Abstract
1. Since gaining its autonomy in 2010, Curaçao suffered multiple economic shocks. The economy shrank by 28 percent in the past decade due in part to spillovers from Venezuela and the pandemic (Figure 1). Population and employment have been continuously declining since 2016 and unemployment remains elevated. The closure of the refinery poses questions about new sources of growth. Curaçao faces pervasive structural challenges including governance vulnerabilities. The pandemic constrained the implementation of staff advice (Annex I). The agreement with The Netherlands to implement structural reforms creates a window of opportunity to address these challenges and improve resilience (Annex II). The war in Ukraine led to higher inflation that disproportionally affected the vulnerable and put a drag on the recovery.
Curaçao
A. Context
1. Since gaining its autonomy in 2010, Curaçao suffered multiple economic shocks. The economy shrank by 28 percent in the past decade due in part to spillovers from Venezuela and the pandemic (Figure 1). Population and employment have been continuously declining since 2016 and unemployment remains elevated. The closure of the refinery poses questions about new sources of growth. Curaçao faces pervasive structural challenges including governance vulnerabilities. The pandemic constrained the implementation of staff advice (Annex I). The agreement with The Netherlands to implement structural reforms creates a window of opportunity to address these challenges and improve resilience (Annex II). The war in Ukraine led to higher inflation that disproportionally affected the vulnerable and put a drag on the recovery.
B. Recent Developments
2. Following a protracted recession, positive growth has returned in 2021 at 4.2 percent, supported by a strong tourism recovery. Stayover tourism in Q4 2021 recovered to pre-pandemic levels, suggesting no lasting effect on the sector’s capacity, although the recovery of cruise arrivals is much slower. A relatively high vaccination rate helped to soften the economic consequences from the wave of the Omicron variant in early 2022 as stayover arrivals were at 92 percent of the 2019 levels in the first 4 months of 2022.1 Despite the recovery in the hospitality sector, private sector employment declined by 51/2 percent in 2021, in part driven by supply-side considerations including skill mismatches, although there was some recovery in the second half of the year. 12-month average inflation accelerated to 3.8 percent in 2021 driven by fuel and other import prices.
3. The pickup in tourism improved the external current account balance. The current account deficit (CAD) narrowed from 27.6 to 21.8 percent of GDP between 2020 and 2021, mainly on account of higher tourism receipts which more than offset the rebound in imports. From 2018 to 2021, the estimated NIIP declined by more than 100 percent of GDP, although Curaçao remained a net creditor with positive NIIP of about 150 percent of GDP. In view of high CADs, staff consider Curaçao’s external position weaker than warranted by the fundamentals and desired policy settings (Annex III).
4. The preliminary 2021 fiscal outcome suggests a significant consolidation since 2020, partly due to a further decline in investment (Figure 2). The primary deficit (excluding a one-off payment for the resolution of Girobank) declined by 2? percent of GDP. The non-interest current expenses, excluding Girobank-related spending, declined due to tight wage policies (nominal freeze and attrition) and lower spending on goods and services. The authorities appropriately phased out the bulk of Covid-19-related spending by end-September 2021, although their total cost (31/2 percent of GDP) was marginally higher than in 2020 as they added subsidies covering part of fixed costs of eligible businesses (1¼ percent of GDP) to the measures. Gross public investment shrank to an unsustainably low level of 0.7 percent of GDP, resulting in negative net investment for the second consecutive year.
5. The multiple shocks led to a significant accumulation of government debt, leading to debt sustainability concerns (Figure 2 and Annex VI). The debt ratio increased from 58 percent of GDP in 2019 to 89 percent of GDP in 2021 on account of liquidity support from The Netherlands required to finance large fiscal deficits, borrowing for the Girobank resolution, and the decline in GDP. The authorities will face significant financing needs in 2023 as all Covid-19-related liquidity support loans (16 percent of GDP) mature in October 2023, after being rolled over in April 2022 at a zero-interest rate.
C. Outlook
6. Growth is expected to strengthen in 2022, although the outlook (Tables 1-4) is clouded by the war in Ukraine. Continued recovery in the hospitality sector in conjunction with higher private investment, particularly in tourism, and favorable employment dynamics this year would support real growth of about 6 percent. As direct trade and financial linkages with Ukraine and Russia are limited, the main impact from the war in Ukraine is likely to take place through surging import prices, particularly in fuel and food categories.2 They are projected to push inflation to 6.8 percent in 2022, significantly higher than expected in the pre-war scenario. Inflation could disproportionally affect the vulnerable population not covered by the existing social safety net and create a drag on the recovery as it erodes disposable income and increases costs of doing business. As the baseline projections do not include the reopening of the refinery, the recovery of employment and output would be sluggish, with real GDP approaching the pre-pandemic level only in 2026. In the medium term, growth is expected to stabilize around its potential of 11/2 percent. The CAD will remain elevated in 2022 driven by the terms of trade shock, but it is expected to subside in the medium term as export receipts recover.
7. The outlook is subject to significant uncertainty and risks. The impact of the war in Ukraine could be deeper than projected. A protracted war in Ukraine could keep energy and food prices high for an extended period, slowing growth, eroding purchasing power more than projected, and increasing the risk of social unrest. A stronger slowdown in Curaçao’s main trading partners, notably the U.S. and The Netherlands, would negatively affect Curaçao’s growth outlook. Further outbreaks of Covid-19 would continue to affect tourism and extend global supply chain disruptions. Global monetary tightening could stifle foreign investment or generate outflows. Loss of correspondent banking relationships could impact finance and trade. On the upside, a sustainable reopening of the refinery would improve the outlook.
Authorities’ Views
8. Fostering an inclusive and sustainable recovery is an utmost priority. The authorities broadly shared staff’s views on the developments and outlook, although the CBCS projected lower growth in 2022. They shared staff’s assessment of risks. They stressed the need for higher economy-wide investment for supporting the recovery. The authorities selected a preferred bidder for assuming the function of the refinery’s operator and considered that the restarting of the refinery would create jobs and accelerate the recovery.
D. Policy Issues
Discussions focused on calibrating policies to respond to the inflationary shock and to support a robust and inclusive recovery, while improving resilience to climate change and preserving public debt sustainability. The mission discussed the pace of fiscal consolidation, particularly the feasibility of current expenditure adjustment in view of the inflationary shock.
Calibrating Fiscal Policy to Foster Recovery While Achieving Sustainability
9. Policies included in a draft 2022 Budget Amendment imply strong fiscal consolidation in 2022-23. Projections assume that expenditure in 2022 will be marginally higher than in the amended budget on account of the cost of reforms whereas revenue will be in line with the macroeconomic outlook. Despite a partial reversal of the 12.5 percent cut in compensation introduced in 2020,3 the current expenditure would decline by about 4 percent of GDP, mainly driven by the end of Covid-19 measures and tight wage bill policies, including a hiring restriction. The primary deficit is expected to decline by 31/2 percent of GDP in 2022 as gross investment strengthens by 1.4 percent of GDP. Staff assume a gradual increase in gross investment to 3 percent of GDP by 2027, marginally higher than projected in the budget. On the basis of these assumptions, the authorities’ fiscal rule (zero current account balance)4 would be restored by 2024 and the primary balance would reach a surplus of 2¼ percent of GDP in the medium term (Table 3). Whereas government debt is still sustainable, the sustainability continues to be conditional on the consistent implementation of the reforms and consolidation measures and access to external financing at favorable terms from The Netherlands (Annex VI).
2022 Budget
(Percent of GDP)
2022 Budget
(Percent of GDP)
| 2022 | ||||
|---|---|---|---|---|
| 2021 Outturn | Original | 1st Amend. | IMF proj. | |
| Revenue | 30.0 | 30.1 | 31.1 | 31.0 |
| Tax | 28.0 | 27.2 | 28.8 | 28.7 |
| Non-tax | 2.0 | 2.9 | 2.3 | 2.3 |
| Expenditure | 36.0 | 33.1 | 33.3 | 33.5 |
| Current | 36.8 | 32.9 | 32.6 | 32.9 |
| Capital, net | -0.9 | 0.1 | 0.6 | 0.6 |
| Capital, gross | 0.7 | 2.1 | 2.1 | 2.1 |
| Overall balance | -6.0 | -3.0 | -2.2 | -2.5 |
| Primary balance | -4.7 | -1.8 | -1.0 | -1.2 |
2022 Budget
(Percent of GDP)
| 2022 | ||||
|---|---|---|---|---|
| 2021 Outturn | Original | 1st Amend. | IMF proj. | |
| Revenue | 30.0 | 30.1 | 31.1 | 31.0 |
| Tax | 28.0 | 27.2 | 28.8 | 28.7 |
| Non-tax | 2.0 | 2.9 | 2.3 | 2.3 |
| Expenditure | 36.0 | 33.1 | 33.3 | 33.5 |
| Current | 36.8 | 32.9 | 32.6 | 32.9 |
| Capital, net | -0.9 | 0.1 | 0.6 | 0.6 |
| Capital, gross | 0.7 | 2.1 | 2.1 | 2.1 |
| Overall balance | -6.0 | -3.0 | -2.2 | -2.5 |
| Primary balance | -4.7 | -1.8 | -1.0 | -1.2 |
10. Fiscal policies need better calibration to improve the quality of consolidation and avoid negative effects on growth. Budgeting adequate resources for structural reform implementation, protection of the vulnerable, and other critical areas will be key for improving the quality of adjustment. Raising public investment, especially in infrastructure, from the currently low levels would increase employment, incentivize private investment, support broad-based economic recovery, and increase Curaçao’s resilience to climate change. A more gradual fiscal adjustment would be growth-friendly while still consistent with sustainability. Shifting some resources to more productive areas such as education and vocational training would improve labor market outcomes and support inclusive recovery. Both revenue and expenditure measures could be used to create fiscal space for investment, although the emphasis should be on reducing current expenditure given considerable revenue which amounts to about 45 percent of GDP including social contributions.
