National Recovery Plan

National Recovery Plan

The interim National Recovery Plan, entitled “Sint Maarten Build Back Better” provides an analysis of the economic impact expected due to the loss of the country’s main business activities and infrastructure. Together with consultations from various stakeholders, it ensures a comprehensive plan, a roadmap for the reconstruction and recovery of Sint Maarten, for the short, mid and long term.

Please find below the summary or download the full interim report.

Introduction

  • The event

    Twenty-two years after the devastation caused by hurricane Luis, Sint Maarten was assailed by one of the strongest category 5 storms recorded in modern history, hurricane Irma. With sustained winds exceeding 185 miles per hour, the storm cut a lethal path of destruction through the Leeward Islands. The eye of the storm passed over the island of Saint Martin/Sint Maarten on September 6, 2017. On Sint Maarten, the loss of life was limited to 2 persons, however, the material damage, which is still being assessed, is expected to be US$1,8 billion. Based on information derived from various damage assessment reports, 90% of the infrastructure on the island was damaged by the storm. Sint Maarten’s environment will need years to recover from the storm damage. Beyond the loss of life and destruction of structures, the catastrophe caused by hurricane Irma has resulted in major societal upheaval. 

  • The Response

    In the immediate aftermath of the storm, emergency humanitarian support and aid was rendered to both residents and visitors. At the time of this writing, the emergency response is winding down. Thereafter the recovery will take on a more programmatic approach both in terms of planning and coordination. Restoration of affected sectors of the island will occur in phases; from short-, medium- to long-term.  To address the need for a comprehensive plan for the recovery, a working group was established, by national decree, on September 14, 2017. This work group was given the task of drafting a National Recovery Plan.

    Members of the work group National Recovery Plan (hereafter: W-NRP) are: 

    • Joane Dovale-Meit, chair
    • Dennis L. Richardson, vice chair
    • Cassandra Janssen, secretary
    • Makini Persaud-Hickinson, member
    • Fernando William, member
    • Jan Beaujon, member
  • The approach

    On September 20, 2017, the Council of Ministers, approved the plan of approach outlining the vision, principles, framework and timeline developed by the W-NRP. The document before you, represents the interim report from the work group, that is based on the plan of approach. The interim NRP was developed using the best information available (damage assessments), as well as input from a broad range of stakeholders. A provisional estimate of the damage per sector, is presented in this report. Additionally, the report provides an analysis of the economic impact expected due to the loss of the country’s main business activities and infrastructure. Actions required for business recovery, as well as the social initiatives necessary for the recovery of the community are outlined in chapters five and six of the interim report. The need for institutional strengthening and capacity building is discussed in the section on government recovery, chapter 7. We conclude the interim report with recommendations. 

National Recovery Program

  • Strategy

    Considering the unprecedented material damage caused by the passage of hurricane Irma, Sint Maarten is confronted with a herculean task of reconstruction and recovery. “Reconstruction” focuses primarily on the construction or replacement of damaged physical structures, and the restoration of critical infrastructure. “Recovery” in the context of National Recovery Plan is defined as the restoration, and where appropriate, improvement of facilities, infrastructure, livelihoods, and living conditions of the Sint Maarten community.

    Vision

    Government’s vision is for a better and stronger Sint Maarten.

    From a strategic and policy standpoint, government has developed a central vision for the recovery. Government seeks to act swiftly and accelerate the restoration of the social and economic infrastructure using the NRP as a roadmap for sustainable recovery. The NRP therefore includes input from stakeholders.

    With the NRP, government conveys its priorities to stakeholders (public and partners), and in so doing, builds consensus for the implementation of the initiatives derived from the plan. Devastation on the scale caused by a category 5 hurricane, must be matched by an equally robust reconstruction effort that includes government, citizens, business, government and community partners, international organizations (NGO’s etc.), and the Netherlands.

    Principles

    Sint Maarten’s NRP adheres to the principle of Build Back Better. This principle goes beyond simply reinstating what the storm destroyed, but instead seeks to improve the community and achieve a recovery that is better, fairer, stronger and more resilient than the situation before the disaster. This concept has been advocated in many other disasters, including hurricane Katrina in the United States in 2005, and the Haiti earthquake of 2010.

