THE HAGUE--Talks have commenced between St. Maarten and the Netherlands for the third tranche liquidity support pending St. Maarten’s compliance with the conditions of the second tranche and confirmed commitment to the requirements of the third tranche.
Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops stated this in a letter that he sent to the Dutch Parliament following the Kingdom Council of Ministers meeting where a number of decisions were taken with regard to the budgets and financial situation of Aruba, Curaçao and St. Maarten.
As for St. Maarten, the state secretary reported that the Committee for Financial Supervision CFT had concluded that St. Maarten in the past period has made “significant steps” in giving content to the conditions of the second liquidity support tranche. In lieu of this CFT advice, talks have started with St. Maarten about the third tranche and the associated conditions.
“Further steps in order to fully comply with all conditions are necessary and see to the immediate execution of the measures and the starting up of the legislation trajectory to have the necessary national ordinances materialise,” it was stated in the letter.
Also, St. Maarten must give content to the 12.5 per cent reduction of the labour conditions for civil servants until further order. The 12.5 per cent pay-cut for the public sector was already implemented for 2020, but needs to continue in 2021 as well. The reduction should be adequate implemented as well for all government entities and publicly financed foundations and institutions that are funded for at least 50 per cent from the government budget.
The Kingdom Council of Ministers on Friday approved to immediately transfer an additional NAf. 181 million in liquidity support to Curaçao under the third tranche. State Secretary Knops explained in his letter that after Curaçao signed the November 2 accord with the Netherlands, an amount of NAf. 105 million was paid for the third tranche.
However, the CFT advice showed that Curaçao’s total liquidity need for the rest of this year was NAf. 286 million. The Kingdom government decided to follow this advice and approved the payment of NAf. 181 million in remaining liquidity support under the third tranche.
The Kingdom Council of Ministers also took a decision to further allow the Dutch Caribbean countries to deviate from the budget norms due to the COVID-19 crisis which makes it impossible for the countries to have balanced budgets as is normally required under the financial supervision Kingdom Law.
The CFT advised for both Curaçao and St. Maarten that the permitted budget deficit for this year may equal the allocated liquidity support for that year. Based on this point of departure, the Kingdom government decided to allow Curaçao to have a 2020 budget deficit of NAf. 685 million and for St. Maarten NAf. 185.5 million.
The Aruba Committee for Financial Supervision CAFT issued a similar advice for Aruba, meaning that a maximum budget deficit of 808 million Aruba florin is allowed for 2020. Aruba is allowed to make capital investments this year for a maximum amount of Afl. 40 million. These should only concern emergency investments which the CAFT needs to assess first.
Curaçao and St. Maarten in budget year 2020 will also only be allowed to make capital investments that are based on the reform agenda of highly urgent replacement investments. The countries must adequately substantiate such investments and submit to the CFT for an assessment.
The Kingdom government furthermore decided to make explicitly clear that the criteria and procedures in the Financial Supervision Kingdom Law apply to the full extent if Curaçao and St. Maarten want to attract loans on the domestic market
