UPDATE: St. Maarten recovery trust fund to hold maximum 470M euros

THE HAGUE–The Trust Fund from which St. Maarten’s reconstruction will be financed will hold a maximum of 470 million euros, Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops announced on Friday.

St. Maarten’s accessibility in the context of a stronger border control and economy, sustainable waste management and wastewater management in cooperation with French St. Martin, and good governance with focus on government, policy, finances and public order and safety are the areas the Dutch Government wants to receive full attention during the execution of the Trust Fund for the recovery of St. Maarten after Hurricane Irma, Knops noted in a letter he sent to the Dutch Parliament on Friday.

In a seven-page letter, Knops provided an update on the various aspects of St. Maarten’s recovery process for which the Dutch Government has reserved 550 million euros. In the letter, detailed information is given on the working relation with the World Bank, which will manage the Trust Fund, and the deployment of the Trust Fund.

A maximum of 470 million euros will be available for the Trust Fund. So far, 24.6 million euros has been used for liquidity support for the St. Maarten Government and 7 million euros has been allocated for early recovery projects. The remaining part of the 550 million euros will be used for direct support from the Netherlands to St. Maarten in instances when financing through the Trust Fund is not possible or undesirable.

Knops explained that the Trust Fund will be used to support the reconstruction on a social, economic and governmental level, to improve St. Maarten’s resilience against hurricanes and other natural disasters, and to strengthen the (governmental) capacity.
“I expect that the financing from the Trust Fund will not be sufficient to execute the entire National Recovery and Resilience Plan (NRRP). This means that choices will have to be made and priorities have to be set. From a Dutch perspective it is important that projects and activities contribute to achieving the broad objective, that they fit within St. Maarten’s structural policy and sustainable financing is secured,” stated Knops.

To further define the range of the Trust Fund, the agreement with the World Bank, which will be signed next month, will secure that only reconstruction-related projects for which there are no other financing options besides public funds will be eligible for financing from the Trust fund.

“These projects have to fit in St. Maarten’s scale where it concerns content, form and process, taking into consideration the local absorbency and available capacity,” Knops said. The Netherlands considers it important that resources from the Trust Fund have to be available to improve St. Maarten’s accessibility in the context of a stronger border control and economy, to achieve sustainable waste management and wastewater management, and good governance.

The Trust Fund, which will have a maximum capacity of 470 million euros, will be replenished by yet-to-be-defined tranches. The tranches will be linked to the execution programmes.

Funding for the reconstruction will be guaranteed on the Dutch Government budget up to the end of 2021, Knops assured. The World Bank is taking into account that the execution of some activities financed by the Trust Fund – for example, large infrastructural projects – will cover a longer period.

Knops’ letter also addressed the fee the World Bank will receive for its work. Knops said the exact amount of the remuneration could not be determined beforehand, as this depended on the number of projects that will be executed by the recipients, the St. Maarten Government and non-profit organisations, and the activities that will be carried out by the World Bank. Knops anticipated that the remuneration will be somewhere between five and nine per cent.

The “creating of noticeable effects for the St. Maarten citizens” is a central point in the execution of the Trust Fund, with a maximal yield. It is important to maintain a realistic ambition level that takes into account the lengthy execution period of some (large infrastructural) projects, the available capacity and local absorbency, the (local and regional) market and the availability of financial instruments. Sustainable solutions and innovations will play a part.

The St. Maarten Government, international organisations and (local) non-governmental organisations (NGOs) will, under certain conditions, have direct access to the resources of the Trust Fund. This will limit administrative cost. Mentioned as an example in Knops’ letter are the United Nations Development Fund (UNPD), the United Nations Office for Project Services (UNOPS), the Red Cross and the St. Maarten Development Fund (SMDF).
The private sector throughout the Kingdom will be informed about the process of work and World Bank’s guidelines for tenders. This will enable companies from all four countries in the Kingdom to contribute to the reconstruction. A first meeting took place with representatives of the Dutch private sector late February. Similar meetings will take place in Aruba and Curaçao.

The governance structure for the deployment of the Trust Fund is based on a tripartite relation between the Netherlands, St. Maarten and the World Bank, and will offer the necessary guarantees for the Netherlands as donor country. The Netherlands will maintain the right at all times, without providing a reason, to suspend payment to the Trust Fund or to even eliminate said Fund.

A steering group with all representatives of the Netherlands, St. Maarten and the World Bank will give direction to the Trust Fund. Civil society will be involved in the activities of the Trust Fund and the reconstruction through a yet-to-be-established sounding board group that will serve to create a support base.

Besides the management of the Trust Fund, the Netherlands will deploy the World Bank to support the St. Maarten Government to draft the National Recovery and Resilience Plan. The St. Maarten Government has already agreed to work with the World Bank to carry out these assignments. This cooperation will be solidified in a formal agreement between the Government and the World Bank.

The World Bank and the Dutch Government will also sign an agreement, most probably in April. Knops said the talks with the World Bank about the framework of the Trust Fund and the definite price agreement are in an advanced stage.

The NRRP, considered to be the map for the entire reconstruction, also serves as a basis to set the range of the Trust Fund. The first draft of the NRRP is at the St. Maarten Council of Ministers for approval. The NRRP contains an analysis of the damage inflicted by Hurricane Irma and describes what is needed per sector to rebuild the island. The document also includes prioritisation, phasing, required funding and financing options.

Knops emphasised that the Dutch Government’s conditions tied to the recovery funds remained in effect. St. Maarten and the Netherlands are currently working on the legal structure to realise the physical organisation of the Integrity Chamber.

A plan of approach to execute strengthened border control will be presented shortly. This plan is being drafted with the input of the St. Maarten Government, the St. Maarten Police Force KPSM, the Royal Dutch Marechaussee, the St. Maarten Customs Department, the Dutch Customs Department and the Dutch Caribbean Coast Guard.

Agreements are being made regarding the sharing of information, the mandate and competencies, cooperation between the services, tasks, training and reporting where it pertains to immigration and intensified border control.

Source: The Daily Herald https://www.thedailyherald.sx/islands/74991-update-st-maarten-recovery-trust-fund-to-hold-maximum-470m-euros