That the Kingdom Council of Ministers RMR deferred a decision mandating Dutch State Secretary of Kingdom Relations Alexandra van Huffelen to conclude an agreement with Curaçao, Aruba and St. Maarten on refinancing their COVID-19 crisis-related liquidity support debts (see Monday paper), might turn out to be a blessing in disguise. Not necessarily because further discussions are desired with Finance Minister Sigrid Kaag who was absent, but so Members of Parliament (MPs) from the Dutch Caribbean countries can lobby among their colleagues from the Netherlands at the current Inter-Parliamentary Kingdom Consultation IPKO in Willemstad.
It’s simply not realistic to expect repayment when the interest-free loans expire in October. The money was badly needed to keep both the public and private sectors going when the islands’ dominant hospitality industries came to a standstill as global travel stopped and was subsequently restricted due to the unprecedented COVID-19 pandemic.
It also came with conditions including a temporary benefits reduction in government and pay cuts at businesses receiving assistance to save jobs. Moreover, so-called “country packages” of reforms must enhance resilience to future shocks.
While the tourism economies have since rebounded in all three cases, that positive development is still in its infancy and remains fragile to outside influences. One should also consider the closure of refineries in Aruba and Curaçao a few years earlier as well as the devastating and long-lasting impact of September 2017 Hurricane Irma on St. Maarten.
There have been calls for at least partial debt cancellation, but most important is not to have to repay a large sum later this year. As pointed out by the Committee for Financial Supervision CFT in today’s edition, Curaçao even assumed a full refinancing to achieve the required balanced budget for 2023.
Aruba and St. Maarten are in similar positions. Lowering cost and/or increasing income collected from society to raise all the funds owed without being allowed to have any deficit at this vulnerable stage could undermine the recovery to no small degree.
Some time and space to further strengthen their economies is highly needed before this extra burden can be responsibly carried.
