St. Maarten leaves monetary union

WILLEMSTAD — It now appears that the Council of Ministers of St. Maarten had already taken a basic decision three weeks ago to leave the monetary union with Curaçao, in view of the recent developments around the Central Bank.

Especially the criticism from the Curaçao government on the decision of the Central Bank of Curaçao and St. Maarten (CBCS) to buy all bonds, which third parties would not buy with an emission of St. Maarten Harbor Holding N.V. (SMHH), had not gone done well with the government of St. Maarten.The basic decision is one of the steps, which in the opinion of St. Maarten, should be taken before the country has its own Central Bank. Among other things, the branch of the CBCS on St. Maarten must have enough personnel. Also the meeting of next Monday, on which the Amigoe reported earlier, between the governments of Curaçao and St. Maarten and Board of Directors (RvB) of the CBCS, is part of this process. The debenture stock in behalf of SMHH and other matters, such as a private loan of 3 million guilders from president-director Emsley Tromp, are subjects of discussion.

Hiro Shigemoto, the Minister of Finance of St. Maarten, requested the meeting. St. Maarten is concerned about the situation at CBCS. According to Shigemoto, the CBCS-management must be given the opportunity to defend itself. Every investigation that Curaçao wishes to conduct into the CBCS board of directors must be done by an independent international organization, says Shigemoto. He also insists that every investigation from the Board of Commissioners (RvC) is preceded by an advice from the Board of Directors (RvC, read: management) and the Supervisory Council to the two Ministers of Finance.

Communal coin
Since 10-10-’10, when the islands became autonomous countries in the Kingdom, Curaçao and St. Maarten share a communal coin and Central Bank. The intention was that both countries introduce an own Caribbean Guilder per January 1st 2012. However, since then, both the government of St. Maarten and of Curaçao indicated their wish for an own Central Bank. Furthermore, the Parliament of Curaçao adopted a motion, pleading for an own Central Bank for the country. In a letter of July 15th last, both Premier Gerrit Schotte (MFK) and Hiro Shigemoto, the Minister of Finance (St. Maarten) requested a plan of approach from the CBCS to realize this.

Response from CBCS
According to the CBCS, there is no obscurity on the validity of the Bank’s investment policy. CBCS states this in response to criticism on the Bank’s decision to buy all bonds, which third parties would not buy with the emission of SMHH.

CBCS believes Renny Maduro, the chairman of the RVC, unjustly appeals to the lack of an approved investment policy 2012. He is to blame for the lack of this policy, according to CBCS.

The RvC approved the investment policy on October 17th 2011. In December 2011, the RvB attempted to convene a meeting of the RvC to present the draft investment policy 2012 for approval. However, this meeting didn’t take place because Maduro decided not to cooperate. The investment policy 2012 was also discussed during a meeting of the RvC on March 7th on St. Maarten, convened by Tromp, but was not approved yet. Maduro had been absent again.

Maduro is holding the wrong end of the stick again according to CBCS, when he alleges that in this case the requirement of a credit rating AA3 applies. This is not correct, now that requirement of the investment policy regards – in a nutshell – international investments. Curaçao and St. Maarten are considered ‘national’ by the Bank; after all they are part of the monetary union.

CBCS considers it their task to support the development of the capital market as much as possible. The development of the capital market can only take place if debenture stocks are indeed offered, if one subscribes to such and trades in debenture stocks.

On December 13th 2011, CBCS stated they were prepared to buy all bonds, which third parties would not buy with the emission of SMHH. The total mount of the debenture stock is 150 million dollars. The Bank believed and still believes this is a surveyable risk, taking the aforementioned into consideration, the expected revenues from SHMM and the collateral given. “The debenture stock is a sound business case. For years, CBCS has been investing in local bonds, whereby a repurchase facility is not unusual.

The transaction at issue therefore fits in this – stable – policy.”

As regards Maduro’s concern about the efflux of foreign currency, the repayment of the foreign financing of the harbor of St. Maarten will in any case take place to the account of the foreign currency reserves, also if CBCS wasn’t involved with the re-financing. “After all, if SMHH would opt for a different national re-financing, this would logically, with the repayment, also lead to a decrease of the foreign exchange reserves. For that matter, expectations are that in the long term the harbor could contribute towards generating extra foreign currency.”

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