Debt Briefing: Sint Maarten

Explanation of terms used: 

Term	Meaning
Sovereign debt(also called government debt, national debt, or public debt)	The amount of money a nation's government has borrowed from creditors which can be domestic or external
Domestic debt	All debt owed to domestic creditors, often issued in local currency or under local law
External debt	All debt owed to foreign creditors (= non-resident, both public and private, including commercial banks, governments, or international financial institutions), often issued in foreign currency or under foreign law
Debt-to-GDP ratio	Showing how much a country owes compared to the financial value of everything that is produced and sold in that country in a year (GDP)
Debt swaps	An agreement where a country restructures its debt by exchanging it for something else in order to reduce its debt burden or improve repayment terms
Public debt audits	A detailed review of how much a government has borrowed, owes, to whom, for what purpose, and whether the debt was acquired legally, transparently, and in the public interest.
Refinancing a loan	Replacing an existing loan with a new loan

History of debt:

Colonial context

Sint Maarten / St. Martin is one island, but divided into two because of its colonial history. Competing Dutch and French interests led to the carving up of the island in two parts in 1648. In 1631, the Dutch West Indian Company began mining salt on the island. In the 17th-18th century, the Dutch and French colonists expanded cotton, sugar and tobacco plantations on St. Martin through the labour of enslaved African people. 

A unification movement in Sint Maarten / St. Martin calls for unity of the island as a necessary step towards decolonization. This briefing discusses the lasting colonial relations between the island and the former Dutch colonizer, while recognizing the unity of Sint Maarten / St. Martin. 

Recent debt history

With the dissolution of the Dutch Antilles on 10-10-2010, Sint Maarten became an autonomous, constituent entity of the Kingdom of the Netherlands, but the internal fiscal decision-making of Sint Maarten was placed under the control of an external Board of Financial Supervision. The Netherlands assumed the majority of the public debt of the Dutch Antilles in 2010 on the condition that Sint Maarten, Curaçao and Aruba agreed to external oversight over their budgets.

The debt-GDP ratio of Sint Maarten increased sharply as a consequence of the impact of the 2017 Irma and Maria hurricanes and the COVID-19 pandemic. To deal with the financial and economic impact of these humanitarian crises, Sint Maarten took out loans from the Netherlands. The Dutch government, however, uses the loans to impose far-reaching economic reforms on Sint Maarten. In 2020, Sint Maarten issued a complaint with the United Nations against the Netherlands on account of racial discrimination and neocolonial use of loans to erode the sovereignty and human rights of Sint Maarten. 

Current sovereign debt situation:

General

Between 2017-2023, on average 85% of the public debt of Sint Maarten was external debt held by the Netherlands. Debt owed to the Netherlands is denominated in the local currency.  In 2023, the total public debt was 1135 million ANG (~ 630million USD): 41% of Sint Maarten’s GDP. 87% of this debt was external. The remainder of the debt is domestic and is owed to public institutions such as the social and health insurance entity (SZV) and the public pension fund (APS). 

Debt restructuring 2010 

With the change of the governance structure of the Kingdom of the Netherlands on 10-10-2010, the Netherlands agreed to restructure 70 percent of the debt of the Netherlands Antilles. The Netherlands assumed the entire debt, but received a claim against Sint Maarten and Curaçao for the remaining 30%. Sint Maarten and Curaçao financed these claims by borrowing money on the capital market. The Netherlands purchased the majority of these loans. The moment the countries gained their new autonomy therefore, they were financially indebted to the Netherlands. 

COVID-loans 

In the COVID-19 pandemic, Sint Maarten took out an interest-free loan with the Netherlands of 141.7 million euros. The loan was refinanced in 2023 at an interest rate of 3.4% from 10-10-2024 until 15-01-2025. In 2024, the loan was refinanced at an interest rate of 2.9%, applicable from 15-01-2025, for a duration of 19 years. 

Debt and social contention:

Debt as a neocolonial tool 

During the COVID-19 Pandemic, Sint Maarten needed financial support because its economy collapsed. The Netherlands chose to offer support in the form of loans, instead of grants. The loans were not offered at once. Instead, the money was given in parts, and each part came with strict conditions. To receive the money, the country had to cut government spending, introduce major economic reforms, and accept Dutch supervision over its economy. Some of these demands entirely overrode Sint Maarten’s autonomy and democratic decision-making, such as raising the retirement age by three years and reducing the health budget.

In response to its treatment by the Netherlands, Sint Maarten explored the possibility of borrowing money on the international capital market. However, the Netherlands threatened that it would declare Sint Maarten in default on an existing Dutch loan, which would seriously damage the country’s credit rating and ability to borrow.

The final conditions attached to the loans were presented as “country packages,” which included structural economic reforms based on neoliberal policy advice by the International Monetary Fund (IMF).  When the first loan period ended in 2022, the Netherlands indicated that interest rates on new, refinanced loans could increase to between 6% and 8% if Curaçao, Aruba, and Sint Maarten did not agree to these reforms. In 2023, Sint Maarten became the first of the three countries to sign an agreement for the refinanced loans. 

Economic and climate vulnerability: lack of climate action 

Sint Maarten’s economy relies heavily on tourism, which makes up about 45% of its GDP. This dependence also makes the island especially vulnerable to natural disasters. In 2017, Hurricanes Irma and Maria caused an estimated 3 billion USD in damage. Around 90% of the island’s infrastructure was either destroyed or severely damaged. A reconstruction Trust Fund has been set up with the World Bank in 2018. The Netherlands has veto power over disimbursements through the fund and has delayed humanitarian assistance. In 2020, only 76 million euros of the promised 550 million euros were delivered. 

The vulnerability of the Sint Maarten is exacerbated by the climate crisis, which disproportionately affects the small island state. Annual hurricanes are growing stronger, sea levels are rising and temperatures are increasing. As a result, Sint Maarten faces a higher risk of flooding, along with damage to coral reefs, many of which are dying. 

Yet, until now no climate adaptation plan exists for Sint Maarten. Any concern for environmental protection is absent from the “country packages”. Instead, the structural reforms seek to create a “resilient economy” by maximizing Sint Maarten’s “economic growth potential” and controlling its public finance. These include measures to improve the investment climate to attract more foreign direct investment and to cut the health and social budgets as well as the public sector wages. 

Racial discrimination 

There is a deep gap between life in the Caribbean part of the Kingdom of the Netherlands and in Europe. This gap is the result of centuries of human rights violations and has increased in the last decade. Even before the economic devastation of the hurricanes and COVID-19, at least 94% of households on Sint Maarten lived in poverty. In the pandemic, citizens in Sint Maarten were not supported in the same way as citizens in the Netherlands. This is but one example of institutional racism within the Kingdom of the Netherlands. 

The public and parliament of Sint Maarten have called for debt cancellation of the COVID-loans and asked “what the Dutch government will pay Sint Maarten for the profits made during the slave trade”.  The Netherlands must make reparations and work towards climate justice. Cancellation of debts is a first step. 

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Debt Briefing_ Sint Maarten_EN.pdf

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