Government borrows Afl. 50 million from SVB to refinance debt

ORANJESTAD – The Government of Aruba has reached an agreement with SVB to borrow Afl. 50 million for three years at an interest rate of 3%, as part of its strategy to refinance existing debt maturing in 2026.

The arrangement was explained in an interview with 24ora.com, in which it was stated that Aruba needs to refinance approximately Afl. 648 million in debt during 2026. This concerns previously incurred debt reaching maturity, rather than Afl. 648 million in new borrowing.

Earlier this year, the government turned to the international market to borrow US$160 million to refinance part of its external debt. In addition, approximately Afl. 150 million in domestic debt needs to be refinanced.

According to the explanation given to 24ora.com, Aruba's Financial Supervision Law, known as LAFT, requires surpluses within the collective sector to contribute to reducing the country's debt. Against this background, the government reached an agreement with SVB for the Afl. 50 million loan.

The government says the arrangement benefits both sides. SVB will earn a 3% return on funds it has available, while the government can refinance part of its debt at a relatively low interest rate, reducing its interest burden.

After the Afl. 50 million SVB loan, approximately Afl. 100 million still needs to be refinanced. The government is preparing a bond issue on Aruba's local financial market to cover that amount.

During the interview, it was emphasized that the transactions are not the result of a shortage of funds and do not represent additional borrowing to finance new government spending. According to the government, there is sufficient liquidity within Aruba's financial system, and the borrowing is intended to refinance existing debt as it matures.

The government also projects that Aruba's public debt-to-GDP ratio will decline to approximately 54%, based on figures included in the 2027 budget recently submitted to the Council of Advice.

According to the government, this indicates that while Aruba continues to refinance maturing obligations, its overall debt burden relative to the size of the economy is continuing to decline.