March 23, 2020 – Philipsburg, Sint Maarten – In these challenging times, we must come together to help our country of St. Maarten and her people get through yet another crisis. The impact of COVID-19 on St. Maarten likely will be far more devastating than the destructive impact of Hurricane Irma – or prior disasters – and we must act in unison…quickly and firmly.
When we compare the impact of COVID-19 to our experience with hurricanes, our country will suffer more deeply on every level. Yet, there are many lessons that I learned as Minister of Health, Labor and Social Development and that we discovered together as a country post-Irma that can be adjusted to serve as solutions today. We simply need to recognize the differences in these experiences, and take advantage of the mechanisms that we already have developed.
While economic damages from Irma have been estimated at US $2.1 billion, we can expect even higher costs from the virus and much less financial assistance and insurance money.
- Overall economic decline resulting from closures is projected at 6% minimum in the case of a 1-month closure, and as high as a 30% drop for extended closures.
- Job loss as a result of COVID-19 will exceed our experience with Irma.
- The culminating loss of revenue to the island economy and government will be greater.
- Assistance and financial resources available to St. Maarten to manage the impact of COVID-19 will likely be much less.
Hurricanes impact our economy differently from COVID-19. Recovery and reconstruction post-hurricane disaster are labor intensive. We have learned from experience that, while a portion of our jobs may be lost, other jobs are created. Further, while the economy is stalled temporarily, reconstruction subsequently is supported in part through an injection into the economy from insurance. Third party donations from parties such as the Netherlands and non-profits also fuel our future and assist in rebuilding and relief efforts. Government revenues otherwise generated from the tourism economy are replaced by the taxes generated from this reconstruction economy.
COVID-19 stalls the global economy; we are an island. One of our country’s largest source of income, the worldwide hospitality industry, has been switched off practically in one day. Hospitality employees are heavily impacted by loss of work, and the trickle down effect felt through our entire work force is substantial. It remains uncertain whether business interruption insurance will cover any the loss of business income caused by COVID-19, which means that there may be no injection of insurance money into the economy at all.
There is no physical destruction so there will be no new jobs, no alternate industry to employ workers who have lost their work. Government taxes that normally come from the tourism industry will not be replaced by alternate industry; therefore, government will have reduced tax revenues from lower wage taxes, room taxes, car rental taxes, TOT, and more.
Since COVID-19 has spared no country, third party donors do not have the capacity to meet every need, and may not be able to assist St. Maarten financially. As a result, contrary to hurricane relief, there may be no financial relief arriving from other sources – donors such as the Netherlands also are struggling to respond to COVID-19 in their own countries and may not have the attention for St Maarten that they previously had after a hurricane.
Sint Maarten’s response is needed now. There is no doubt that these challenging times bring challenging questions – perhaps questions we have not faced previously. We have no choice now but to come together as a country in order to survive. While we can learn from the experience of other countries currently facing COVID-19, their social and geographic differences make applications clumsy and often inappropriate.
Instead, we can learn from our experience – many of the following recommendations are from the post-hurricane Irma playbook.
- Basic Necessities Vouchers: Similar to after Irma, there are people in our community who will struggle just to be able to purchase basic necessities. In order to assist our most vulnerable population, government should reinstitute the Basic Necessities Vouchers which will allow people to buy food and other basic necessities.
- Government Financial Aid: Post-Irma, a fast-track program for temporary financial aid was instituted. This program allows people who are struggling financially to access 3 months of financial aid from the Ministry of VSA during the time that they apply for full financial aid benefits.
- Skills Training program: The skills training program was an extremely successful program financed by the Recovery funds that allowed workers who were in danger of being laid off or reduced hours to receive a stipend as well as medical aid in exchange for attending the training program. Additional funds could be allocated now to extend and expand the program. Given the need to avoid group settings, an on-line version could be adapted, which also would offer the opportunity both to expand the curriculum and to employ personnel. Temporary internet access could be provided to citizens in order to facilitate the online learning.
- Business Stimulus package: The reality is that many businesses have not yet recovered from the effects of Irma. A comprehensive stimulus package must be considered. Although government will be challenged with declining revenues, consideration for waiving or deferring taxes could be considered. Low interest loans to help bridge the gap until the economy restarts could also be considered. Helping businesses would keep more employees on payrolls.
Sint Maarten, we have survived many other challenges, and we will survive COVID-19. But we only will do so if we are methodical and together in the way that we move forward. We must acknowledge the severity of the financial impact that looms ahead, and the repercussions on our entire population. We must take these recommended actions now since; if we do not do so, now, the consequences for us all could be devastating to our economy, our community and our country.
