On September 6, 2017, Sint Maarten was severely struck by Hurricane Irma. The island, a constituent country within the Kingdom of the Netherlands, suffered damages of up to US$1.38 billion, or around 129 percent of its gross domestic product, according to estimates from the Sint Maarten government and the World Bank. Sint Maarten is still rebuilding and recovering from the devastation.
Sint Maarten’s economy is based on tourism. Restaurants, hotels, and other tourism-related sectors account for about 45 percent of GDP in Sint Maarten, the Caribbean’s most densely populated country with a population surpassing 40,000 and a per-capita GDP of a little over $25,000. Tourism accounted for 73 percent of foreign exchange income in 2016, helped by a large arrival numbers. Sint Maarten receives an average of 1.7 million cruise passengers each year, and the airport is a hub for connecting flights across the Caribbean.
Sint Maarten’s economy contracted by a cumulative 12 percent during 2017-18 in the aftermath of the hurricane. Growth is expected to rebound in 2019 and return to its pre-Irma GDP level by 2025. Private external finance from direct investment, loans, the pay-out of insurance claims, and funds held abroad are needed to finance the reconstruction of private properties and businesses.
Public finances faced a sharp decline in tax revenue due to the economic contraction. At the same time, government spending will increase to rebuild public infrastructure and assist the affected population. To support a fast and sustainable recovery, the Sint Maarten Recovery, Reconstruction and Resilience Trust Fund (SXM TF), administered by the World Bank and financed by the Netherlands, was created for up to 470 million euros (US$553.4 million). The fund supports the goals of Sint Maarten’s National Recovery and Resilience Plan (NRRP) to restore economic, community, and governance infrastructure and service delivery. Liquidity support to help cover part of the current budget deficits was provided for 2018 and will be provided for 2019 and 2020 by the Netherlands through an arrangement that allows Sint Maarten to borrow at the Dutch sovereign bond rate.
The social and economic impacts of Irma could have significant effects on poverty levels if actions are not taken. In the absence of a national poverty line for Sint Maarten, a United Nations Development Program (UNDP) benchmark for poverty based on the minimum wage indicates that 26.87 percent of the country’s households, or about 3,762 households, are poor and live on incomes at or below the monthly minimum wage, which was approximately US$850 in 2017. Although little is known about extension of the disaster impacts on vulnerable groups in Sint Maarten, international experience indicates that the poorest and most vulnerable groups tend to be disproportionately affected. This includes Sint Maarten’s large number of female-headed households — 38.7 percent of all households — who depend on the income of women in this post-hurricane period.
The downturn in economic activity has been reflected in substantially higher levels of unemployment. Sint Maarten’s overall unemployment rate increased from 6.2 percent in 2017 to 9.9 percent in 2018, with youth unemployment at 17.9 percent in 2018. The tourism sector suffered from major damages to the airport, accommodations, and tour operator equipment, which dramatically reduced tourist arrivals. Micro, small, and medium enterprises (MSMEs) have endured significant capital losses due to the impacts of the hurricane. Households need access to finance to rebuild homes and make a full return to economic activities. Rapid economic recovery and reconstruction are critically needed to generate income and stem the loss of jobs. Access to finance and business recovery is needed to help the private sector grow and contribute to the economic recovery.
Last Updated: Apr 02, 2019