Theo should substantiate claim that it won't cost much
PHILIPSBURG:--- Leader of the National Alliance (NA) William Marlin says dollarization will have serious financial consequences for St. Maarten as the costs to take this route are extremely exorbitant.
Marlin said UP Theo Heyliger's claims during Sunday's debate that it won't cost much is erroneous and intended to sugar coat the real figures and the tremendous loss of seigniorage for the country.
For St. Maarten to dollarize the country would have to purchase stocks of currency equivalent to the value of the total stock of guilder in circulation. For the former Netherlands Antilles that cost was estimated to exceed NAF. 229 million or US$128 million. Additionally, the country would have to pay annual costs 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.
"This is not pennies that we are talking about; this is a substantial amount of money," Marlin said in a press release last night. "The UP Leader Theo Heyliger has to substantiate his claims and calculations that it would cost nothing or would cost little."
"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.
There are no clear advantages of dollarizing for taxpayers in St. Maarten. "My position is if it ain't broke, don't fix it," he said noting that dollarization will ultimately cost taxpayers more money in the long term.
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 argued that the proponents of dollarization generally base their position on their gut feelings and have not presented sound academic or practical arguments for dollarization. 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."
NA Press Release
