Refinancing covid loans Curaçao, Sint Maarten and Aruba
The Netherlands is offering the Countries of Curaçao, Sint Maarten and Aruba refinancing of the loans they received to combat the consequences of the corona pandemic. These loans, totalling €1.17 billion, expire on the 10th of October this year. If the countries agree to the Dutch proposal, they will have the option to spread the repayment over a longer period, at current interest rates. This is necessary so that countries can continue to pay for important services for their citizens. State Secretary Alexandra van Huffelen is sending a letter to the House of Representatives and the Senate about this today.
Late last year, the Council of Ministers already considered that due to the size of the loans and the goal of restoring public finances, the countries would not be able to repay them in full on the expiry date. For this reason, the Dutch government decided early this year to offer the countries full refinancing.
To qualify for the favourable refinancing and a low interest rate, the Countries do have to meet a number of conditions. All countries have been asked to show how they intend to further strengthen the economy in the coming years. This includes drawing up a Multiannual Economic Framework that should provide insight into planned investments and reforms. The Netherlands is also asking for an independent refinancing calculation to determine the debt burden per country.
Sint Maarten was the first country to complete the refinancing estimation process. This shows that government finances will remain vulnerable in the coming years. For this reason, the loan will be offered on a grace period and Sint Maarten will be given the opportunity to repay the loan at a more even pace.
Agreements on financial supervision in a Rijkswet (Kingdom Act)
In addition to these general conditions, a number of country-specific conditions also apply. For instance, for Aruba, they must agree to a Rijkswet (Kingdom Act – RAft), which sustainably regulates financial supervision. As there is no administrative agreement with Aruba on the Rijkswet (Kingdom Act), Aruba is offered the loan at a higher interest rate (6 - 8%). This corresponds to the interest rate the Netherlands would charge from countries with a similar credit rating. Also, Aruba has not yet presented an estimation of the refinancing. Should Aruba still agree to the RAft, they too will qualify for a lower interest rate of 3.1%. If they also present an estimation, the pace of repayment can be adjusted accordingly.
Ennia issues 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, threatening to cut 30,000 policyholders on Curaçao and Sint Maarten. The collapse of this insurer would have major socio-economic consequences for the residents of these countries. The Netherlands is therefore prepared to provide both countries with a loan - of around €600 million - to enable a relaunch and thus provide security for policyholders in Curaçao and Sint Maarten.