A call for debt cancellation for the Dutch Caribbean by Member of Parliament (MP) George Pantophlet in Monday’s paper sparked a few predictable reactions such as starting by cutting the pay of elected representatives and ministers. Some pointed out that there was already debt restructuring for the former Netherlands Antilles when it was dismantled a decade ago, while others mentioned meeting one’s responsibility or even getting out of the kingdom in exchange.
To be fair, this was not the only occasion the NA-faction member made his suggestion and the country’s fiscal position hasn’t exactly improved since he first did. It is also no secret that St. Maarten could not optimally benefit from debt relief by the Netherlands that accompanied the constitutional changes per 10-10-10, be it largely due to its own administrative shortcomings at the time.
Consequently, there was never really a “healthy starting position” as proclaimed to support the new status. Substantial amounts were already owed to the Antillean Pension Fund APNA and Social Insurance Bank SVB, among others.
Nevertheless, the local government seemed well on its way to fiscal balance when monster Hurricane Irma struck in September 2017. Recovery from the island’s worst natural disaster on record had just been all but completed when the current unprecedented and ongoing coronavirus-related socio-economic crisis hit early last year.
Let’s face it, nobody carries blame for these unforeseen setbacks locally. The same may be said about stalled oil refineries of Curaçao and Aruba basically resulting from developments beyond their control in neighbouring Venezuela.
Asking to consider debt forgiveness in the future should not be misconstrued as demanding such now. The fact is that government had – and still has – no choice but to borrow from the Netherlands not only to fund its operations, including public sector salaries, but to prevent widespread business closures, mass layoffs and abject poverty.
It must be recognised too that the Dutch Government did not only give “soft” loans but also grants, including money for a new prison and the entire Reconstruction Trust Fund. There is thus every reason to be thankful and show gratitude.
However, one can hardly deny that repayment of the liquidity support provided will place a heavy burden on the budget going forward, which could – in itself – limit growth while the dominant hospitality industry is being restored to its former glory. If the intention remains for St. Maarten to stand on its own feet sooner rather than later, talk of eventual debt relief is certainly not without merit.