11. The authorities’ strong efforts to improve revenue administration have brought tangible results and need to be continued. Expanding the tax administration’s resources and improving its business practices is contributing to a significant pickup in revenue. The planned reorganization of the three revenue departments will further improve the capacity of tax administration and ought to proceed expeditiously. Whereas the authorities are preparing a sales tax reform with the main objective of improving its administration, they should subsequently consider replacing it with a fully-fledged VAT to reduce distortions.5
12. The inflation pressures stemming from the war in Ukraine warrant targeted action. Recently implemented reductions in fuel taxes require clear sunset clauses, while enhancing the social safety net to better target and more effectively protect the vulnerable.6 In view of higher food prices, the authorities could consider the continuation of the food program that was in place during the pandemic or other well-targeted measures.
13. Structural reform to modernize Curaçao’s civil service would work better than the current attrition and wage freeze policies. While the objective of reducing the wage bill as a share of GDP is appropriate, the target of 10 percent of GDP should be used with caution. The 3-to-1 attrition policy was useful to reduce the overall government wage bill, but it has significant drawbacks as it is counterproductive in critical areas and reversible in non-critical areas when lifted. Both level and skill composition of government employment needs to be consistent with the effective delivery of public services. Implementing functional reviews under the landspakket would help achieve that objective. A benchmark study of employment benefits in the public sector entities, already envisaged under the landspakket, is needed to calibrate compensation to retain the required talent and incentivize performance.
14. Reforms of the health care and social security systems are needed to alleviate pressure on public finances and reduce fiscal risks. The cost of healthcare has been steadily rising in recent years, exerting pressure on the SVB and requiring higher budget transfers. Given the complexity of the health reform, prompt design and stakeholder consultations are the immediate priority. It will be important to provide the health sector with adequate resources to ensure health care continuity, especially in view of the inflation shock.
15. An active policy scenario illustrates the outcomes of rebalancing fiscal policies towards higher investment. In this scenario, gross public investment is gradually increased relative to the baseline during 2023-27, with a cumulative differential reaching 2 percent of GDP by 2027. The impact on the overall balance is offset by revenue and expenditure measures accumulating to 0.5 and 1.5 percent of GDP by 2027, respectively. It is assumed that the revenue and current expenditure measures have only short-term GDP impact whereas public investment affects long-term GDP with a multiplier of 2, implying high-quality investments such as increasing resilience to climate change. Under these assumptions, medium-term fiscal consolidation would be comparable to the one observed in the baseline. After 10 years, the debt ratio would be marginally lower than in the baseline projections while real GDP would be 4 percent higher.
Health Care Expenditure by the SVB
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: SVB and IMF staff estimates.Health Care Expenditure by the SVB
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: SVB and IMF staff estimates.Health Care Expenditure by the SVB
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: SVB and IMF staff estimates.Authorities’ Views
16. The authorities are committed to fiscal consolidation and structural reforms necessary for debt sustainability and improving resilience. They considered that the objective of returning to their fiscal rule in 2023 unless the Kingdom of the Netherlands grants a permission to deviate, could be too ambitious given the need to factor in the costs of implementing structural reforms and counterproductive for economic growth. Although the draft Budget Amendment projects a small current surplus from 2023, it does not include the cost of reform implementation under the landspakket. Refinancing of the pre-pandemic loans from The Netherlands at a lower interest rate would have opened up fiscal space for implementing the reforms. The reform of tax administration will proceed in stages, with a merger of inspection and receiver departments being the highest priority. The planned sales tax reform will increase efficiency of revenue administration. Ongoing reform of the gaming industry has potential for generating substantial additional fiscal revenue. To improve the effectiveness of the government, the authorities are redesigning the top management structure and reassessing core tasks and functions to provide a basis for the size of civil service. The authorities are planning a broad-based reform of health care with an objective to reduce fiscal costs.
Illustrative Active Scenario
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff projections.Illustrative Active Scenario
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff projections.Illustrative Active Scenario
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff projections.Strengthening the Fiscal Framework and Securing Fiscal Sustainability
Long-Term Debt Anchor
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.Long-Term Debt Anchor
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.Long-Term Debt Anchor
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.17. Incorporating the medium-term perspective to policymaking would be key for reaching sustainability. The current fiscal rule—zero current account balance—has significant drawbacks including pro-cyclicality, a short-term focus, and low applicability during periods of significant shocks. Curaçao would benefit from developing an explicit medium-term framework guided by a medium-term (or long-term) fiscal anchor. For example, the authorities could consider moving towards a Fiscal Responsibility Framework with an objective for the government debt stock, in line with experience in many other Caribbean countries, supported by an operational rule for fiscal deficits (Annex V). In view of high vulnerability to shocks, the debt objective should be set at a level that ensures that the risk of debt distress is minimized. The objective could be to ensure that the debt ratio remains below 70 percent of GDP (a threshold indicating higher risk of debt distress in the DSA for emerging market economies) with a given probability. A stochastic simulation exercise calibrated to Curaçao’s past data illustrates that a steady-state anchor of about 55 percent of GDP would keep the debt stock below 70 percent of GDP with a probability of 90 percent. In both baseline and active scenarios, the debt ratio would subside below this anchor by 2030.
18. Strengthening public financial management would be key for ensuring fiscal sustainability. The landspakket envisages key PFM reforms including upgrading budget procedures, improving the quality and timeliness of financial statements, strengthening expenditure controls, and modernizing the procurement system. Their robust implementation would be critical for supporting fiscal consolidation. Strengthening expenditure controls and modernizing the procurement system will improve fiscal discipline and the efficiency of spending and reduce risks of corruption. Better coordination and information exchange across government units would improve outcomes. Regular and timely publication of the fiscal outturns and financial statements and periodic communication of the medium-term strategy with credible measures will increase public trust in government’s operations, promoting the effectiveness of the fiscal policies.
19. A significant improvement is needed in the institutional setup of public investment strategy and management (Annex IV). Such a framework should include a clear planning and decision-making process, adequate project appraisal incorporating risks of climate change and including climate adaptation measures in project design, monitoring, and assessment schemes. Multi-year project budgeting and a transparent procurement system are critical to rationalize and secure financing resources. In addition, capacity building for high quality project analyses would be needed for better project selection.
Authorities’ Views
20. The authorities are committed to strengthening public financial management. Their priorities are to reorganize tax and customs administration, ensure reliability and integrity of IT systems, improve management of public finances and public property, and ensure that the established budgetary standards are met. These objectives are supported by the reforms spelled out in the Implementation Agenda under the landspakket. Action plans have already been developed and adopted for many of these reforms. The authorities agreed that better institutional setup of public investment strategy would improve investment outcomes. The authorities are reviewing the social welfare system and are planning to re-design it. The authorities underscored that adequate staffing is needed to implement planned reforms.
Boosting Medium-Term Growth and Improving the Data Framework
21. Developing the tourism sector and adding new engines of growth would be vital for boosting potential growth. The closing of the Isla refinery posed questions about a new growth model for Curaçao. With a strong pipeline of new hotels (Corendon Resort opened in 2020 and Sandals Resort in June 2022), the hospitality sector is well-positioned to become the leading economic engine of growth, however labor is a binding constraint. In addition to their efforts to restart the refinery, the authorities are exploring other areas including modernizing the energy sector (establishing an LNG plant to reduce electricity prices, increasing the share of renewable energy), expanding maritime services, developing the local industry including fishing, and expanding trade and exports. This requires substantial investment by both public and private sectors, which, in turn, needs a better business climate and an improvement in the functioning of the labor market. Establishing the LNG plant is a promising initiative but requires careful analysis. Deploying a guaranteed lending facility for viable SMEs in Curaçao would help support their development.
22. A better business environment would encourage private sector investment. Under the landspakket agreements, the authorities published an assessment of the business and investment climate to determine areas to improve. The activities include identifying the systemic gaps in funding and capacity, optimizing licensing and permitting, and addressing the costs of doing business. The authorities should ensure these initiatives are executed and the recommendations are implemented in a timely manner.
23. Timely implementation of reforms addressing governance weaknesses and corruption risks will be critical for sustained and inclusive growth. The landspakket lays out important reform priorities to strengthen multiple dimensions of governance through its various themes (Annex II). Themes A-C advance important fiscal governance reforms such as strengthening expenditure controls, modernizing the procurement system, improving transparency, and reforming tax administration. Theme D covers governance in the financial sector, including reforms to bolster financial sector oversight and improve the CBCS’s governance. Theme H aims to strengthen the rule of law through safeguarding adequate resources for law enforcement and implementing a comprehensive reform of the gaming industry, among other measures. The authorities should add emphasis on evaluating anti-corruption and enforcement institutions and strengthening them. The National Risk Assessment for Curaçao, which is expected to be published in the coming weeks, would provide guidance for reform priorities in the AML/CFT area.
