Statia, Saba and Bonaire jointly Seek More Economic Support in Corona crisis

On March 25^th, the islands of Statia, Saba and Bonaire received an Emergency Package for employees, employers and entrepreneurs to deal with economic consequences of the Corona pandemic.

This Emergency Package, including contribution for labor costs of microcredits for employers, is much appreciated by the governments of the three islands.

However, based on the lessons learned from the aftermath and recovery after hurricanes Irma and Maria, the local governments of the three islands point out that the current package will not suffice. Governors of Saba and Bonaire joined forces with Government Commissioner Van Rij, to seek additional economic support measures from The Hague.

Letter to The Hague

In a joint letter of April 22^nd, addressed to the Ministers of Economic Affairs, Social Affairs, Finance, and Internal Affairs, a broad spectrum of economic consequences and possible responses are explicated. A week prior, the Minister of Economic Affairs Mr. Wiebes and State Secretary of Social Affairs Mrs. Van Ark, had already received a letter from Central Dialogue Statia, requesting an economic recovery stimulus.

“We appreciate the emergency package offered to the BES-islands. Many of our citizens need it dearly” says Government Commissioner Marnix van Rij of St. Eustatius

The Commissioner on the other hand explains that, looking ahead, an additional economic package is essential. “The aftermath of COVID 19 is expected to be far greater than for example the effects of hurricanes in recent years. Therefore, we need to look beyond the coming three months for a more structural and comprehensive solution”, according to Van Rij.

Suggestions for additional measures include a marketing fund for tourism, increased social security and reduction of transport costs between Saba and Statia to St. Maarten.

The letter addresses a number of problems Statia and the other islands are facing as a result of the Corona crisis. This includes:

• The current Emergency Package offers up to 80% compensation of loss of turnover. However, the remaining 20% ​​cannot be borne by many companies on the island. In many cases their turnover has been brought down to zero and margins are often so minimal that entrepreneurs are not able to absorb the remaining 20%. Reserves of these businesses are often too minimal to compensate out of pocket.
• Tourism has come to a virtual standstill in a matter of weeks.
  Projects are delayed, leaving money on the shelf. For example, renewal of the airport is ongoing, but has suffered delays, because of the crisis.
• There is a poverty trap for people who are not part of the target group of the initial emergency package. These include the elderly and others who depend on peers for their income. This is a large group on Statia, where few people use social security of the government.
• Day laborers or people with a 0-hour contract are also excluded from the scheme. Especially because often are paid off the record and in cash.
• The public entities of Statia and Saba are not in a position to take additional measures, because of their financial outlook.
• The oil terminal, as an important employer on Statia, has cancelled contracts at the beginning of this years. As a result, subcontractors lost their business. Companies that rely on the oil terminal are affected as well, including supermarkets, rental companies, restaurants and hotels. With the current Corona crisis, this sector is hit for a second time in a short period. Because officials from the Netherlands have postponed their trips, as a result of the current crisis, these businesses are dealing with an accumulation in decrease of income.

Suggested measures

To prevent further damage to the economy and to stimulate a speedy recovery and in addition to the offered Emergency Package, a number of measures are suggested:

• A budget neutral economic impulse, by implementing planned government projects earlier than scheduled.
• Facilitate deferment of payment for mortgage and loans, electricity and telecom, for businesses in distress.
• Reduce permanent or temporary cost of living of Statians, by guaranteeing utility depreciation charges.
• Impulse tourism and marketing: It took two years after hurricanes Irma and Maria for tourists to make their way to Statia and Saba. A multi-faceted approach to promoting tourism is needed to stimulate tourism. For example, being physically present at fairs is essential. Therefore, a tourism promotion fund is required.
• Reduced fare of flights from Saba and Statia to St. Maarten, to make the islands more attractive for tourists and bring down transport costs, as part of living expenses for its inhabitants.
• Strengthening social security services, for instance by an increase of food stamps and temporary allowances for regular living costs.

Not new

The 3 islands point out that many of these suggestions have been on the table, long before the current situation. Implementing these measures now, would be addressing some of the root causes for the lagging behind of the economic development of the islands. By stimulating the economy in direct response to the Corona crisis, an increased dependency on government spending in the long term can be minimized.