Debt Cancellation is the Only Option.



PHILIPSBURG, Sint Maarten — Member of Parliament George Pantophlet is insistent that debt cancellation is the only viable and reasonable option for St Maarten and the other islands in the Dutch Caribbean. The Central Bank of Curacao and St. Maarten in its article of Monday August 2, 2021 entitled “Multi-annual plan deemed crucial for balanced Budget was clear when it stated in its CBSC 2020 Annual Report and he quotes “that in both countries the current budget deficit widened significantly in 2020 compared to 2019, due to decline in government revenues combined with an increase in expenditures” end of quote.

In the MP’s opinion It does not take a rocket scientist to come to this conclusion. However, what does concern him is the word “balanced”. It is quite obvious that the St. Maarten government has in accordance with article 25 of Kingdom Law on Financial Supervision on numerous occasions requested to deviate from such because having a balanced Budget at this time or in the near future is unrealistic but he does agree completely with the need for serious and responsible financial management.

The CBSC article also mentioned that the economies of St. Maarten and Curacao are not expected to reach their pre-pandemic levels until 2024 and that high fiscal deficits will persist over the medium term, making additional liquidity support from the Netherlands indispensable. Therefore, the MP is saying that it is unrealistic to ask for multiannual plans to reflect balanced budgets without debt cancellation. Requesting fiscal consolidation which describes government policy intended to reduce deficits and the accumulation of debt cannot be achieved if we are inundated with loans after loans. MP further asserts that he wholeheartedly with the need for structural reforms which the government of St. Maarten had already started before being delayed by the pandemic.

“The matters of capacity and prioritization are crucial however as debt is unsustainable it will have a negative impact on the aforementioned. While I understand that the CBSC is not a political organ it has an impactful influence on the economies of these islands” the MP explained.

The Central Bank is also calling for measures to stimulate private investments. In the MP’s opinion dialogue should be held with the commercial Banks as it relates to interest rates for mortgages and other private loans. “It is hypocritical for our financial institutions having to comply with international financial standards but cannot benefit from low interest rates. The excuse will be our economies of scale. Then my reply would be that the fact that we are small economies of scale should also be taken into consideration when formulating structures and or policies that are better suited for large economies, one size does not always fit all” MP Pantophlet stated.

Additionally, the MP has noticed (and it is a recurrent statement) is that the CBSC and IMF continuously mention is the rigidity of labor laws or the need for flexibility. As long as there is an abuse of the short term labor contract, laws will have to be amended to protect employees. In his opinion the measures mentioned in the CBSC article to stimulate the private investments are repetitive and mirrors already existing templates.

The MP remains adamant that debt cancellation is the only option. He is not surprised that the statement attributed to the IMF on August 11, 2021 did not reach the front page of the daily newspaper. It says in Dutch IMF: Coronaleningen molensteen om nek Curacao en Sint Maarten. Freely translated “Corona loans millstone (burden) on the necks of Curacao and Sint Maarten. The MP further extracts from the IMF article based on his freely translation, that if the Netherlands does not convert the corona loans into donations the governments of the countries will never achieve the justifiable 40% GDP as was the norm. The report also mentions that Curacao will need at least 10 years to get back to its pre-pandemic status.

“It is critically clear that without debt cancellation and the unpredictability of the future as it relates to climate change, hurricanes and pandemics the continuous giving of loans instead of donations will not help the economy of St. Maarten and the other countries. St. Maarten owes the Dutch government over Naf 1 billion guilders and growing while paying Naf 12.7 million. In addition to that more loans have been granted. On the national level in addition to other creditors, St. Maarten still owes SZV and the St Maarten General Pension fund millions of guilders. It is a shame that the government of St Maarten cannot access the over $30 million in interest savings gained from the grant. This money is sitting at the Central Bank. Debt cancellation is the only option” MP Pantophlet concluded.