24. Labor issues in Curaçao are long-standing, but the pandemic introduced a new challenge with emigration/brain drain playing a significant role in the reduction of the workforce. Even before the pandemic, the decline in the refining sector—historically one of the largest employers of skilled labor—led to negative trends in employment, contributed to emigration, and resulted in skills mismatches as the economy transitions to a new growth model. The pandemic aggravated these trends, resulting in population decline of almost 6 percentage points since 2016, and a reduction of registered private employment by 17 percent during the same period. Labor market mobility is unidirectional since skilled workers can easily move to The Netherlands or the Dutch Caribbean whereas replacing them is more difficult due to barriers to entry. Lowering barriers to foreign skilled workers would help address this loss of human capital and address some of the skill mismatch issues. Addressing structural rigidities in the labor market would help Curaçao to improve potential growth.
25. A significant improvement in data availability and quality is needed as current gaps hamper effective macroeconomic analysis and surveillance. The authorities should address the shortages of human and financial resources limiting data collection, coverage, and timeliness, particularly for the national accounts statistics, price statistics, and the labor force survey. Publishing fiscal data in the GFSM 2014 format would improve transparency. The authorities could seek technical support from the international community.
Authorities’ Views
26. The authorities considered that achieving a strong and sustainable economic recovery is a necessary condition for addressing Curaçao’s challenges. They developed the National Export Strategy to develop local industry and trade. They consider that establishing a facility for loan guarantees would have unlocked significant banking system resources for viable projects. Improving the business climate is high on their agenda, with efforts to reduce red tape being ramped up. Some labor issues will be addressed by the landspakket. They agree with the high importance of timely statistical data and are finding solutions to improve resource availability for the CBS.
Sint Maarten
A. Context
27. Sint Maarten is a small, tourism-centered economy recovering from successive deep shocks. In 2017, Hurricanes Irma and Maria hit the island, causing damage estimated at 238 percent of GDP including significant damage to the airport. While still rebuilding from the toll of the hurricanes, the Covid-19 pandemic marked a second deep shock to the tourism industry as well as the people and businesses of Sint Maarten. Economic activity is estimated to have declined by a cumulative 24 percent since 2016 (Figure 1).
Real GDP Index, 2014-21
(2014 = 100)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and IMF staff calculations.Real GDP Index, 2014-21
(2014 = 100)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and IMF staff calculations.Real GDP Index, 2014-21
(2014 = 100)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and IMF staff calculations.28. The government debt-to-GDP ratio has tripled since 2010. Government debt stood at about 20 percent of GDP in 2010 following a round of the debt relief by The Netherlands but rose to 38 percent in advance of the hurricanes in 2017 and the Covid-19 pandemic and was estimated at 60 percent of GDP by end-2021 (Figure 2). Before the hurricanes, this increase had been driven by government investment. Under the heavy shocks of the last five years, current expenditure has exceeded revenues, resulting in accelerated debt accumulation and minimal public investment outside of the hurricane relief trust fund.
29. The Netherlands has served as a critical backstop for financing, conditional on a reform package which it is helping to support. Emergency support immediately after the hurricanes and the establishment of a recovery trust fund (grants worth about 50 percent of GDP) were essential to the recovery. Since the beginning of the pandemic, Sint Maarten has received zero-interest loans of about 161/2 percent of GDP for gross financing needs as well as donations of vaccines and other critical supplies and services. As a condition of the liquidity support disbursements, Sint Maarten and The Netherlands reached agreement on a set of reform priorities (landspakket), which are generally consistent with past Article IV recommendations. These reforms are proceeding, with strong support from the Tijdelijke Werkorganisatie (Temporary Working Organization, TWO). The TWO is intended as a transitional body to the Caribbean Entity for Reform and Development (COHO, Annex II) whose outlook is uncertain.
Interest Burden of Caribbean Governments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: World Economic Outlook and IMF staff calculations.Note: Left chart: Cumulative Overall Balance is the sum of the overall balance in 2020 through 2022 divided by the sum of nominal GDP over the same period. Interest payments are the sum of government interest payments divided by the sum of nominal GDP over the same period.Right chart: “Average” excludes Curaçao and Sint Maarten.Interest Burden of Caribbean Governments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: World Economic Outlook and IMF staff calculations.Note: Left chart: Cumulative Overall Balance is the sum of the overall balance in 2020 through 2022 divided by the sum of nominal GDP over the same period. Interest payments are the sum of government interest payments divided by the sum of nominal GDP over the same period.Right chart: “Average” excludes Curaçao and Sint Maarten.Interest Burden of Caribbean Governments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: World Economic Outlook and IMF staff calculations.Note: Left chart: Cumulative Overall Balance is the sum of the overall balance in 2020 through 2022 divided by the sum of nominal GDP over the same period. Interest payments are the sum of government interest payments divided by the sum of nominal GDP over the same period.Right chart: “Average” excludes Curaçao and Sint Maarten.B. Recent Developments
30. Covid-19 has taken a heavy humanitarian and economic toll on the citizens of Sint Maarten, but progress has been made on vaccination. The first 3 waves of Covid-19 saw high average daily infection rates, with about a quarter of the population infected and 86 deaths (2 per thousand people). As of June 3, around 61 percent of the population is fully vaccinated, while only 21 percent of the population has received a third booster shot. Infection rates are in line with similar Caribbean countries, while the vaccination rate is high relative to similar, tourism-focused islands, with highly effective vaccines.
31. Tourism is recovering unevenly between stayover arrivals and cruise ship visitors. Stayover arrivals were overperforming by the fourth quarter of the 2021 and into 2022, exceeding 2019 levels despite pandemic-induced delays to airport reconstruction. The cruise industry resumed sailing in the second quarter of 2021, but the industry has recovered slowly. Cruise arrivals were still around 50 percent below 2019 levels in late 2021 and returned to this level after an omicron-related decline.
Stayover and Cruise Arrivals, Percent of 2019
(Percent, y/y)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.Stayover and Cruise Arrivals, Percent of 2019
(Percent, y/y)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.Stayover and Cruise Arrivals, Percent of 2019
(Percent, y/y)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.32. Despite the continuing impact of Covid-19, staff estimate that recovery in Sint Maarten is well underway, with growth in 2021 at 8 percent. Tourism provided the largest boost to growth while a small pickup in both public (including the Trust Fund) and private investment helped offset continued decline in consumption. Unemployment is estimated to have risen to around 25 percent in 2021 as the formal sector continues to shed employees. Emigration is likely to have added additional downward pressure on employment. Newly published 2019-20 real GDP estimates indicate a slightly better recovery from hurricanes and a somewhat smaller effect from the pandemic.
33. Inflation has risen, driven by external factors. Inflation is estimated to have risen to an average of 2.8 percent in 2021 from 0.7 in 2020, principally due to the rise in oil prices, shipping costs, and inflation in the U.S. Historically, Sint Maarten’s inflation tracks inflation in the U.S., its major trading partner, with a lag.
34. The external current account improved slightly in 2021, but a large deficit remains due to continued pandemic support. Fiscal support underpinned consumption as tourism receipts recovered from a deep downturn. Goods imports fell around 18 percent y/y, due to non-oil, non-tourism related imports. The deficit saw pressure from a worsening terms-of-trade, largely driven by rising global inflation reflecting U.S. growth, supply chain constraints, and higher oil prices. The external position in Sint Maarten is assessed to be weaker than warranted by fundamentals and desired policy settings in view of this deficit and a substantial, negative estimated NIIP (Annex III).
35. The central government recorded a primary deficit of 6 percent of GDP on continued pandemic support. The deficit narrowed significantly last year (9.3 percent in 2020) but remains well above its pre-hurricane average. Current expenditures declined substantially due to declining demand for support programs and the expiration of the SSRP. Tax revenue has lagged the economic recovery, slowing the fiscal adjustment. Trust Fund execution accelerated in 2021, with notable progress in the renovation of the PJIA.
C. Outlook
36. The war in Ukraine will magnify external price pressures and reduce real earnings. Prices are expected to rise in 2022, registering an annual average growth rate of 5.9 percent, partially driven by lagged U.S. inflation in 2021 and global commodity prices. The war in Ukraine has further increased energy and food prices, to which Sint Maarten is particularly vulnerable given its dependence on imported food and on energy-intensive imports and utilities more generally.7 The current account deficit is expected to rise by nearly six percentage points of GDP in spite of substantial fiscal consolidation due to terms of trade deterioration. These price pressures are likely to suppress real wages given the public wage freeze and weak labor market conditions.
2022 Macro Forecast Revisions
Overall deficit of the budgetary central government. It does not include Trust Fund activities.
2022 Macro Forecast Revisions
| 2021 Article IV | Latest | Difference | |
|---|---|---|---|
| Real GDP growth | 15.0 | 7.5 | -7.5 |
| Inflation, 12-m average | 2.7 | 5.9 | 3.2 |
| Curr. Account Deficit | 28.6 | 22.2 | -6.4 |
| Budget Deficit 1/ | 8.5 | 5.8 | -2.7 |
Overall deficit of the budgetary central government. It does not include Trust Fund activities.
2022 Macro Forecast Revisions
| 2021 Article IV | Latest | Difference | |
|---|---|---|---|
| Real GDP growth | 15.0 | 7.5 | -7.5 |
| Inflation, 12-m average | 2.7 | 5.9 | 3.2 |
| Curr. Account Deficit | 28.6 | 22.2 | -6.4 |
| Budget Deficit 1/ | 8.5 | 5.8 | -2.7 |
Overall deficit of the budgetary central government. It does not include Trust Fund activities.