    While disasters provide opportunities for change, recovery efforts cannot address every challenge within a community. So too, the NRP does not pretend to provide answers for every perceived problem facing Sint Maarten, pre- or post-Irma.  Instead, the NRP seeks to set priorities which relate to interconnected focal areas; business restoration, community recovery, and strengthening of government.

    Given the island’s reliance on tourism and related economic activities, swift restoration of business activity is a priority. Restoration of business will support the return of the social order on the island as well. Besides the catastrophic material impact, the storm has caused significant emotional stress and social disruption among the residents of the island. 

  • Recovery Cycle

    The National Recovery Plan (NRP) provides a comprehensive framework for public and private sector to recover from the social and economic impact of hurricane Irma. The NRP provides guidance to government and stakeholders on Sint Maarten (business and social) regarding the roles and tasks each will fulfill for short-, medium- and long-term recovery. In addition, the NRP outlines measures and initiatives that government will undertake to support the return of a robust economy, equitable social services, and a resilient infrastructure.

    Successful recovery is a cumulative process. It is therefore imperative that certain basic requirements are met and maintained to allow progression of the recovery cycle.

  • Funding/financing for recovery

    Budget analysis

    The private sector will use a combination of insurance proceeds and financing to invest in the reconstruction and renewal of their infrastructure, facilities and obligations to employees. The recovery plan makes use of preliminary estimates.

    Government’s budget, already sparse, is projected to be insufficient to cover the immediate emergency and clean-up costs. The additional budget expenditure along with the loss of tax revenue is projected to result in a budget deficit of NAf 156 million in 2017. The deficit for fiscal year 2018 will be higher (see section 4.6). Budget support must be arranged. Cost-cutting measures, if possible in some areas, will certainly not bridge the gap created by the loss of income due to reduced economic activity. Moreover, additional initiatives to shore up the competitive position of the destination for the 2018-2019 tourism season are needed. Tourism marketing must increase beyond what is traditionally budgeted. The lessons of hurricane Luis can serve as a guide in this regard. Sint Maarten’s success in maintaining and growing tourism market share after hurricane Luis, proves the viability of establishing special marketing funds.

    Sources

    The Dutch government has committed itself to help Sint Maarten. As a part of the Kingdom, Sint Maarten has thus far received emergency aid, material and technical support to deal with the crisis immediately after the passage of the storm.

    Recovery and reconstruction, guided by the principle of ‘build back better’, is going to be a costly process, requiring hundreds of millions of Guilders. A reconstruction fund is being debated in The Hague. While the size of the fund remains unknown, the Dutch government is acutely aware of the island’s needs. Representatives of the Ministries of Defense and Interior Affairs and Kingdom Relations have been on the ground almost from the beginning and have assisted in assessing the damage and needs.

    It is also clear that the reconstruction funding will be subject to certain conditions and requirements. The Hague wishes to guarantee that the financial support provided, is effectively and efficiently deployed to the areas of greatest need. However, it is equally evident that success requires that Dutch funding remain aligned with locally identified priorities.

    Funding from the European Union and the United Nations is possible. In fact, the Kingdom government has made appeals on behalf of Sint Maarten for assistance. The damage is immense and a swift recovery is necessary for the economic resilience of the community. 

Consultations

  • Consultations

    To develop the NRP, initial damage assessment reports are being supplemented with information from stakeholders. The W-NRP met with a variety of stakeholders. Consultations will continue after presentation of the interim report. The stakeholders who have met with or contributed information to the W-NRP to date include:

    • The Governor
    • Council of Ministers
    • Ministry:
      - Minister General Affairs,
      - Minister of Education, Culture, Youth and Sports Affairs
      - Minister of Minister of Public Housing, Spatial Planning, Environment and Infrastructure
      - Minister of Finance
      - Minister of Justice
      - Minister of Health Care, Social and Labor
      - Minister of Tourism, Economic Affairs, Transport and Telecommunications
    • Dutch Civil Mission
    • Government-owned Companies:
      - NV GEBE
      - TelEm
      - Harbour Group of Companies
      - Princess Juliana International Airport
      -  Windward Island Airways N.V.
    • Government Departments:
      - Interior Affairs and Kingdom Relations (BAK)
    • Sociale Ziektekosten Verzekering (SZV)
    • Central Bank of Curaçao and Sint Maarten (CBCS)
    • General Pension Fund (APS)
    • Private Sector:
      - The Sint Maarten Hospitality Trade Association (SHTA)
      - Merchants of Frontstreet and Backstreet
      - Marine Sector representatives
      - Banker’s Association
      - Various Business owners
      - Sint Maarten Insurance Brokers Association
      - American University Caribbean (AUC)
      - Unleashed Potential Group (UPG)
      - United Telecommucation Service (UTS)
    • Law enforcement:
      - Koninklijke Marechaussee
      - Police Corps Sint Maarten
    • Community:
      - The Nature Foundation
      - Community Councils of:
    • Point Blanche
    • Belvedere
    • Saunders
    • Dutch Quarter
    • International organizations:
      - Samaritan’s Purse
      - Economic Commission for the Caribbean and Latin America (ECLAC)
      - United Nations Development Programme (UNDP)

