THE HAGUE--Parties in the Second Chamber of the Dutch Parliament are backing the decision of the Kingdom Government to provide liquidity support to Aruba, Curaçao and St. Maarten, but they are concerned about the ability of the Dutch Caribbean countries to repay the Dutch loans.
The liberal democrats VVD, the Christian party CDA, Democrats D66 and the Labour Party PvdA, represented in the Second Chamber’s Permanent Committee for Kingdom Relations, this week submitted their remarks and questions in response to the draft 2020 budget amendment of the Dutch government to facilitate the financial support for the islands.
The VVD, CDA, D66 and PvdA all remarked that they found it a good decision to assist the islands. “It is a good thing that the Netherlands assists the other countries in the Kingdom,” stated the VVD. “The CDA wholeheartedly supports the efforts to financially assist the countries in the Caribbean part of the Kingdom in these exceptionally heavy times, not only from a moral perspective, but also from a legal perspective.”
However, the parties are worried about the financial resilience of the three countries. D66 asked: “To what extent does the government expect that the countries will be able to repay the liquidity support given the fact that before the corona crisis, the countries didn’t have sustainable government finances?”
VVD and D66 specifically wanted to know if the countries would be able to present proposals that contribute to stabilising the economy during the corona crisis. “How realistic is it that the countries will come with proposals that contribute to the sustainable strengthening of the (social) economic structure? What if the countries don’t do so and later on financial support is again needed?” asked the VVD.
CDA and PvdA expressed concerns about the growing national debt of the Dutch Caribbean countries, especially seeing that they are Small Island Developing States (SIDS) for which the International Monetary Fund (IMF) advises a maximum debt quota of 40 per cent.
“Does the government agree with this opinion of the IMF?” the CDA wanted to know. “The PvdA foresees that the size of the debt of the Caribbean countries threatens to mount to unmanageable proportions.”
Additional financial support from the Netherlands for the longer term has been linked to several conditions, including large, structural reforms and cost-cutting exercises. The VVD made clear that these reform/austerity measures are most certainly needed. “There is no doubt about that.”
The CDA expressed support for tying further financial assistance to conditions in the areas of the labour market, the capital market, the pension system, social welfare system, the health care system and the government organisation. The party inquired whether the development of the state of law and necessary investments in law enforcement would be added to the list of conditions.
In the opinion of the CDA, financial assistance can only be given if the point of departure is clear. The party referred to a statement of State Secretary of Home Affairs and Kingdom Relations Raymond Knops that agreements, advices and instructions in the past to create more robust public finances had yielded little result. “Can the government outline, per country, which agreements, advices and instructions were not or insufficiently followed?”
The VVD asked which adaptations the countries had already made for their financial management to emerge stronger from this crisis. “What have the countries learned from the process of support after Hurricane Irma if we look at the case of resistance against the conditions for the reconstruction of the St. Maarten airport? How can the countries strengthen their financial resilience?”
The Kingdom Council of Ministers tied conditions for St. Maarten to the NAf. 50.2 million liquidity support that it received earlier this month. The VVD asked why conditions were only set for St. Maarten, and not for Aruba and Curaçao. “What are the reasons for this?”
D66 asked about the 3 million euros that were deducted from the NAf. 50.2 million liquidity support that St. Maarten received for the costs of housing St. Maarten detainees in Dutch prisons. “Can the government indicate why 3 million euros were withheld from the liquidity support and why this has been linked to the corona crisis?”
The PvdA noted that the Kingdom Council of Ministers indicated that the liquidity support should mostly benefit the people that have been hardest hit by the corona crisis. “In what way are the countries executing this?”
The PvdA also wanted to know how many persons were directly assisted by the 16.5 million euros that the Dutch government is making available for humanitarian assistance, for food and hygiene packages for the group that needs it most. “Is it plausible that this contribution will increase?”
The D66 party remarked that the high season for the islands usually lasts until May. “To what extent did the government take into account that the revenues from tourism will come to a standstill in this period? Is the government willing to prolong the liquidity support to the end of August?”
The PvdA expected that the initial three-months financial support will probably have to be prolonged and that bridging measures will be needed considering the fact that the countries greatly depend on tourism. “Which supplementary measures and financial loans should be expected? The possibility exists to refinance the loans after two years and to change these into sinking bonds. How realistic is this scenario and what alternatives are possible?”
The CDA and PvdA mentioned the decision of the Aruba government to cut the salaries of Ministers, Members of Parliament, civil servants and directors of government owned companies. Aruba has set a norm to limit the higher salaries in the public sector.
The CDA inquired whether a similar initiative to set a norm for government owned companies was being implemented in Curaçao and St. Maarten. The PvdA wanted to know if Aruba had an exemplary function in taking large pay-cuts, and whether these efforts were in line with the conditions that applied for St. Maarten.
