Unbiased look at the Sint Maarten Elections
PHILIPSBURG--National Alliance (NA) leader Member of Parliament William Marlin says dollarization will have serious financial consequences for St. Maarten, as the expenses to take this route are extremely exorbitant. He called on United People's (UP) party leader MP Theo Heyliger to substantiate his claim that the switch from the Netherlands Antilles guilder to the US dollar would not cost the country much.
Marlin, whose party is not in favour of dollarizing the economy, said such a move comes with "tremendous loss of seigniorage" for the country.
To dollarize, the country would have to purchase stocks of currency equivalent to the value of the total stock of guilders in circulation. For the former Netherlands Antilles that cost was estimated to exceed NAf. 229 million or US $128 million, according to Marlin.
The country would have to pay an annual cost of US $45 million for use of the currency. The country would also "lose millions" in central bank profits, estimated to be around US $33 million and lose interest on US notes, which was estimated under the former Netherlands Antilles to be about US $6 million dollars.
"When we were hit by Hurricane Luis in 1995 and the island had not been receiving (American) tourists and therefore no US dollars either, we saw the guilder rise and had been in circulation more than ever before. What if we dollarize and this happened again? In such a case we can, if necessary, print our own currency, but we cannot print extra dollars if we run short," Marlin said.
Dollarizing is similar to deciding to only purchase or import American-made products, irrespective of the more competitive prices and/or quality available elsewhere for the very same product instead of producing it yourself, Marlin said.
Proponents of dollarization generally base their position on their gut feelings and have not presented sound academic or practical arguments for dollarization, Marlin said. "Some believe that since the dollar is already in use in St. Maarten, then the country is de facto already dollarized, plus American tourists come. But many developed countries that are bombarded with American tourists have never considered dollarizing."
He said one should also take note that the US economy was the hardest hit by the last economic crisis. "It is very costly to dollarize. I don't know where the UP leader came up with the calculation that it costs little to nothing, but he should substantiate this
