PHILIPSBURG--The Central Bank for Curaçao and St. Maarten (CBCS) has recommended that the governments of Curaçao and St. Maarten invoke Article 36 of the Charter for the Kingdom of the Netherlands to obtain aid from the Netherlands for financing their respective national budgets, safeguarding employment and if needed, financing balance of payments.
The foreign exchange reserves are managed by CBCS, which must ensure a sufficient supply of foreign exchange for the unhampered execution of foreign transactions. By doing so, the confidence in the fixed peg of the NAf. to the US dollar can be maintained, CBCS said in a press release.
“Thus, contrary to what certain media are proposing, foreign exchange reserves cannot serve to finance the support programmes. Furthermore, the support programmes of the countries Curaçao and St. Maarten are aimed at maintaining a certain level of spending to meet the minimum needs of affected citizens and companies, which – through imports – causes pressure on the foreign exchange reserves.”
According to CBCS, by receiving funding from abroad – in particular the Netherlands – for financing of support programmes, a compensating foreign exchange inflow is ensured. Prior to the closing of the borders, the import coverage was 3.8 months, which is a comfortable level. After having received the first instalment of liquidity support from the Netherlands, the import coverage even exceeded temporarily, four months of imports.
CBCS President Jose Jardim said CBCS is committed to safeguarding the stability of the peg of the NAf. to the US dollar and will use all necessary instruments to that purpose, as was successfully done in the past.
“CBCS will thus continue its efforts to finance the economy without failing its primary monetary task. The measure implemented by CBCS on March 20 – whereby foreign-exchange licences are no longer granted for capital transactions that result in an immediate drop in foreign exchange reserves – remains in effect until further notice. Depending on the further developments, additional measures may be announced,” it was stated in the release.
“CBCS will also assist the countries in drafting a plan for financial-economic recovery geared at enhancing the competitiveness of the monetary union as well as strengthening the sustainability of the public finances of both countries,” said Jardim.
