SINT MAARTEN (POND ISLAND) – “I will start this press briefing with reading from the report of State Secretary Knops to the Second Chamber in The Netherlands as it relates to the liquidity loans from the Netherlands to St. Maarten,” Minister of Finance Ardwell Irion said on Wednesday during the Council of Ministers (COM) press briefing.
“The Cft was again unable to establish that Sint Maarten has met the conditions for the second tranche of liquidity support. This means that no talks will commence with Sint Maarten about the provision of a third tranche of liquidity support. If Sint Maarten still wants to have this conversation, the country will first have to demonstrate to the Council of Ministers via the Cft that all the conditions set for the second and third tranches have been met. The Kingdom Council of Ministers will then assess the request, based on the circumstances at that moment, whereby it will, in any case be examined, whether there is still a need for liquidity support.
“Ladies and Gentlemen of the media, people of St. Maarten,
“Let’s review St. Maarten received Naf 24 million – first part of the 2nd tranche after accepting the conditions set by the Kingdom Council of Ministers.
“In a letter of June 30th CFT, wrote that it had recommended that St. Maarten receive Naf 53 million for the period May 15th through June 30th. Naf 29 million would be made available after the following conditions were met:
- A minimum contribution from employees of 20% for the Payroll support program;
- An adjustment of the graduated scale for the payroll support program to a one on one method as it relates to the loss of revenue;
- The adjustments were to go into effect as of May 2020. (Just to be clear, not June, not July, but MAY 2020).
“The letter further provided more detailed explanation as to the application of the conditions.
“In a letter addressed to State Secretary Knops on July 21st, 2020 and copied to me among others, the CFT informed the State Secretary that St. Maarten had satisfactorily met the conditions of the payroll support adjustments. Considering the adjusted conditions of the payroll support would go into effect as of June1st and not May 15th as stated in the conditions, the amount would be reduced to 2/3 of the Naf 29 million, which is Naf 19.3 million.
“That brings us to the KCOM meeting of August 14th, 2020.
The Cft cannot establish that SXM has met all the conditions for the second tranche of liquidity support. This means that no talks can be held with Sint Maarten about a third tranche of liquidity support states State Secretary Knops to the Kingdom Council of Ministers.
If Sint Maarten still wants to have this conversation, the country will first have to demonstrate to the Council of Ministers through the Cft that all the conditions have been met. This request will then be assessed by the Kingdom Council of Ministers on the basis of the circumstances at that time, whereby it will in any case be examined whether the need for liquidity support still exists.
“I would like to reiterate what was stated by the Minister Plenipotentiary during last Friday’s KCOM meeting, which is that at the time of the decision regarding the second tranche conditions, a substantial part of the applications for May had already been processed. The implementation of the adjustment as of June 1st was reasonable given the date of decision-making.
“So the adjustment of the conditions of the payroll support program was not successful on May 15th 2020, and because of that the Naf 29 million was cut by 9.7 million guilders.
- No consideration was given to the fact that we started the program later than the other islands.
- No consideration was given to the fact that the decision to adjust the payroll program was made in mid-May by the KCOM.
- No consideration was given to the fact that the Payroll Support Program was agreed and budgeted for three months, April, May and June;
- Maarten covered the May Payroll from its already scarce liquidity as no consideration was given to the fact that a previously introduced (payroll) program could not simply be changed in the middle of implementation and the principle of legal certainty that is violated by the immediate amendment of the program in accordance with the advice of the Cft.
“During the meeting of August 14th St. Maarten requested to accrue the deducted funds which were cut because of the 2-week delay in implementation of the adjustments to the payroll support.
Conditions for the second installment second tranche
“Sint Maarten has a fundamental difference of opinion with the Cft about the validity of the legal reforms approved by Parliament, recently adopted by the Governor and published in the National Gazette.
“This concerns reforms for which significant legislative changes were necessary. It is noteworthy that Sint Maarten has nevertheless succeeded in having such reforms approved and declared applicable.
“These reforms are:
- Savings for the remaining part of the SSRP not funded by the Netherlands. We have made the adjustments, which form part of the budget amendment 2020. The deadline was July 15th which we did not achieve;
- Total salary and emoluments of Members of Parliament and Ministers must be cut by 25% per years and until further notice, as of July 1st Additionally no indexation is to be applied until further notice and the savings are to be booked in general resources. The Cft is of the opinion that the 10% salary cut already taken in April is not to form part of the 25%. Cft refers to a motion passed by parliament on March 28th in which an additional 5% salary cut and 20% material cut is supported. Finally, the savings are to be imbedded in the budget amendment, which has not yet been presented to Cft, and as such Cft cannot evaluate yet whether the required amendments are related to the conditions have been included.
- the retirement age increase for the civil servants from 62 to 65 years and to replace the final salary regulation with the median salary regulation. The statutory regulation was approved by Parliament on June 3, 2020 and adopted by the Governor on June 18, 2020. Published in the National Gazette as of July 1st 2020;
- AOV/General Old Age Pension: Increase of the age from 62 to 65 years, approved on July 15, 2020 by Parliament and adopted by the Governor on August 11, 2020. Published in the National Gazette on August 12th, 2020. At the time the advice was made by Cft it had not been published and consequently determined not completed as per the required condition for the second tranche.
“These reforms will lead to savings for the 2020 budget and to a cost savings of the salaries and benefits package for government officials. In other words, the enforcement of these reforms will affect the working conditions of the public servants and will lead to savings in the 2020 budget.
“Not counting these reforms could further complicate the successful conclusion of the negotiations with the Unions and the acceptance of the 12.5% reduction in the employment conditions package.
- 5% annual reduction of the salary and benefits package of civil servants and workers in the (semi) public sector, if financed for at least 50% by government, until further notice. No indexation to be applied either until further notice.
“St. Maarten presented a document in which it described the application of this condition:
- Reduction in vacation allowance;
- Additional expenses on training, uniforms, meals, travel expenses (no further specification)
- Reduction of the pension premium
Cft has indicated that these two items are not to be considered part of the reduction of the 12.5% as they stem from previous KCOM instructions in 2015 and 2016.
“The legislative trajectories have started but not yet completed and there are still negotiations with the Civil Servants unions have not yet been concluded, as such there are no formal decisions.
“The CFT therefore concluded that St. Maarten had not complied with the 12. 5% reduction.
- Maximizing of salary & benefits at 130% of the Prime Minister’s salary (after the reductions mentioned earlier) for government owned companies and entities and for the (semi) public sector which are financed for at least 50% by government. The same is valid for consultants.
“The calculation, which was submitted, included the reduction of the pension premium and as such the condition is considered not completed.
“Sint Maarten is of the opinion that these implemented reforms should from part of the reductions, particularly the 12.5% reduction in terms of employment package, and the Cft does not think so and therefore assumes a total discount of 20.5%. The Cft does not judge with due regard to the local context. In that case, discussions with Cft are complicated.
“This difference of opinion leads, among other things, to the fact that Sint Maarten is of the opinion that it meets the conditions set for the second tranche, while the Cft cannot determine this.
“Starting the discussions about the third tranche of liquidity support is important, sooner rather than later.
“We will continue communicating with Cft, in fact, my cabinet has a meeting today at 3:00 pm.
“We are currently working on responding to all the concerns expressed and will make all effort possible to ensure that we have a seat at the table. It does require however, cooperation from all ministers, all government departments, civil servants, unions, relevant high councils and once the legislative amendments reach parliament also parliament.”