

“This is one of many loans the country needs to get out of the depths of Hurricane Irma,” UP-MP  Claret Connor observed. “A loan of this size, with zero interest and deferred for five years before repayment begins, requires serious leadership to get us over this bump. And we have not yet dealt with the budgets for 2018 and 2019 with an expected deficit of 250 million.”

DP-MP Perry Geerlings wanted to know which conditions apply to the loan of 21.7 million guilders that will be freed up from the capital investment program.

“Is that money still fully available or has some of it already been allocated elsewhere?”

Geerlings wanted to make sure he understood that the two loans come with different conditions.

Based on the Kingdom law financial supervision, the Netherlands has a standing obligation to subscribe to loans St. Maarten attracts after approval by financial supervisor Cft. These loans are extended against the current yield on government bonds.

On Tuesday the yield on Dutch government bonds with a duration of 10 years was 0.789 percent.