News item | 8/25/2023 | 2:45 pm
The Netherlands is offering the countries of Curaçao, Sint Maarten and Aruba to refinance the loans they have received to cope with the consequences of the corona pandemic. These loans, totaling EUR 1.17 billion, will expire on 10 October 2023. If the countries agree to the Dutch proposal, they will be given the option of spreading the repayment over a longer period of time, at the current interest rate. This is necessary so that countries can continue to pay for important services for their inhabitants. State Secretary Van Huffelen will send a letter about this to the House of Representatives and the Senate.
At the end of last year, the Kingdom Council of Ministers already took into account that the Countries would not be able to repay them in full on the maturity date due to the size of the loans and with a view to restoring government finances. For this reason, the Dutch government decided at the beginning of this year to offer the countries full refinancing.
Refinancing Terms
To qualify for the favorable refinancing and low interest rates, the Countries must meet a number of conditions. All countries were asked to show how they want to further strengthen the economy in the coming years. Among other things, by drawing up a Multi-Annual Economic Framework that should provide insight into planned investments and reforms. The Netherlands is also asking for an independent calculation of the refinancing in order to determine the debt burden per country.
Sint Maarten was the first country to complete the calculation of the refinancing. This shows that public finances will continue to be vulnerable in the coming years. For this reason, the loan is offered interest-only and Sint Maarten is given the opportunity to repay the loan at a more even pace.
Agreements on financial supervision in a Kingdom Act
In addition to these general terms and conditions, a number of specific terms and conditions apply per country. For example, Aruba must agree to a Kingdom Act, in which financial supervision is permanently regulated. Since there is no administrative agreement with Aruba about a Kingdom Act, Aruba is offered the loan at a higher interest rate (6 – 8%). This corresponds to the interest rate that the Netherlands would demand from countries with a comparable credit rating. Aruba has also not yet presented a calculation of the refinancing. Should Aruba still agree to a Kingdom Act, they will also be eligible for a lower interest rate of approximately 3.1%. If they also provide a calculation, customization can be agreed in the structure of the loan and repayment.
Ennia problem Curaçao and Sint Maarten
For Curaçao and Sint Maarten, there must be an administrative agreement on a financially realistic rescue plan for pension insurer Ennia. This pension insurer is currently struggling with a huge capital shortfall, which threatens a discount for 30,000 policyholders on Curaçao and Sint Maarten. The collapse of this insurer will have major socio-economic consequences for the inhabitants of these countries. The Netherlands is therefore prepared to provide both countries with a loan to enable a restart and thus provide security to the policyholders on Curaçao and Sint Maarten.