Moody’s downgrade: St. Maarten Minister warns

POSTED: 04/8/16 3:10 PM

St. Maarten News – Moody’s is about to lower the rating for country St. Maarten from BAA1 to BAA2, Finance Minister Richard Gibson said yesterday. Moody’s decision will affect the investment climate and in would also expose the country to high interest rates on international financial markets when after 2018 financial supervisor Cft packs its bags.

Minister Gibson said that Moody’s had not taken a decision yet but that the signs pointed towards a downgrading. “The reason behind it is that, according to Moody’s, our economy develops at a very slow pace. For several years economic growth has been 0.5 percent and the outlook for the near future is between 0.3 and 0.5 percent. There is no indication that it will change significantly.”

Minister Gibson noted that it is “significant” that other islands in the region perform better than St. Maarten does. “There is something we are not doing that we will have to start doing shortly, otherwise we will continue to be downgraded,” he warned. “Moody’s says we have not made any strides with our institutions. We have to change because if we don’t take those steps we will in the future get more of what we got in the past.”

When financial supervisor Cft terminates its services in 2018 “we will be exposed to world market rates,” Gibson pointed out. “Currently we have a favorable relationship with the Netherlands whereby we are able to borrow against 2 to 2.5 percent. If we do not have supervising institutions in place that meet international standards by 2018 we will have to borrow against 6 to 7 percent. Therefore, we have to change, do things differently and pay attention to benchmarks.”

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