The current discussion between Aruba and the Netherlands (see related story) is interesting also for St. Maarten. After Aruban Prime Minister Evelyn Wever-Croes Oduber declined a third tranche of liquidity support and attached conditions because the term for such was suddenly extended by The Hague from three to five months and the stated amount would thus no longer suffice, Dutch State Secretary of Home Affairs Raymond Knops said there was room for more than the 204 million Aruban florins pledged if needed.
But the Wever-Croes cabinet, faced with an unexpected shortfall of Afl.136 million, had already decided to seek funding on the local capital market for a maximum of Afl. 400 million. This in turn led Knops to warn that doing so will cost an annual Afl. 21 million in interest at 5.3 per cent alone or Afl. 1,400 for every resident over the seven-year term.
However, the immediate plan is to issue only a bond in two parts for respectively Afl. 60 million and US $60 million, according to Aruban Finance Minister Xiomara Maduro. She said the debt quota increase mentioned by Knops to 127 per cent of the gross domestic product (GDP) would also occur with the Dutch loans and suggested making these grants instead.
Meanwhile, Curaçao also looked at various alternative financing options and concluded that the offer from the Netherlands is more advantageous due to the country’s relatively high-risk investment profile. Prime Minister Eugene Rhuggenaath said talks with the Dutch government were intense but productive, and progress was being made in getting closer to one another.
Hopefully, that is indeed the case, because ultimately the latter’s goal should be to succeed rather than fail in assisting the three Caribbean kingdom partners to survive the coronavirus-related crisis and restructure their economies so they become less vulnerable and more sustainable. On the other hand, the ability of the islands’ dominant hospitality industries to recover must not be underestimated either and cutting too much could in fact have an adverse effect on renewed growth in the near future.
With St. Maarten still struggling to meet requirements of the second tranche, while both Aruba and Curaçao are yet to reach agreement on a third, it appears the current effort is not meeting its primary objectives and a more result-oriented approach seems called for. It is time for The Hague to turn the switch or – in Dutch – “draai de knop(s) om.”