37. Real output is expected to return to pre-pandemic levels in 2023, but risks are tilted to the downside (Tables 5-8). Growth is expected to continue as tourism returns and airport reconstruction is completed. In 2022, growth is projected to reach 7.5 percent, lower than previous projections on stronger-than-expected recovery in 2021 leaving less room for catch-up growth. Real output is expected to return to its pre-Irma level by the end of the forecast horizon. The growth outlook is dimmed somewhat by the negative real earnings effect of inflation prospects from the war in Ukraine as well as a more uncertain outlook for the long-run recovery in the cruise industry.
38. Tourism will maintain its strong recovery in 2022, assuming the pandemic continues to subside. Overnight visitors should exceed 2019 levels this year and reach 2016 levels by 2028, with cruise arrivals approaching 2019 levels by 2024. Cruise tourism has been badly hit by pandemic concerns and there is substantial uncertainty around its prospects for regaining pre-pandemic popularity. The anticipated completion of the airport in 2023 is expected to boost the number of stayover arrivals especially if coupled with an expansion of homeporting, which could become an engine of growth, but a rotation from cruise to stayover arrivals may strain existing hotel capacity.
39. Risks are headlined by war in Ukraine and prospects for the tourism industry (Figure 5). Despite the limited direct exposure to Ukraine and Russia, deeper or more prolonged economic consequences for the war could result in a larger inflation shock and its consequences. Sint Maarten could also be directly affected through the yachting industry as sanctions continue against Russian yacht owners. Tourism may also be limited as by downside risks to advanced economies stemming from the war or financial tightening. Renewed global outbreaks of Covid-19 would substantially reverse tourism recovery and potentially suppress long-run demand. Natural disasters, especially rising risks of another damaging hurricane are an ever-present feature of Sint Maarten’s outlook and could have consequences to output, debt, and the current account on the same scale as seen for Hurricane Irma. Other risks include rising and volatile food and energy prices, possibly associated with social discontent and political instability, extended supply chain disruptions, and a slower than expected reconstruction progress.
Authorities’ Views
40. The authorities shared staff’s views on the growth outlook and the balance of risks but estimated a somewhat stronger recovery in 2021 and slower growth in 2022. They agree that the completion of the airport in 2023 will underpin further growth in stayover arrivals. They see inflation pressures from the war in Ukraine as substantial and likely to be sustained. Among other risks, the authorities underlined the ongoing risk of hurricane-related damage, even as reconstruction from the 2017 hurricanes looks to be well underway. Subscription to weather and natural disaster insurance, as well as plans for a disaster recovery fund, are likely to better insulate the economy and facilitate faster recovery from these events in the future.
D. Policy Issues
Discussions focused on securing a strong, durable, and inclusive recovery, improving fiscal dynamics, and setting in place conditions for robust future growth and sustainable fiscal management.
Sustaining Fiscal Consolidation and Building Stronger Fiscal Infrastructure
41. Robust implementation of the reforms under the country package would improve public service quality while putting debt on a favorable path. Expiration of the Covid-19 measures coupled with wage bill containment under the country package would reduce current expenditures, narrowing the primary deficit by more than 2 percentage points. Government debt is expected to increase to 63.1 percent of GDP this year on still substantial deficits but then decline as consolidation proceeds. Public investment would remain low for 2022, but the long-planned investments in PFM and tax administration, predating hurricane Irma but delayed due to the pandemic, have re-started under the country package.
42. Inflation pressures from the war in Ukraine will disproportionately affect the most vulnerable. The economic consequences of the invasion of Ukraine have added to the already mounting price pressures in Sint Maarten. The fiscal effect of this inflation is mixed. The nominal wage freeze implies a further real decline in the wage bill. On the other hand, the government temporarily reduced the gasoline excise tax8, with an expected impact of about NAf2 million (0.1 percent of GDP) for the year. Partial allocation of the fiscal windfall from lower real wages could be used to ease the nominal decline in real wages and realign it with the real wage path expected at the time when the freeze was agreed. Any additional easing related to additional inflation shocks should seek better-targeted measures (IMF Fiscal Monitor, April 2022) including food subsidies and lump-sum utility credits. Intervention to offset price shocks should have a clear sunset clause. Either measure would reduce a key element of the ambitious medium-term consolidation path and should be accompanied by offsetting revenue measures and a high-quality reform of public compensation.
43. The social security and health insurance system (SZV) poses risks to rapid fiscal consolidation. Government debt is assessed to be sustainable over the medium term subject to access to external financing at favorable terms from The Netherlands (Annex VII), but failure to reform the social security system, as reflected in staff’s baseline, is expected to reverse near-term debt reduction. Depletion of the SZV’s reserve, driven by shortfalls in medical insurance receipts, would entail recurrent government support towards the end of the forecast horizon. The SZV has taken several steps to improve efficiency, including compliance measures, measures to lower medical costs (for example requiring generic prescriptions in most cases), and raising the income ceiling on insurance contributions. These steps should slow the pace of reserve depletion. Work assessing the financial effects of these reforms on the system are ongoing, but it is likely that additional reforms are needed to put the system on a sustainable footing.
44. Strengthening PFM will be critical to improving expenditure and investment efficiency. As discussed in past Article IV surveillance, there is room for improvement in the PFM system, including upgrading the financial information management system, improving budget classifications and chart of accounts, and adopting a treasury single account (TSA) system. Restructuring the public investment management framework and developing capacity in this area could help to maximize the impact of expected public investment acceleration, including by modernizing the public procurement framework (Annex II). Strengthening the multi-year budget framework and capacity would also help to map the government’s medium-term fiscal and investment strategy to execution of relevant measures and projects.
45. The government is advancing revenue administration reforms, but the open border remains a key bottleneck. Upgrading the IT system of the tax administration has re-started under the country package, reducing leakages, and improving compliance. Tax policy reforms have shown little progress, however, because close coordination with the French municipality of Saint Martin, required to minimize an imbalance in tax rates across their open border, has been a challenge. The authorities are working on a number of new tax proposals in line with last year’s TA including taxing sharing-economy vacation home rentals, internet consumer sales, and the gambling industry. While more politically difficult, recurrent property taxes are among the least distortive taxes and are more achievable in Sint Maarten’s urbanized, single government entity environment.
46. An active policy scenario would improve the quality of the planned consolidation and set Sint Maarten on a path to lower debt levels. An easing of the real decline in the wage bill would slow consolidation in 2023, but key base-broadening revenue measures and reform of the SZV would make these affordable while improving the quality and long-run sustainability of the fiscal regime. Reform of the health insurance and social security regimes is needed to put the SZV on a sustainable footing and avoid direct fiscal support beginning in 2025. These reforms could provide space for transitioning the nominal wage bill freeze to a higher quality public compensation reform over the medium term. They would also provide additional funds supporting high-quality, climate-resilient public investment. Taken together these changes would ease somewhat the reduction in debt to GDP in the near term but would recoup these losses by the end of the forecast horizon. If sustained, they would allow Sint Maarten to achieve a debt anchor in the range of 50-55 percent of GDP by 2030.
47. Sint Maarten would benefit from setting a fiscal anchor and developing a medium-term budget. Considering the recent rise in debt due to the pandemic, a longer-term plan for fiscal consolidation underpinned by concrete policy measures is needed. A medium-term budget can help establish the governments intentions, assess the effect of planned policy measures, and facilitate investment project costing and planning. Setting a long-term debt anchor would be useful to frame medium-term fiscal objectives. Annex V presents an illustrative calculation of a debt anchor which considers macroeconomic and hurricane risks. This work suggests a debt level of about 53 percent of GDP, paired with a baseline debt-stabilizing primary balance of -0.75 percent of GDP. This anchor keeps central government debt below 70 percent of GDP, the indicative level for elevated debt risks for EMs in the DSA for market access countries, in 90 percent of simulations. Climate change could further increase hurricane frequency and severity, somewhat reducing the recommended debt anchor but raising the steady-state overall balance needed to maintain it. Under the active policy scenario above, the debt-to-GDP ratio would reach this level in 2031.
Long-Term Debt Anchor, with Natural Disasters
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.Long-Term Debt Anchor, with Natural Disasters
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.Long-Term Debt Anchor, with Natural Disasters
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Source: IMF staff calculations.48. The robust execution of the Trust Fund is expected to continue. An extension of the Trust Fund expiration to 2028 (previously 2025) is expected to allow the full disbursal of grant funding allocated by The Netherlands.9 Increased staffing and accumulation of administrative experience in both the government and the private sector are accelerating planning and execution. The Trust Fund covers a wide range of areas, including airport reconstruction, new hospital construction, SME support, and government digitalization projects. Sustained progress would improve Sint Maarten’s potential growth and facilitate fiscal consolidation. Execution should however be monitored for potential supply constraints, particularly in the construction sector, which could hinder execution and efficiency.
49. The government should develop a public investment management reform plan. With the bulk of near-term public investment projects expected to be executed by the Trust Fund, the current period presents an opportunity to look forward. Central government investment averaged an already-low (Annex IV) 1.6 percent of GDP between 2012 and 2016 but fell to 0.3 percent of GDP after Hurricane Irma. A medium-term investment plan would plot a transition to ramp up investment as the Trust Fund expires, maintain the Trust Fund’s focus on disaster-resilient infrastructure, improve execution, and support growth. Retaining capacity that has been built up at the NRPB and centralizing investment management within the government could help make these improvements permanent.
