St. Maarten government borrowed NAf. 327.9M from the Dutch

MONDAY, 11 JUNE 2012

THE HAGUE--Curaçao has borrowed NAf. 1.6 billion and St. Maarten NAf. 327.9 million from The Netherlands since they attained country status in October 2010.

The soft-interest loans were provided to help the two countries with the building-up of their facilities in light of their new constitutional status, Dutch caretaker Minister of Interior Affairs and Kingdom Relations Liesbeth Spies informed the Second Chamber late last week.

For St. Maarten the interest rates are between 1.5 and 3 per cent and the starting date of five of the loans was October 2010, while one loan was issued in October 2011. These loans are for amounts between NAf. 26 million and 78.5 million with loan terms of between five and 30 years.

Curaçao has taken five loans, ranging from NAf. 81.9 million to NAf. 582.3 million, with loan terms ranging from 10 to 30 years and interest rates of 2.5 to 3.125 per cent. According to Spies, no loans have been paid off so far.

The Financial Supervision Law (Rijkswet Financieel Toezicht) for Curaçao and St. Maarten prescribes that the countries can borrow against a low tariff and that The Netherlands is obliged to subscribe to the loans.

Before a loan is issued, the Committee for Financial Supervisions CFT checks whether the budget of the country involved complies with the Financial Supervision Law and whether the total interest charges remain within the agreed-on boundaries of the interest charges norm.

In her letter to the Second Chamber in which she answered questions from Parliament about the 2011 annual account of the Kingdom Relations chapter, Minister Spies also addressed the reorganisation of the backlog of payments of Curaçao and St. Maarten.

Curaçao and St. Maarten submitted 10 requests to reorganise the backlog of payments before the "window" was closed in October 2011. Eight of these requests were honoured. The Netherlands paid off NAf. 37.4 million for Curaçao and NAf. 65.5 million for St. Maarten.

In the case of St. Maarten it concerns payments arrears to the General Antillean Pension Fund APNA. Curaçao also had a considerable debt to APNA, but also to a number of government foundations. The Netherlands paid 29.9 million euros in 2011 to make the Pension Fund for the Caribbean Netherlands (Bonaire, St. Eustatius and Saba) financially healthy.
Spies also addressed the financial situation in Curaçao and the CFT. She stated that Curaçao had not been supplying information requested by the CFT in a timely fashion. The quality is also below a satisfactory level.

The Minister said the communication and cooperation with St. Maarten had "drastically improved." A second office of the CFT has been opened in St. Maarten and this has led to more frequent contact between St. Maarten's Government and the CFT.

Curaçao's increasing budget deficit is a major concern. She said the matter had the "full attention" of the CFT and the Kingdom Council of Ministers. The CFT has issued a warning to the Curaçao Government that it must take adequate measures to decrease the budget deficit, or it will ask the Kingdom Council of Ministers to give an instruction.
Spies said she had not received a formal request from St. Maarten's Government to end financial supervision. She explained that a country must have complied with the norms of the Financial Supervision Law for three consecutive years before it could qualify for a positive decision of the evaluation committee.

A premature lifting of financial supervision considerably increases the risks for Kingdom partners in the "growing process" of improving proper financial households in the new countries. This process involves a proper budget policy, good financial management and the prevention of an uncontrolled build-up of new debts.