Conclusions & Recommendations

  • Conclusions

    Since the approval of the plan of approach on September 20, the W-NRP has worked on preparing an interim report. This report provides a review of the situation on Sint Maarten following the passage of hurricane Irma. It outlines the impact by listing priority areas for the reconstruction and recovery. The interim report is, however, not comprehensive. It cannot be, given the paucity of information currently available from the affected sectors. Damage assessments are, at best, preliminary, and needs cannot (yet) be identified with any specificity. However, the W-NRP has developed an impression of the scope of the challenges facing the island. 

  • Emergency Phase

    The immediate emergency caused by hurricane Irma is no longer acute. Relief efforts and emergency actions will likely be suspended in the near-term. This does not mean that needs do not exist. Persons who are permanently displaced due to the destruction of homes continue to require emergency shelter, food and water, and possibly financial aid and mental health support for the foreseeable future. Residual needs from the emergency phase will need to be communicated to the W-NRP. The needs can then be addressed in the NRP.

  • Communication

    Planning depends on the availability of information. Definitive damage and needs assessments must be completed by October 31, 2017. This will allow the W-NRP to develop more accurate calculations to present to funding agencies. In addition, the information will be useful in terms of preparing economic impact assessments, that are critical for drafting supportive and/or mitigation policies and programs.

  • Carrying capacity

    Resources required for recovery will exceed the financial carrying capacity of the island. The initial damage assessments bear this out. Moreover, based on the principle of ‘build back better’, the reconstruction requires that the community adapt to the new normal of bigger and stronger hurricanes; a situation that is challenging, financially and otherwise. 

  • Priorities

    The W-NRP recommends the following approach in establishing priorities: 

    Sustainable economic development

    The recommended measures for economic recovery (chapter 5: business recovery) are geared towards creating sustainable economic development. 

    The W-NRP recommends jump-starting cruise tourism in Q4, in an attempt to ignite a full economic recovery within a year. In so doing, an opportunity is created to improve the tourism product. The new and improved product, in turn, can strengthen Sint Maarten’s position in a highly competitive regional market.

    Sustainable economic development requires securing and strengthening of the strategic infrastructure in the mid- and long-term. These priorities include:

    • Port (section 4.3.2 and 5.1.2)
    • Airport (section 4.3.2 and 5.1.2)
    • Telecommunications (section 4.3.6 and 5.1.2)
    • Electricity and Water (section 4.3.1, 5.1.1 and 6.2.3)

    In addition, building codes will be subject to review to determine whether the current requirements are sufficient to guarantee category 5 resistance of the structures on the island (Build Back Better). 

    Education

    Education is a prime building block for the economy, both now and in the future. For example, our main economic pillar, tourism, demands the human touch, and, more often than not, that human element is knowledge-based.  The rapid recovery of the educational sector is therefore critical, as it forms the foundation for both the economy and the community (section 4.5 and 6.4).

    Maintenance of law and order

    Maintenance of law and order demands ensuring security in the short-term. Both residents and visitors need reassurance that law and order has been restored. Additionally, in the mid- to long-term, law enforcement must be supported by means of an expansion in the quantity of law enforcement officials, and the quality of law enforcement agencies on Sint Maarten (sections 4.5, 5.1.1 and 6.5).

    Social infrastructure

    The prime challenge on the social front after hurricane Irma, relates to providing the community with housing. One aspect to this initiative is the repair and rebuilding of the existing housing stock damaged by the storm. The other aspect involves replacing the sub-standard housing on the island. In the short-term, emergency housing must be provided. For the mid- to long-term, an integrated community housing program, including public-private partnerships needs to be developed.