Public Investment
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: St. Maarten authorities and IMF Staff calculations.Public Investment
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: St. Maarten authorities and IMF Staff calculations.Public Investment
(percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: St. Maarten authorities and IMF Staff calculations.Authorities’ Views
50. The authorities are actively engaged in the reform agenda while addressing specific challenges. They emphasized a strong relationship with the TWO which has been collaborative and productive. They view a more coercive COHO arrangement as risking undermining this positive momentum. The authorities are working on base-broadening revenue reforms, PFM improvements, upgrades in the revenue administration, and many other areas outlined in the landspakket. They see implementation risks given the size and the scope of the reform program and limited staffing available in an administration size appropriate to this island of just more than 40,000 people. The authorities recognize staffing limitations in key skill areas and emphasize the need for a more nuanced reform of the wage bill, including removing the universal 12.5 percent nominal wage reduction and its unanticipated deeper real wage reduction, to permit competitive hiring and effective public service delivery. They are working towards implementing a general health insurance system, which is intended to be both financially sustainable and offer better access and higher care quality, to be implemented in the next 12-18 months.
Boosting Medium-Term Growth
51. Improving the business environment is key to establishing medium-term growth and boosting potential GDP. Removing impediments to entrepreneurial activities is key to harnessing Sint Maarten’s entrepreneurial spirit, sustaining recovery, and accelerating the formalization of the workforce. The authorities have made progress establishing a platform for e-payments and are working to bring more payment functionality online. Establishing a single window for business permitting and expediting processing by verifying compliance ex-post would facilitate entrepreneurship and economic dynamism. Increasing transparency and establishing procurement processes that meet international standards would accelerate the execution of Trust Fund and other public infrastructure projects, while attracting more FDI.
52. Improvements to the governance and the anti-corruption framework would further support investment and growth. Efforts to strengthen fiscal governance in the public procurement system and public investment framework (¶44) would reduce the opportunities for corruption, improve public service quality, and support domestic activity. Broader anti-corruption efforts, including progress on Sint Maarten’s National Risk Assessment (NRA) have been significantly hampered by funding and staffing constraints in the Financial Intelligence Unit (FIU) and related law enforcement agencies. Appropriate resources need to be dedicated to the NRA to ensure that it can be completed on schedule prior to the 4th round Mutual Evaluation assessment (MER) by the Caribbean Financial Action Task Force (CFATF). The Sint Maarten authorities should strengthen the AML/CFT regulatory and supervisory framework for the gaming industry and ensure that supervisory authorities have adequate resources and sufficient powers to sanction non-compliance with AML/CFT obligations. These and other rule of law and governance reforms agreed under the landspakket are priority areas for advancement.
53. Greater labor market flexibility and competitiveness would promote formalization, efficiency, and growth. The pandemic has raised the importance of recognizing the segmentation in the labor market and therefore, the policies to address it. In the context of Sint Maarten’s nominal wage freeze, future increases should be benchmarked to market-based wages and in line with productivity growth. The recovery in tourism and output has not yet reached formal employment, with the formal private sector continuing to shed jobs while anecdotal evidence suggests that the informal sector is expanding. Efforts should be made to provide incentives to remain in the formal sector such as simplifying and establishing online tax registration and payments for individuals and entrepreneurs. Labor market flexibility should be increased to allow business to respond to changing conditions. Labor market structures and regulations should be made more flexible, for example by accommodating multiple jobs and seasonal work.
54. Future green infrastructure projects could complement private investment. As recovery-related Trust Fund projects come to fruition, thought should be given to the next generation of public infrastructure projects to facilitate growth and secure Sint Maarten’s business model. Environmentally friendly improvements to public infrastructure could improve economic efficiency while potentially increasing Sint Maarten’s tourism margins. Options to incentivize private renewable energy generation, currently under consideration, could improve energy efficiency and reduce costs while presenting a positive boost to Sint Maarten’s profile to tourists.
Improving the Data Framework
55. A significant improvement in data availability and quality is needed as current gaps hamper effective macroeconomic analysis and surveillance. Improvements are urgently needed in national accounts preparation and timeliness, the compilation and timeliness of CPI and labor market data, and the completion of an up-to-date household expenditure survey. The offices responsible for these statistics need to be adequately resourced and staffed. The government should also secure financial and human resources for the national census planned for 2022. Raising the statistical department to the level of an independent agency would help reduce publication lags, improve retention of institutional knowledge, and reinforce confidence in data production. Better integration and sharing of administrative data and automation of data compilation will be key to improve the robustness of estimates. A centralized data publishing platform may be useful to solve this issue.
Authorities’ Views
56. The authorities recognize the need to promote growth and improve data availability and quality. They have been working actively to develop growing demographic groups to the country’s tourism portfolio and facilitate off-season events. In addition to the fruits of Trust Fund execution the authorities are also considering green infrastructure initiative including the promotion of private renewable energy. To improve statistical production, the authorities recently filled two positions in the Department of Statistics and have introduced a backup system for each lead position, while the hiring effort continues. They note the difficulty acquiring specialized skills like financial expertise. Steps to improve data sharing within the government are recognized as an important goal.
The Monetary Union of Curaçao and Sint Maarten: Policy Issues
57. The pandemic widened the current account deficit of the Union to 27 percent of GDP in 2020, which eased to about 23 percent of GDP in 2021. Despite the double-digit CADs, the stock of international reserves increased from US$1.3 billion (6.2 months of imports) in 2019 to US$1.8 billion in 2021 (6.3 months of imports). However, reserves remain at around 60 percent of the risk-weighted adequacy measure (Annex III). The CADs were financed by substantial financing from The Netherlands (included in other investment liabilities in the chart below), steady FDI inflows, and a substantial drawdown of assets. In January 2022, the CBCS eliminated the exchange restriction on transfers of dividends and profits to non-residents and other controls introduced in March 2020, including measures considered CFMs, given the comfortable reserve cushion.
58. Monetary policy continues to support the peg to the US dollar. After keeping the reference rate at the historical low of 1 percent for more than 2 years, the CBCS increased it to 2 percent in June 2022. Excess liquidity has grown, although credit growth at the level of the Union remained subdued, suggesting low risk appetite on the banks’ side and structural impediments (Figure 3 and Table 10). It is important to continue building the monetary policy transmission mechanism. The CBCS should be prepared to increase the reference rate further and absorb excess liquidity if necessary. The CBCS is planning to review the 60/40 investment rule that limits institutional investors’ non-resident investments to 40 percent of assets, with the view to increasing investment opportunities and reducing interconnectedness between institutional investors and banks (Box 1). The review should include a comprehensive assessment of the effects on the economy, including efficiency, pro-cyclicality, and the stability of international reserves. It should also assess the impact on risk at the level of institutional investors.
59. The financial system weathered the pandemic well, although financial vulnerabilities and risks remain elevated (Box 1). The banking sector remains well-capitalized and liquid, but the longer-term effects of the pandemic on asset quality are yet to be determined despite the asset quality reviews in four large banks. The pandemic shock increased NPL ratios to double digit levels in both countries in 2020, although they eased somewhat in 2021. However, nearly a quarter of the loans that made use of the Covid-19 moratorium (NAf 0.55 billion, 8.5 percent of the loan portfolio) were restructured and could pose latent risks for asset quality in addition to legacy issues on asset quality that existed before the pandemic. To improve asset quality, a multifaceted approach is needed, involving macroeconomic policies to support growth and employment, prudential policies to ensure macro-financial stability, and a comprehensive strategy to reduce the structural bottlenecks for resolution of problem loans.10 Capital adequacy ratios are well above regulatory requirements in both countries, although the CBCS’ stress tests warned that they could be lower once the full effect of the pandemic on asset quality is incorporated. The low profitability of the banking sector is a concern as it limits banks’ ability to retain and build up buffers.
60. Despite significant excess liquidity, credit growth remains close to zero given the uncertain macro environment and structural impediments. Limited economic diversification, endemic to microstates, reduces banks’ ability to diversify their lending risks and restricts investment opportunities. Competition from institutional investors puts pressure on lending margins, reducing incentives to lend. Other structural impediments include weak information frameworks and difficulty with collateral valuations. Developing structures that increase information and transparency (e.g., an affordable credit bureau, various asset registers) and raising financial literacy among SMEs and the general public would strengthen financial intermediation and facilitate lending. Improving land and property registration with proper valuations would also help collateralization of loans.
61. The CBCS has made substantial progress in advancing its financial reform agenda and should continue these efforts. It has significantly advanced risk-based supervision, including in the AML/CFT area (¶63), following a complete restructuring of the supervision department in 2021. It continued work on improving its enforcement policy, increased its capacity to monitor liquidity, carried out asset quality reviews in four financial institutions, and prepared a new corporate governance code for the financial sector, which is expected to become binding by the end of 2022. The publication of the first Financial Stability Report in May 2022 is a substantial step forward. The resolution of Girobank is progressing in line with the authorities’ strategy and preparations for establishing a deposit guarantee scheme by January 1, 2023 are well-advanced. In cooperation with the governments, the CBCS should promptly finalize the supervisory enforcement and the deposit guarantee scheme legislations. Given the large size of the international banking system, the CBCS should closely monitor possible linkages with the local economy and associated risks.
