Refinancing COVID loans for Curaçao, Sint Maarten, and Aruba

August 25, 2023  –THE HAGUE – Netherlands offers the countries Curaçao, Sint Maarten, and Aruba the opportunity to refinance the loans they received to address the consequences of the coronavirus pandemic. These loans, totaling 1.17 billion euros, will mature on October 10 of this year. If the countries agree to the Dutch proposal, they will have the option to spread out the repayment over a longer period, at the current interest rate. This is necessary to ensure that countries can continue to cover essential services for their residents. State Secretary Alexandra van Huffelen will send a letter about this to the Second and First Chamber today. 

Prime Ministers of Curaçao, Aruba and Sint Maarten together with State Secretary Van Huffelen

The Council of Ministers already took into account at the end of last year that due to the size of the loans and considering the recovery of public finances, the Countries would not be able to fully repay them by the maturity date. For this reason, the Dutch government decided earlier this year to offer full refinancing to the countries. 

Refinancing conditions 

To qualify for favorable refinancing and a low interest rate, the Countries must meet certain conditions. All countries have been asked to demonstrate how they intend to further strengthen the economy in the coming years. This includes the development of a Multi-Year Economic Framework that provides insight into planned investments and reforms. Netherlands also requests an independent assessment of the refinancing to determine the debt burden for each country. 

Sint Maarten is the first country to complete the assessment of the refinancing. It indicates that public finances will remain vulnerable in the coming years. For this reason, the loan will be offered with no repayment requirement, and Sint Maarten will have the option to repay the loan at a more balanced pace. 

Agreements on Financial Oversight in a Kingdom Act 

In addition to these general conditions, there are several specific conditions for each country. For Aruba, they must agree to a Kingdom Act that establishes sustainable financial oversight. Since there is no administrative agreement in place with Aruba regarding 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 ask of countries with a comparable credit rating. Aruba has also not yet presented an assessment of the refinancing. If Aruba were to agree to a Kingdom Act, they would also qualify for a lower interest rate of around 3.1%. If they provide an assessment as well, customized arrangements can be made regarding the loan structure and repayment. 

Ennia Issue in Curaçao and Sint Maarten 

For Curaçao and Sint Maarten, there must be an administrative agreement on a financially realistic rescue plan for the pension insurer Ennia. This pension insurer is currently facing a significant deficit, which could lead to a reduction in benefits for 30,000 policyholders in Curaçao and Sint Maarten. The collapse of this insurer would have significant socio-economic consequences for the residents of these countries. Therefore, the Netherlands is willing to provide both countries with a loan to enable a restart and provide certainty to policyholders in Curaçao and Sint Maarten. 

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