NETHERLANDS – The Dutch Central Bank (DNB) is concerned about the implications for the Algemeen Pensioenfonds van de Netherlands Antillen (APNA), the general pension fund for government workers in the Netherlands Antilles, of the territory’s government debt, a Dutch a parliamentary working group has been told.
The Netherlands Antilles government debt totals ANG4.9bn (€2.2bn), some 8.75% of its GNP at end-2005, DNB director Henk Brouwer said. This represented a 20% increase from 2000 and 23% of total tax revenues are used to service debt interest payments, according to DNB data. The debt position is not sustainable, Brouwer added.
The APNA holds 40% of debt, Brouwer said. As the Netherlands pension supervisor, the DNB was concerned about the APNA’s position, he added.
Addressing the parliamentary kingdom relations working group, Brouwer said a pension fund depends on the health of the financial system.
The ANPA reported assets under management of €1.575bn in 1Q06, when it posted a return of 5.3% and a coverage ratio of 102%. Some 92% of its investments are in US and the remaining 8% are in Europe.
The Netherlands Antilles, a federal grouping of five Caribbean former Dutch colonies, is a part of the Kingdom of the Netherlands.
The debt issue has come to the fore as the islands’ links to each other are due to be dissolved by July 2007, with Curacao and Sint Maarten becoming autonomous territories and Bonaire, Sint Eustatius and Saba taking an as-yet undefined status as ‘kingdom islands’.
The constitutional changes were made after referendums in the territories. None of the islands voted for independence.
The DNB was willing to actively participate in rescheduling the territory’s debt and in debt relief, Brouwer said. The Dutch state could become the main debtor, he added. Antillean paper is denominated in the Antillean guilder, which is pegged to the US dollar.
He said that the debt could be converted into normal US debt paper and its maturity extended or it could be paid off in one go.
Institutional investors, including the APNA, would receive a vast amount of money, which they should be able to invest internationally as there were not enough investment opportunities in the Antilles.
Brouwer emphasised the DNB’s position that the islands should retain monetary union while the dollarisation of their economies meant that no central bank was needed for the islands.