62. To maintain financial stability, the authorities should finalize a strategy for restructuring Ennia, the largest insurance company in the Union. Ennia provides a full spectrum of insurance and pension products to 87,000 policyholders in Curaçao and 6,000 policyholders in Sint Maarten and holds a market share of about 50 percent based on total assets. It has been under the CBCS’s special administration since 2018. A more structured dialogue between the CBCS and the governments—that could be facilitated by establishing a Financial Stability Committee—is needed to finalize the strategy for Ennia’s restructuring and address financial sector vulnerabilities.
Curaçao and Sint Maarten Monetary Union: Structure of the Financial System
The Union’s financial system includes domestic (onshore) and international (offshore) sectors. Banks and institutional investors (pension funds and insurance companies) comprise the bulk of the domestic financial system with total assets of around US$ 14.6 billion (around 4 times Union’s GDP). All of the sectors are highly concentrated and interconnected, with a few large institutions dominating the market. The Union’s 24 international banks held assets of US$ 59 billion (15 times Union’s GDP) in the end of 2021, more than a double the 2019 level.
The domestic banking sector is composed of eight banks (assets of about 190 percent of GDP), four of which are foreign subsidiaries or branches with assets of NAf 3.8 billion (29 percent of the total sector assets). The system’s regulatory capital stood at 19.3 percent of risk-weighted assets at end-2021, above the regulatory minimum of 10.5 percent, while liquidity was high at 33.4 percent as deposit growth outpaced credit. NPLs remain high at 10.4 percent of total loans and low profitability, with a return on assets of 1.4 percent, continues to be a challenge.
The Union: Assets of the Financial System
(Percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.
The Union: Assets of the Financial System
(Percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.The Union: Assets of the Financial System
(Percent of GDP)
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS and Fund staff calculations.The nonbank sector is made up of 12 pension funds (assets of 130 percent of GDP) and 27 insurance companies (assets of 60 percent of GDP). Funding adequacy for pension funds is stable at around 106 percent of liabilities, but some concerns are present regarding asset quality. Due to the 60/40 investment rule, institutional investors hold a significant part of assets in domestic banks, leading to considerable interdependence in the financial system.
63. It is important to continue strengthening the AML/CFT framework and institutions to reduce the risk of correspondent banking relationship (CBR) losses. CBRs have remained stable since 2020,11 but requests for information from correspondent banks to local banks have increased and deepened. The CBCS embarked on a three-pronged strategy to reduce the AML/CFT risks: (i) laying out clear expectations for the financial institutions and service providers, (ii) expanding resources for AML/CFT supervision, strengthening the regulatory framework, and accelerating its transition to risk-based supervision, and (iii) engaging in dialogue with international government agencies and counterparts on CBR issues, including expectations and practices to reverse the loss of CBRs. The CBCS is revising the AML/CFT guidelines to incorporate the latest Financial Action Task Force (FATF) recommendations, including a requirement for supervised institutions to undertake AML/CFT risk self-assessments and specific requirements with regard to outsourcing of AML/CFT activities. A new risk-based AML/CFT self-assessment and AML/CFT questionnaire are under development. The authorities should continue careful monitoring of cross-border financial flows to mitigate financial integrity risks associated with international banks. Strong implementation of the envisaged measures and completion of the NRAs will be instrumental for a successful completion of the 4th round Mutual Evaluation assessments of both countries by CFATF expected in 2024. Continued careful monitoring of banking system access to a sufficient number of correspondent banks will remain important for the healthy functioning of the system.
Authorities’ Views
64. The CBCS shared staff’s assessment of financial sector stability and risks. Given the latent risks to asset quality, the CBCS is monitoring it closely. The CBCS is committed to its financial sector reform program. The near-term priorities are to complete the transition to risk-based supervision, including in the AML/CFT area, and set up a deposit guarantee system. The CBCS aims to increase the resilience of financial institutions, limit concentration risk, reduce leverage, and regulate cyclical movements. To this aim, the CBCS would assess possible macroprudential instruments such as the introduction of a countercyclical capital requirement, exposure limits, dynamic provisioning, and a systemic risk buffer. The draft AML/CFT guidelines have been discussed with the public and are expected to come into force in the second half of 2022. To strengthen CBRs, the CBCS is planning an enquiry to gauge the willingness of global institutions to reengage the jurisdictions of Curaçao and Sint Maarten, and to identify U.S. institutions willing to cater to the region. The CBCS stepped up monitoring of cross-border financial flows, including stemming from the international banking sector, although data constraints pose challenges. The CBCS’s Strategic Plan for 2022-2025, approved by the CBCS’s Supervisory Board in November 2021, ensures that the CBCS continues to implement the change program initiated in 2021 and thus strengthen financial sector governance.
Staff Appraisal
Curaçao
65. The recovery from the pandemic is gaining momentum, although the economy is facing multiple challenges. The comprehensive economic support measures put in place with significant help from The Netherlands cushioned the Covid-19 shock and saved livelihoods. The authorities appropriately phased out Covid-19 support in late 2021 as the economy started to recover. Inflationary pressures stemming from the war in Ukraine, lingering effects from the closure of the Isla refinery, emigration, and structural constraints endemic to small island states pose a drag on the recovery.
66. Keeping a clear vision of a sustainable and inclusive growth model for Curaçao would be key. Identifying new sources of growth would be important for diversifying the economy, improving resilience, and achieving fiscal sustainability. Implementing supply-side and governance reforms envisaged in the landspakket such as improving the business climate, the functioning of the labor market, and improving regulatory frameworks, would be key for supporting the recovery.
67. Fiscal policies should be calibrated to achieve growth-friendly fiscal consolidation and support the most vulnerable while placing public debt firmly on a downward path. The authorities are implementing strong frontloaded fiscal consolidation with an objective to return to their fiscal rule next year. There is scope for improving the quality of fiscal consolidation by budgeting adequate resources for efficient delivery of public services and implementing reforms. As the current hiring restriction hampers capacity to deliver public services in certain areas such as statistics, replacing it with a structural reform to modernize Curaçao’s civil service would work better. Increasing public investment to more adequate levels would support employment, incentivize private investment, and support broad-based economic recovery. Special attention is needed to investments in climate resilience.
68. Adding a more medium-term perspective to policymaking and improving public financial management will be key for supporting sustainability. Curaçao would benefit from developing a well-articulated medium-term framework guided by a debt anchor. In view of high vulnerability to shocks, the debt objective could include a margin of safety to minimize the risk of debt distress. Strengthening public financial management would be key for ensuring fiscal sustainability. A significant improvement is needed in the institutional setup of public investment strategy and management. Such a framework should include a clear planning and decision-making process as well as adequate project appraisal incorporating risks from climate change.
Sint Maarten
69. The recovery in Sint Maarten is underway. Stayover tourism has exceeded pre-pandemic levels and cruise tourism is rebounding. Public investment supported by the Trust Fund is raising the prospect of matching the level of output seen before the 2017 hurricanes by the end of the forecast horizon. Nevertheless, downside risks cloud the outlook. Global price pressures are making a mark on the island and threatening real wages and the purchasing power of the most vulnerable. Disappointing investment execution, especially for the airport, a rebound in the economic consequences of the Covid-19 pandemic, spillovers from a slowdown in advanced economies, or another devastating hurricane season are key risks that could significantly derail recent gains.
70. Fiscal efforts should center on a higher-quality consolidation. The public wage bill freeze could be eased in light of the inflation shock and should eventually be replaced by a comprehensive reform focused on productivity and competitive wages. Attention should be given to hiring key skill areas where positions are difficult to fill. Temporary relief to households, in addition to the gasoline excise tax reduction, should employ more targeted measures. These steps can be financed by needed base-broadening tax reforms including taxes on sharing-economy holiday rentals, internet consumer sales, and the gambling industry. Higher premiums and cost-cutting measures are urgently needed to put the social security and health insurance system (SZV) on a sustainable financial footing and avoid becoming a fiscal burden in the medium-term.
71. Medium-term fiscal planning and institution-building would serve Sint Maarten well. Developing a medium-term fiscal framework, including establishing an appropriate debt anchor, would aid fiscal planning, coordinate expectations across the government, and facilitate investment project costing and financing. Sint Maarten should leverage the period of Trust Fund execution to build public investment management capacity. It will need to improve its public investment levels in the long run to secure sustained growth.
72. Increasing dynamism for businesses and workers and supporting green investment would help sustain the recovery. As the economy recovers from the pandemic, long run growth concerns return to the fore. Private sector dynamism would be supported by reducing barriers to new business and simplifying, centralizing, and speeding up permitting. Barriers to formal work should be reduced by increasing flexibility to multiple jobs and seasonal work as well as easing hiring and firing restrictions. Green infrastructure investments would support growth while improving Sint Maarten’s living environment and global brand.
The Monetary Union of Curaçao and Sint Maarten
73. The external position of the union has improved on the heels of a nascent recovery. The Union’s current account deficit declined, and international reserves remain at a comfortable level. Nevertheless, the external positions in both countries remain weaker than warranted by the fundamentals and desired policy settings. Across-the-board supply-side reforms remain vital for strengthening the external position of the union, as official financing is expected to wind down.
74. Monetary policy should continue supporting the peg. The CBCS has appropriately raised the reference rate in June 2022. Excess liquidity should be monitored closely and sterilized if necessary. It would be important to strengthen the transmission mechanism of monetary policy. Improving the financial infrastructure would lower impediments to lending and improve the productive use of deposits.
