Is this the result of complacency? Moody’s looming downgrading of St. Maarten’s credit rating to BAA2 seems to suggest this. And mind you, this is serious stuff that is going to cost us dearly unless the government takes decisive action.
It is, of course all about economic growth. The port likes to boast about how popular the port is for cruise tourism and the airport cannot get enough of sending press releases about yet another international award of, at times, questionable meaning.
In the meantime, the number of cruise passengers is dropping, the economy is not following the pace of surrounding islands and investor confidence is slowly going down the tubes.
Okay, we know, maybe these terms are slightly on the strong side – but not all that much.
Think about what lies ahead of us and it becomes possible to understand that getting rid of financial supervisor Cft might be a bad idea under these circumstances.
Currently, the country’s budgetary process is on the best track it has ever been by objective standards – you don’t have to blow the horn of the Minister of Finance for that. The reward for this financially responsible policy could be that the kingdom will terminate the services of the Cft after 2018.
This is something St. Maarten wants: it wants to chart its own course, be responsible for its own destiny and also be responsible for its own state finances. The Cft would be replaced by a local supervisory mechanism. Great.
But the down side of terminating Cft-services could be severe. Currently, financial supervision allows the state to borrow at a favorable interest rate of between 2 and 2.5 percent. The Netherlands is obliged to subscribe to loans for capital investments and the interest rates are so low due to the excellent credit rating of that country.
Once the Cft has packed up, those cheap loans are off the table and St. Maarten will be on its own. It will have to go to the international financial market. And what matters most there? Right: the credit rating.
If Moody’s pushed through with its downgrading of St. Maarten to BAA2, the country becomes exposed to lenders who won’t take less than 6 of 7 percent.
To color in this picture a bit: the difference between 2 and 7 percent for every one million the country borrows for capital investments is 50,000 guilders. And guess where that money will have to come from?
Source: Today SXM Opinion: Moody’s downgrading of St. Maarten to BAA2
Ofcourse it’s a result of SXM previous & current Government lack of action, multiple shifting of ship jumpers and overall no long term plan and policies for SXM.
Where is a strategic vision on Tourism? And how does this tie into the well being of everyone living on SXM?
Let’s get serious now!!