Ministry of Finance Outlines Ongoing ENNIA Situation and Proposed Solutions
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Ministry of Finance Outlines Ongoing ENNIA Situation and Proposed Solutions

Minister of Finance Ardwell Irion Minister of Finance Ardwell Irion

SINT MAARTEN (GREAT BAY) - The Ministry of Finance would like to provide a comprehensive overview of the ongoing situation with ENNIA and the proposed solutions to address the critical financial issues facing the company. This update comes in response to previous communications to Parliament from the Minister of Finance, including letters dated August 28, 2023, and September 11, 2023, as well as the Prime Minister's presentation to the Committee of General Affairs on September 13, 2023.

The core issue at hand is the substantial capital shortage at ENNIA, which poses a significant threat to the financial well-being of approximately 30,000 policyholders. Without a viable solution, these policyholders would face substantial reductions in their pensions, which could have far-reaching social and economic consequences.

Key Points:

  1. Multi-Country Collaboration: It is essential to emphasize that any potential solution requires the agreement of Curacao, Sint Maarten, the Central Bank of Curacao and Sint Maarten and the Netherlands. The policyholders are residents of Curacao and Sint Maarten, and the Netherlands has expressed its willingness to provide a capital injection, contingent upon approval by the Dutch Second and First Chambers. Should any of the involved countries fail to agree, a solution for the ENNIA situation becomes unattainable.
  2. Negotiations and Technical Committee: Substantial negotiations have taken place on a technical level involving Curacao, Sint Maarten, the Technical Committee ENNIA, the Central Bank of Curacao and Sint Maarten, the Ministry of the Interior and Kingdom Relations, the Dutch Central Bank, and the Ministry of Finance of the Netherlands. The Technical Committee ENNIA comprises of representatives from the CBCS, as well as reputable external legal and financial advisors from Curacao and the Netherlands.
  3. Acknowledged Intervention: Based on these negotiations, it is widely recognized that intervention is necessary due to the significant capital shortfall at ENNIA. Without a capital injection, the 30,000 policyholders would face substantial pension reductions, leading to severe social and economic consequences.
  4. Agreement Reached on Technical Level: At the technical level, Curacao and Sint Maarten, along with the Central Bank of Curacao and Sint Maarten, have reached an outline agreement. This agreement stipulates that ENNIA will undergo a solvent restart with a substantial capital injection. Experts consider this solution financially sound and realistic.
  5. Confirmation Required: However, it's important to note that the agreement still requires confirmation at the Ministerial level, subject to Parliament's approval of the 2024 budget.
  6. Debt Concerns for Curacao: A significant challenge at present is the potential increase in debt and debt-to-GDP ratio for Curacao. This increase may lead to a violation of the Kingdom Act Financial Supervision for Curacao and Sint Maarten (the Rft) due to the exceeded interest burden norm.
  7. Cft Advice: The Board of Financial Supervision (the Cft) has expressed above mentioned concerns in a letter dated August 21, 2023, and negotiations are underway with Curacao to address this situation.

The Proposed ENNIA Loan Mentioned by State Secretary Van Huffelen: The refinancing offer made to Sint Maarten is favorable, including full refinancing, interest-only terms, and a spread repayment profile. However, this offer is contingent upon the resolution of the ENNIA situation, and term sheets must be signed by all parties before October 15, 2023, subject to budget approvals.

Impact on National Budget: While the exact impact on the national budget can be determined after loan agreements are finalized, it's estimated that Sint Maarten for its part of the loan will on-lend the received loan from the Netherlands – through a capital injection – to ENNIA. The loan will in principle be mirrored from the Netherlands to Sint Maarten and from Sint Maarten to ENNIA, meaning that the interest Sint Maarten must pay to the Netherlands will in principle be the same interest ENNIA has to pay to Sint Maarten.

However, the Cft, will add the ENNIA loan to the interest burden of the Rft, which will become approximately Naf 26.6 million and as such under the current interest burden norm of Naf 32.7 million.

Government's Intentions and Deadline: The Government's intentions are clear: the refinancing offer hinges on the resolution of the ENNIA situation, with term sheets requiring all parties' signatures before the recently extended date of October 15 2023. These agreements remain subject to parliamentary approval. The Ministry of Finance is actively engaged in negotiations to find a mutually agreeable solution to the ENNIA situation, understanding the significant impact it has on policyholders and the broader community. Collaboration between Curacao, Sint Maarten, and the Netherlands is essential to reaching a resolution that safeguards the interests of all stakeholders.

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