New St. Maarten government building remains unfinished as government awaits advice on bond

POSTED: 08/11/11 11:57 AM

No decisions on currency and breakup before Plan of Approach

St. Maarten – Prime Minister Sarah Wescot-Williams has verbally agreed with the President of the Central Bank of Curacao and St. Maarten Emsley Tromp that he will send a new letter on a bond issue for St. Maarten. The government is also waiting for a report from the Central Bank on a Plan of Approach to accomplish the separation of a monetary union between St. Maarten and Curacao. The report was requested by the St. Maarten’s Finance Minister Hiro Shigemoto and Curacao’s Prime Minister Gerrit Schotte in separate letters to the Central Bank president.
Wescot-Williams and Tromp reached the agreement on the new letter at a meeting last week Thursday in the prime minister’s office, which Tromp attended with two of his staffers. The request for an update was made because the Government of the Island Territory of St. Maarten and subsequently of country St. Maarten did not respond to a September 2010 letter explaining the conditions for issuing the bond before 10-10-10 and the conditions for issuing the bond after 10-10-10. The conditions cover things like potential repayment terms like percentages for the interest rate.
“Given where we are today, the first option is no longer there as 10-10-10 is already past and I am sure economically we will see the conditions that are mentioned and that are currently a fact,” the prime minister said at the Council of Ministers press briefing.
The most recent request to secure a bond dates back to January 6, 2011, when the Government of St. Maarten requested the authority from the Board of financial supervision (Cft) to borrow 76 million guilders. Part of that loan – roughly 49 million guilders – would be for finishing the new government building, while another part – 27 million guilders – would allow government to refinance the payments of several pre-financing deals. The government has since requested the Cft to leave the refinancing of the 27 million guilders in pre-financing “out of the equation.”
In reply the Cft requested that government first get an approved budget and also supply them with a finalized report on the collective sector. The budget was approved June and signed into law early July and the Foundation Government Accountants Bureau provide its report on the collective sector in July as well. Government has now forwarded both documents to the Cft and is expecting a reply on its request at the beginning of next week (August 15).
The prime minister told journalists that she continues to press for the loan application to be completed because the cost of having the new government administration building stand empty and incomplete contributes to climb “practically every week.” Taking site costs into consideration the building is costing government roughly 3.8 million guilders. The prime minister did not state if that was a weekly cost or a monthly cost.
“I want you to understand why there is such an urgency behind getting this building ready for occupation, not only because of the effect it would have on government services as a whole, but also because it is becoming very, very costly,” the prime minister said.

Build up of the branch
The prime minister also announced that the discussion on building up the branch of the Central Bank in Philipsburg has now been lumped together with the request by Shigemoto and Schotte in their separate letters to provide the plan of approach for separating the monetary union between St. Maarten and Curacao. That report must outline the consequences of the separation and present proposals to deal with them. Also tied into the report is the discussion on a currency for St. Maarten. The prime minister does not expect that firm decisions will be made on any of the items that will come in the report before it is presented.
“It would depend on the recommendations of the study itself. Once that is had then both governments will have to make a clear decision,” Wescot-Williams said in response to a reporter’s question.
A first draft of the plan of approach is expected during the month of August that will outline how far the Central Bank has gone in their research and what is left to be done.

Foreign exchange levy
The prime minister has also requested that the proper terminology be used when listing the one percent foreign exchange levy in the budget. The levy is a license fee that is paid to the Central Bank by the commercial banks. The Central Bank then repays it to the coffers of government but instead of listing it as a license fee, the Government of St. Maarten has been listing it as a dividend. The government has projected it will collect roughly 25 million guilders from this levy in 2011 at a rate of roughly two million guilders per month.

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