    Anticipating and addressing the rise in unemployment is a priority as well. While the exact number of unemployed is not yet known, measures must be taken in the near-term to accommodate displaced workers. Programs must be developed that will integrate persons seeking employment as part of the economic recovery of the island (sections 6.3.1 – 6.3.3.).

    Managing the increase in solid waste caused by the storm debris is also urgent, and spans the entirety of the recovery cycle. In the short-term, the large debris needs to be removed from districts (cleanup of the island-section 5.1.1). Thereafter, the material must be processed and recycled, particularly metals and timber. In the long-term, action must be taken to reduce the landfill area. A waste management system is required (section 6.2.4).

    A modern general hospital to replace the St. Maarten Medical Center (SMMC) is a priority. Alternative funding for the general hospital in the form of soft loans, grants or a combination thereof (reconstruction aid), is being sought to secure this critical project (section 6.2.1).

    Institutional strengthening

    As part of government recovery, improvements will include tax reform, organizational restructuring, human resource development, and upgrading of systems.  Enhancement of the financial resilience of government is necessary so that in times of national distress, government can act in a substantive way to effectively deal with crises (chapter 7).  

  • Financial resources

    The financial resources potentially available for recovery include: insurance payments, loans (soft or commercial), funding from the Netherlands’ reconstruction fund, funding from other international institutions (EU, UN etc.), and funding from the public budget. Ways of bridging the public budget gap must be identified (sections 2.3.1 and 4.6).

    Establishment of an Economic Recovery Fund (section 5.1.4) is recommended. Entities responsible for the island’s critical infrastructure could engage in more rapid reconstruction and recovery if concessional financing is available.

    Absent accurate assessments of the damage or the costs to rebuild/improve, it is not (yet) possible to accurately establish the size of the funding needed to execute the recovery. However, the W-NRP understands the need to provide a “ball park” figure.

    The following is an approximation based on the initial impressions of the damage and the funding necessary for the recovery of Sint Maarten:

    amount of damage – {insurance payments + contribution business and individuals} = reconstruction fund

    The expected insurance payments are expected to total US$ 785 million. The investment individuals and businesses are likely to make to ‘build back better’, is estimated at US$ 200 million. Given the current estimated damage of US$ 1,8 billion, a funding gap of US$ 815 million remains.

    Without external financial support, government must provide funding to strengthen security, cleanup the island, repair and upgrade schools, construct community housing and facilitate fiscal incentives to stimulate the economic recovery. Funding on such a scale will create structural budget deficits for the foreseeable future. The alternative to public financing (and the resultant budget deficits), is a slower recovery spanning several years, and the potential for unacceptable social and economic consequences.

    With a national budget of NAf 478 million (US$ 266 million) for 2017, Sint Maarten’s ability to contribute is limited. Due to the expected loss in revenue for the remainder of the fiscal year 2017, government expects a budgetary shortfall of approximately NAf 156 million. As such, a temporary exemption from the requirement to maintain balanced public budgets would be necessary for government to fund various recovery initiatives. Such an agreement would have to be reached with the Kingdom Council of Ministers in keeping with article 25 of the Kingdom Law Financial Supervision for Curaçao and Sint Maarten.

  • Implementation organization

    The W-NRP believes a dedicated organization is necessary to implement the NRP once the plan is formally approved and funding options are identified. In the development of the NRP, the work group has tried to remain pragmatic and, where possible, apply structures and practices that have worked in the past, i.e. after hurricane Luis.

    The Office for Recovery and Reconstruction (ThORR) should be established by no later than December 2017. ThORR will be tasked with managing the implementation of the initiatives, projects and programs, defined in the

    NRP. In addition, ThORR will liaise with the Dutch reconstruction coordinator to ensure that projects meet the conditions and criteria imposed by the reconstruction fund.

    Managing the projects will be a team of technical experts (project managers) selected based on the required skillset of the portfolio of projects. ThORR will be managed by an experienced program manager who will coordinate the activities of the office and report to the Council of Ministers on the progress of the NRP-implementation. A reporting system will be developed to facilitate the work and to ensure that there is transparency and accountability for the funds that are invested.