St Maarten will lose millions if it dollarizes
PHILIPSBURG--Having your own currency is a "sign of pride," says Constitutional Affairs Minister Roland Duncan, who weighed in on the issue of currency during Saturday night's political debate and elaborated on his position during an interview with this newspaper on Monday.
Duncan, a proponent of the Caribbean guilder said it was only countries in crisis that usually dollarize.
"It is a sign of pride to have your own currency. It shows that you are managing your own economy no matter how small it is," Duncan said. "I don't know of any country in good strength and with good management that dollarizes. Every country that dollarized was in crisis or had trouble with bad management. Why haven't Europe and China dollarized?" he asked.
St. Maarten and Curaçao had taken a decision to establish a joint Central Bank and common currency in The Hague during the November 2006 final declaration under the tenure of Democratic Party leader and former Constitutional Affairs Commissioner Sarah Wescot-Williams. It was reconfirmed in November 2008. However, Wescot-Williams and United People's (UP) party leader Theo Heyliger have changed from their original stance.
The Caribbean guilder will be the same value as the current Netherlands Antilles guilder and it will have a fixed exchange rate tagged to the US dollar. The new currency will be introduced in 2012 and will come in 5-, 10-, 20-, 50- and 100-guilder notes. The Netherlands Antilles guilder will be used in the interim.
Duncan said St. Maarten stands to lose about US $30 million per annum from the one per cent tax imposed on dollar withdrawals if it switched to dollarization.
St. Maarten will also incur huge expenses. "If you dollarize you have to buy dollars to put into circulation. This is an International Monetary Fund measure to ensure that your foreign exchange reserve is sufficient," Duncan said. Buying dollars will cost St. Maarten a one-time payment of US $120 million.
St. Maarten will also have to pay US $45 million per year to replace damaged, torn or otherwise broken bills. "We will have to buy the US dollars because it is not our currency, he said.
St. Maarten will save on these costs when it uses the Caribbean guilder. It costs only about NAf. 0.24 cents to print a bill (currency note). Coins are more expensive. "It's easy to say let's dollarize, but we will make/save money having our own currency."
The switch from the Netherlands Antilles guilder to the Caribbean guilder in 2012 will not have any bearing on the use of US dollars in St. Maarten.
Tourists and businesses will continue to be able to use US dollars. They will not have to change their US currency to the Caribbean guilder to do business here or to shop here. Persons with US dollar accounts in St. Maarten will be able to maintain their accounts. The Caribbean guilder will have the same value as the current Netherlands Antilles guilder, Leader of Government Commissioner William Marlin had told reporters recently.
He had said some politicians had been deliberately misleading the public about the currency and dollarization issue, telling them that they would be unable to use dollars if St. Maarten doesn't dollarize. He said this was far from the truth as "absolutely nothing will change except the name and look of the currency."
Marlin said: "If one has US $100,000 in the bank it will remain US $100,000. If you have NAf. 100,000, what will change in the future is that instead of being in the Netherlands Antillean guilder, it will be the Caribbean guilder currency and it will have the identical value as the current Netherlands Antilles guilder."