75. Strong implementation of financial sector reforms would help to alleviate financial sector vulnerabilities. The financial system withstood the shock from the pandemic with help from appropriate policies. Nevertheless, the pandemic took a toll on asset quality and financial sector vulnerabilities and risks remain elevated as the macro environment remains volatile. The authorities have made significant efforts in advancing their financial sector agenda, including transitioning to risk-based supervision, addressing legacy issues, and improving analysis and transparency. These efforts need to continue. Strong collaboration between the CBCS and the government is critical for addressing remaining legacy issues and advancing financial sector reforms. Continued monitoring of correspondent bank relationships remains important for the healthy functioning of the system.
76. It is envisaged that the next Article IV consultation discussions with the Kingdom of the Netherlands—Curaçao and Sint Maarten will be held on a 12-months cycle.
Curaçao and Sint Maarten: Regional Comparison 1/ 2/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: IMF World Economic Outlook; IMF Information Notice System; and IMF staff calculations.1/ Figure reports medians for 15 tourism-oriented Caribbean countries, and the subgroup of countries in the Eastern Caribbean Currency Union (ECCU). 10th to 90th percentile range (light shading) are for all tourism-oriented Caribbean countries.2/ Due to data availability, Caribbean-oriented comparators do not include ECCU countries.3/ Sint Maarten fiscal balance excludes operations of the Trust Fund. The comparator figures are on general government basis.
Curaçao and Sint Maarten: Regional Comparison 1/ 2/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: IMF World Economic Outlook; IMF Information Notice System; and IMF staff calculations.1/ Figure reports medians for 15 tourism-oriented Caribbean countries, and the subgroup of countries in the Eastern Caribbean Currency Union (ECCU). 10th to 90th percentile range (light shading) are for all tourism-oriented Caribbean countries.2/ Due to data availability, Caribbean-oriented comparators do not include ECCU countries.3/ Sint Maarten fiscal balance excludes operations of the Trust Fund. The comparator figures are on general government basis.Curaçao and Sint Maarten: Regional Comparison 1/ 2/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: IMF World Economic Outlook; IMF Information Notice System; and IMF staff calculations.1/ Figure reports medians for 15 tourism-oriented Caribbean countries, and the subgroup of countries in the Eastern Caribbean Currency Union (ECCU). 10th to 90th percentile range (light shading) are for all tourism-oriented Caribbean countries.2/ Due to data availability, Caribbean-oriented comparators do not include ECCU countries.3/ Sint Maarten fiscal balance excludes operations of the Trust Fund. The comparator figures are on general government basis.
Curaçao and Sint Maarten: Fiscal Developments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: The Curaçao and St. Maarten authorities and IMF staff calculations.
Curaçao and Sint Maarten: Fiscal Developments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: The Curaçao and St. Maarten authorities and IMF staff calculations.Curaçao and Sint Maarten: Fiscal Developments
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: The Curaçao and St. Maarten authorities and IMF staff calculations.
Curaçao and Sint Maarten: Monetary Developments, 2018–2022Q1
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS, and IMF staff estimates.1/ Excluding Girobank from January 2021.
Curaçao and Sint Maarten: Monetary Developments, 2018–2022Q1
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS, and IMF staff estimates.1/ Excluding Girobank from January 2021.Curaçao and Sint Maarten: Monetary Developments, 2018–2022Q1
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
Sources: CBCS, and IMF staff estimates.1/ Excluding Girobank from January 2021.
Curaçao: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Nonmutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.
Curaçao: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Nonmutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.Curaçao: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Nonmutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.
Sint Maarten: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.
Sint Maarten: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.Sint Maarten: Risk Assessment Matrix 1/
Citation: IMF Staff Country Reports 2022, 270; 10.5089/9798400214363.002.A001
1/ The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.Curaçao: Selected Economic and Financial Indicators, 2018–27
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Budgetary central government consolidated with the social security fund (SVB).
2020-21 values exclude Girobank. 2022 value shows the latest available data (April).
Curaçao: Selected Economic and Financial Indicators, 2018–27
| Area | 444 (km2) | Population, thousand (2021) | 151 | |||||||
| Percent of population below age 15 (2021) | 17.0 | Literacy rate, in percent (2010) | 96.7 | |||||||
| Percent of population aged 65+ (2021) | 19.0 | Life expectancy at birth, male (2017) | 74.7 | |||||||
| Infant mortality, over 1,000 live births (2020) | 5.7 | Life expectancy at birth, female (2017) | 81.5 | |||||||
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
| Prel. | Prel. | Prel. | Prel. | Proj. | ||||||
| Real Economy | (Percent change unless otherwise indicated) | |||||||||
| Real GDP | -2.2 | -3.4 | -18.4 | 4.2 | 6.0 | 4.5 | 3.0 | 2.0 | 2.0 | 1.5 |
| CPI (12-month average) | 2.6 | 2.6 | 2.2 | 3.8 | 6.8 | 4.4 | 2.7 | 2.3 | 2.2 | 2.0 |
| CPI (end of period) | 3.6 | 2.3 | 2.2 | 4.8 | 7.2 | 3.0 | 2.4 | 2.3 | 2.2 | 2.0 |
| GDP deflator | 2.6 | 2.7 | 2.1 | 3.8 | 1.7 | 4.7 | 3.4 | 2.9 | 2.2 | 2.0 |
| Unemployment rate (percent) | 13.4 | 17.4 | 19.1 | 19.7 | 19.2 | 16.6 | 14.6 | 13.6 | 12.6 | 11.8 |
| Central Government Finances | (Percent of GDP) | |||||||||
| Net operating (current) balance | -1.3 | -0.5 | -15.2 | -6.9 | -1.9 | -0.1 | 0.8 | 1.6 | 1.8 | 1.9 |
| Primary balance | -1.5 | -0.4 | -13.4 | -4.7 | -1.2 | 0.7 | 1.8 | 2.2 | 2.2 | 2.2 |
| Overall balance | -2.6 | -1.6 | -14.7 | -6.0 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Central government debt 1/ | 56.4 | 57.9 | 88.4 | 89.2 | 83.3 | 76.6 | 71.6 | 67.5 | 64.1 | 61.2 |
| General Government Finances 2/ | ||||||||||
| Overall balance | -2.5 | -2.0 | -15.9 | -6.9 | -5.6 | -1.5 | -0.1 | 0.5 | 0.5 | 0.5 |
| Balance of Payments | (Percent of GDP) | |||||||||
| Current account | -26.9 | -18.0 | -27.6 | -21.9 | -21.6 | -17.7 | -16.5 | -15.4 | -14.4 | -13.7 |
| Goods trade balance | -38.8 | -35.5 | -37.6 | -42.2 | -51.0 | -48.9 | -48.0 | -46.8 | -45.9 | -45.5 |
| Exports of goods | 19.4 | 13.3 | 10.9 | 12.7 | 16.0 | 14.2 | 12.9 | 12.0 | 11.5 | 11.2 |
| Imports of goods | 58.2 | 48.8 | 48.4 | 54.9 | 67.0 | 63.1 | 60.9 | 58.8 | 57.4 | 56.8 |
| Service balance | 11.9 | 16.9 | 9.8 | 18.7 | 27.8 | 29.7 | 30.5 | 30.9 | 31.4 | 32.0 |
| Exports of services | 44.7 | 46.0 | 29.8 | 34.6 | 45.2 | 46.5 | 47.5 | 48.1 | 48.6 | 49.1 |
| Imports of services | 32.7 | 29.0 | 20.0 | 15.9 | 17.3 | 16.8 | 16.9 | 17.1 | 17.2 | 17.1 |
| External debt | 157.4 | 162.0 | 216.6 | 215.9 | 205.9 | 193.6 | 186.6 | 182.1 | 179.0 | 177.1 |
| Net international investment position | 251.5 | 173.4 | 183.5 | 147.6 | 115.3 | 87.6 | 65.7 | 47.2 | 30.9 | 16.1 |
| Memorandum Items | ||||||||||
| Nominal GDP (millions of U.S. dollars) | 3,020 | 2,995 | 2,496 | 2,700 | 2,911 | 3,186 | 3,394 | 3,562 | 3,713 | 3,845 |
| Per capita GDP (U.S. dollars) | 19,037 | 19,173 | 16,244 | 17,870 | 19,160 | 20,863 | 22,111 | 23,101 | 23,972 | 24,715 |
| Credit to non-government sectors (percent change) 3/ | 2.5 | 2.0 | 0.1 | 0.1 | -0.6 | … | … | … | … | … |
| Fund position | Curaçao is part of the Kingdom of the Netherlands and does not have a separate quota. | |||||||||
| Exchange rate | The Netherlands Antillean guilder is pegged to the U.S. dollar at NAf 1.79 = US$1. | |||||||||
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Budgetary central government consolidated with the social security fund (SVB).
2020-21 values exclude Girobank. 2022 value shows the latest available data (April).
