The Netherlands not counting on immediate repayment of a combined more than 1 billion euros in COVID-19 liquidity support loans it gave the Dutch Caribbean countries when these are due next October is in principle good news. The Rutte IV Cabinet in its Spring Memorandum “only” mentioned 76 million euros in related interest.
Curaçao, Aruba and St. Maarten had already indicated they can’t possibly come up with the full respective amounts this year, certainly if the balanced budget rule of the Kingdom Consensus Law on Financial Supervision is to be upheld. The Hague too understands this and talks on refinancing are underway.
The governments in Willemstad, Oranjestad and Philipsburg hoped for at least partial debt cancellation, but up to this point the lender is unwilling to discuss such. In addition, any refinancing will obviously not be zero-interest as the original short-term loans were.
Nevertheless, depending on the new terms it should for now remove an enormous “sword of Damocles” hanging over the heads of the islands by allowing time for their respective economies to recover further from the impacts of the pandemic and subsequently Russia’s war on Ukraine. The latter crisis is ongoing and it still won’t be easy under the current circumstances, but public funds to make future payments must be raised.
No matter one’s perspective, the private sector will have to produce these earnings for the national treasury. As all three have tourism as main business activity, its continued growth is imperative to be able to do so.
A concerted effort will be needed to stimulate their dominant hospitality industries as well as market and promote the visitor destinations going forward. Putting more “head in beds” is increasingly paramount in that regard.
