PHILIPSBURG–National Alliance (NA) Member of Parliament (MP) George Pantophlet says debt cancellation by the Netherlands is the only viable and reasonable option for St. Maarten and other islands in the Dutch Caribbean.
He said the Central Bank of Curaçao and St. Maarten (CBCS) in an article on Monday, August 2, 2021, entitled “Multi-annual plan deemed crucial for balanced budget” was clear when it stated in its CBSC 2020 Annual Report 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.”
Pantophlet says it does not take a rocket scientist to come to this conclusion. He is however concerned about the use of 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,” Pantophlet said. The MP agrees with the need for serious and responsible financial management.
The CBSC article also mentioned that the economies of St. Maarten and Curaçao 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. The MP says 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.”
The MP agrees that there is need for structural reforms which the government of St. Maarten had already started before being delayed by the pandemic. “The matters of capacity and prioritisation are crucial however as debt is unsustainable it will have a negative impact on the aforementioned. While I understand that the CBCS is not a political organ it has an impactful influence on the economies of these islands” the MP said.
CBCS is also calling for measures to stimulate private investments. In the MP’s opinion, dialogue should be held with 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,” Pantophlet said.
He alluded to statements by CBCS and the International Monetary Fund (IMF) about the rigidity of the labour laws and the need for flexibility. He said as long as there is abuse of the short-term labour contract, laws will have to be amended to protect employees. He said the measures mentioned in the CBCS article to stimulate private investments are repetitive and mirrors already-existing templates.
The MP is adamant that debt cancellation is the only option. “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 [Social and Health Insurances – Ed.] 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.”
Bron: Daily Herald