Unexpected setback

Unexpected setback

News that the Kingdom Council of Ministers decided assistance will be provided to the Dutch Caribbean countries due to the coronavirus threat (see related story) is reassuring. The Netherlands recognises that economies of the islands will be severely hurt particularly regarding the hospitality industry on which they all to a large extent depend.

A “quick-scan” by the Committee for Financial Supervision CFT and the International Monetary Fund (IMF) is to determine what is required now as well as later. It was stated that St. Maarten just received liquidity support “so they can manage for a little while,” but – in reality – that money is to address existing shortfalls rather than the current global crisis and its local consequences.

Nevertheless, the expression of solidarity from The Hague in a time of great concern and uncertainty is appreciated. Hopefully lessons learned with the World Bank-managed Recovery Trust Fund established after the major hurricanes of September 2017 will serve to help those who most need it quickly and effectively.

With the destination projected to lose US $125.7 million in stayover and cruise tourism revenues, there can little doubt that the situation is serious. The initially-forecast 2020 gross domestic product (GDP) growth of 3.5 per cent had already been revised downwards to 2.9 per cent before by the Central Bank, but could now become a decline of as much as 9.7 per cent, according to Minister of Tourism, Economic Affairs, Transport and Telecommunication (TEATT) Melissa Arrindell-Doncher.

If extra means allocated to counter the impact of COVID-19 are well-spent it could make a significant positive difference in both socioeconomic and public finances terms. CFT and IMF will do the assessment, but it’s very important that the local government in consultation with relevant stakeholders makes realistic plans to overcome this unexpected setback.