The Netherlands is offering the countries of Curaçao, Sint Maarten and Aruba to refinance the loans they received to cope with the consequences of the corona pandemic. These loans, totaling € 1.17 billion, will expire on 10 October 2023. If the countries agree to the Dutch proposal, they will be given the opportunity to spread 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 sends a letter to the House of Representatives.
At the end of last year, the Reich Council of Ministers already took into account that the countries would not be able to fully repay them by the end date due to the size of the loans and with a view to restoring public finances. For this reason, the Dutch government decided at the beginning of this year to offer the countries full refinancing.
Conditions for refinancing
However, in order to qualify for the favourable refinancing and low interest rates, countries must meet a number of conditions. All countries have been asked to show how they want to further strengthen the economy in the coming years. Among other things, by drawing up a multiannual economic framework that should provide insight into planned investments and reforms. The Netherlands also calls for an independent calculation of the refinancing, in order to be able to determine the debt burden per country.
Sint Maarten was the first country to complete the transfer of the refinancing. This shows that public finances are still vulnerable in the coming years. For this reason, the loan is offered repayment-free and Sint Maarten is given the opportunity to repay the loan at a more even pace.
Agreements on financial supervision in a National Law
In addition to these general terms and conditions, a number of specific conditions apply per country. For example, Aruba has to agree to a National Law, in which financial supervision is regulated sustainably. Since there is no administrative agreement with Aruba on a National Law, Aruba is offered the loan at a higher interest rate (6 – 8%). This corresponds to the interest rate that the Netherlands would charge from countries with a similar credit rating. Also, Aruba has not yet presented a transfer of the refinancing. If Aruba still agrees to a national law, they are also eligible for a lower interest rate of approximately 3.1%. If they also provide a transfer account, then customization can be agreed in the design of the loan and repayment.
Ennia problems 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 asset deficit, 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 willing to provide both countries with a loan to enable a restart and thus provide security to the policyholders on Curaçao and Sint Maarten.
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