Tuitt concerned about Curacao rating

POSTED: 11/23/12 12:53 PM

GREAT BAY- Finance Minister Roland Tuitt has expressed concern about the downgrade of Curacao’s financial outlook rating since it could affect St. Maarten. The two countries share a monetary union through the Netherlands Antillean guilder and one Central Bank.
“It has some effect on St. Maarten because we have a joint Central Bank with Curacao. Curacao has to see how they can improve. They would be dragging us down with their problems. We have our own problems and we are trying to solve them. Curacao should also deal with their problems expeditiously,” Tuitt said on Wednesday.
Reuters quoted Standard and Poor (S&P) rating service who last week provided a brief statement on its reasons for downgrading Curacao, financially.
“On Nov. 15, 2012, we revised the outlook on the ‘A-‘ sovereign rating on Curacao to negative from stable, based on deteriorating balances in the national pension and health care funds, which have been weakening the government’s underlying fiscal stance.
In our view, the Curacao country risk has limited implications for Curacao-based reinsurer Nationale Borg Reinsurance N.V. (NBRe) because the insurer is not materially exposed to Curacao-based assets and liabilities.
We are accordingly affirming the ‘A-‘ rating and maintaining the stable outlook on NBRe. The stable outlook on NBRe continues to reflect its core status to Nationale Borg Group and our expectation that the group will maintain strong capitalization and strong operating performance,” the statement read.
Shared ownership of the Central Bank and no firm decision on dollarization continues to be a problem as it tries to shape its own identity as a country.
St. Maarten has received a BAA1 with a positive outlook rating from another rating agency, Moody’s.
The opinions of rating agencies have been known to cause major headaches for government since lending institutions then demand higher returns for capital debts. Negative ratings make a country appear risky to a potential investor.

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