Curaçao: Selected Economic and Financial Indicators, 2018–27
| Area | 444 (km2) | Population, thousand (2021) | 151 | |||||||
| Percent of population below age 15 (2021) | 17.0 | Literacy rate, in percent (2010) | 96.7 | |||||||
| Percent of population aged 65+ (2021) | 19.0 | Life expectancy at birth, male (2017) | 74.7 | |||||||
| Infant mortality, over 1,000 live births (2020) | 5.7 | Life expectancy at birth, female (2017) | 81.5 | |||||||
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
| Prel. | Prel. | Prel. | Prel. | Proj. | ||||||
| Real Economy | (Percent change unless otherwise indicated) | |||||||||
| Real GDP | -2.2 | -3.4 | -18.4 | 4.2 | 6.0 | 4.5 | 3.0 | 2.0 | 2.0 | 1.5 |
| CPI (12-month average) | 2.6 | 2.6 | 2.2 | 3.8 | 6.8 | 4.4 | 2.7 | 2.3 | 2.2 | 2.0 |
| CPI (end of period) | 3.6 | 2.3 | 2.2 | 4.8 | 7.2 | 3.0 | 2.4 | 2.3 | 2.2 | 2.0 |
| GDP deflator | 2.6 | 2.7 | 2.1 | 3.8 | 1.7 | 4.7 | 3.4 | 2.9 | 2.2 | 2.0 |
| Unemployment rate (percent) | 13.4 | 17.4 | 19.1 | 19.7 | 19.2 | 16.6 | 14.6 | 13.6 | 12.6 | 11.8 |
| Central Government Finances | (Percent of GDP) | |||||||||
| Net operating (current) balance | -1.3 | -0.5 | -15.2 | -6.9 | -1.9 | -0.1 | 0.8 | 1.6 | 1.8 | 1.9 |
| Primary balance | -1.5 | -0.4 | -13.4 | -4.7 | -1.2 | 0.7 | 1.8 | 2.2 | 2.2 | 2.2 |
| Overall balance | -2.6 | -1.6 | -14.7 | -6.0 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Central government debt 1/ | 56.4 | 57.9 | 88.4 | 89.2 | 83.3 | 76.6 | 71.6 | 67.5 | 64.1 | 61.2 |
| General Government Finances 2/ | ||||||||||
| Overall balance | -2.5 | -2.0 | -15.9 | -6.9 | -5.6 | -1.5 | -0.1 | 0.5 | 0.5 | 0.5 |
| Balance of Payments | (Percent of GDP) | |||||||||
| Current account | -26.9 | -18.0 | -27.6 | -21.9 | -21.6 | -17.7 | -16.5 | -15.4 | -14.4 | -13.7 |
| Goods trade balance | -38.8 | -35.5 | -37.6 | -42.2 | -51.0 | -48.9 | -48.0 | -46.8 | -45.9 | -45.5 |
| Exports of goods | 19.4 | 13.3 | 10.9 | 12.7 | 16.0 | 14.2 | 12.9 | 12.0 | 11.5 | 11.2 |
| Imports of goods | 58.2 | 48.8 | 48.4 | 54.9 | 67.0 | 63.1 | 60.9 | 58.8 | 57.4 | 56.8 |
| Service balance | 11.9 | 16.9 | 9.8 | 18.7 | 27.8 | 29.7 | 30.5 | 30.9 | 31.4 | 32.0 |
| Exports of services | 44.7 | 46.0 | 29.8 | 34.6 | 45.2 | 46.5 | 47.5 | 48.1 | 48.6 | 49.1 |
| Imports of services | 32.7 | 29.0 | 20.0 | 15.9 | 17.3 | 16.8 | 16.9 | 17.1 | 17.2 | 17.1 |
| External debt | 157.4 | 162.0 | 216.6 | 215.9 | 205.9 | 193.6 | 186.6 | 182.1 | 179.0 | 177.1 |
| Net international investment position | 251.5 | 173.4 | 183.5 | 147.6 | 115.3 | 87.6 | 65.7 | 47.2 | 30.9 | 16.1 |
| Memorandum Items | ||||||||||
| Nominal GDP (millions of U.S. dollars) | 3,020 | 2,995 | 2,496 | 2,700 | 2,911 | 3,186 | 3,394 | 3,562 | 3,713 | 3,845 |
| Per capita GDP (U.S. dollars) | 19,037 | 19,173 | 16,244 | 17,870 | 19,160 | 20,863 | 22,111 | 23,101 | 23,972 | 24,715 |
| Credit to non-government sectors (percent change) 3/ | 2.5 | 2.0 | 0.1 | 0.1 | -0.6 | … | … | … | … | … |
| Fund position | Curaçao is part of the Kingdom of the Netherlands and does not have a separate quota. | |||||||||
| Exchange rate | The Netherlands Antillean guilder is pegged to the U.S. dollar at NAf 1.79 = US$1. | |||||||||
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Budgetary central government consolidated with the social security fund (SVB).
2020-21 values exclude Girobank. 2022 value shows the latest available data (April).
Curaçao: Government Operations, 2018–271/
(Millions of NAf unless otherwise indicated)
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Government Operations, 2018–271/
(Millions of NAf unless otherwise indicated)
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Prel. | Prel. | Projection | ||||||
| Budgetary Central Government | ||||||||||
| Revenue | 1639 | 1625 | 1428 | 1448 | 1614 | 1722 | 1877 | 1966 | 2045 | 2117 |
| Tax | 1484 | 1525 | 1321 | 1351 | 1495 | 1585 | 1725 | 1806 | 1879 | 1944 |
| Taxes on income and profits | 646 | 664 | 580 | 503 | 556 | 606 | 658 | 691 | 721 | 746 |
| Taxes on property | 33 | 30 | 34 | 51 | 49 | 49 | 53 | 56 | 58 | 60 |
| Taxes on goods and services | 572 | 621 | 541 | 617 | 683 | 713 | 788 | 827 | 862 | 893 |
| Taxes on international trade and transactions | 233 | 210 | 166 | 181 | 207 | 217 | 226 | 231 | 237 | 245 |
| Grants | 46 | 32 | 40 | 39 | 38 | 40 | 42 | 44 | 46 | 47 |
| Other revenue | 109 | 68 | 67 | 59 | 81 | 96 | 110 | 116 | 121 | 125 |
| Expenditure | 1778 | 1711 | 2085 | 1738 | 1746 | 1766 | 1883 | 1937 | 2015 | 2084 |
| Expense (current expenditure) | 1707 | 1653 | 2109 | 1780 | 1713 | 1729 | 1831 | 1866 | 1928 | 1987 |
| Compensation of labor | 585 | 585 | 597 | 595 | 596 | 606 | 637 | 657 | 685 | 710 |
| Wages and salaries 2/ | 483 | 482 | 494 | 480 | 494 | 502 | 526 | 544 | 567 | 587 |
| Social contributions | 101 | 103 | 103 | 116 | 103 | 105 | 110 | 114 | 119 | 123 |
| Goods and services | 196 | 171 | 216 | 184 | 221 | 204 | 201 | 201 | 210 | 217 |
| Consumption of fixed capital | 88 | 93 | 90 | 76 | 76 | 90 | 98 | 102 | 106 | 110 |
| Interest payments | 70 | 68 | 69 | 61 | 71 | 85 | 112 | 115 | 118 | 121 |
| Subsidies 3/ | 0 | 0 | 95 | 101 | 0 | 0 | 0 | 0 | 0 | 0 |
| Grants | 588 | 558 | 802 | 522 | 558 | 551 | 593 | 600 | 610 | 623 |
| Social benefits | 179 | 174 | 231 | 237 | 189 | 189 | 189 | 189 | 197 | 204 |
| Other expense | 2 | 3 | 8 | 3 | 2 | 2 | 2 | 2 | 2 | 2 |
| Net acquisition of nonfinancial assets | 71 | 59 | -23 | -42 | 33 | 38 | 51 | 71 | 87 | 97 |
| Net acquisition of nonfinancial assets (capital) | 159 | 152 | 66 | 34 | 109 | 128 | 149 | 172 | 193 | 206 |
| Net operating (current) balance | -68 | -28 | -680 | -332 | -99 | -7 | 46 | 100 | 117 | 130 |
| Overall balance | -139 | -87 | -657 | -290 | -132 | -44 | -5 | 29 | 30 | 33 |
| Primary balance | -79 | -21 | -597 | -229 | -62 | 40 | 107 | 143 | 148 | 154 |
| Financing, net | -311 | -210 | -555 | -227 | -132 | -44 | -5 | 29 | 30 | 33 |
| Net acquisition of financial assets 4/ | -303 | -158 | 294 | 122 | -99 | -19 | -21 | -17 | -17 | -17 |
| Net incurrence of liabilities | 9 | 53 | 849 | 349 | 33 | 26 | -15 | -46 | -46 | -50 |
| Loans | -8 | 53 | 908 | 349 | 33 | 26 | -15 | -46 | -46 | -50 |
| Borrowing | 0 | 99 | 1016 | 415 | 963 | 961 | 86 | 248 | 151 | 165 |
| Amortization | 8 | 46 | 108 | 65 | 931 | 936 | 101 | 294 | 197 | 215 |
| Other accounts payable, incl. arrears | 17 | 0 | -59 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Statistical discrepancies | 172 | 124 | -102 | -63 | 0 | 0 | 0 | 0 | 0 | 0 |
| General Government 5/ | ||||||||||
| Revenue | 2447 | 2423 | 2160 | 2193 | 2378 | 2541 | 2746 | 2869 | 2987 | 3092 |
| of which : Social contributions | 777 | 772 | 701 | 727 | 744 | 798 | 846 | 880 | 918 | 950 |
| Expenditure | 2581 | 2530 | 2871 | 2528 | 2667 | 2627 | 2751 | 2840 | 2957 | 3059 |
| Expense | 2510 | 2471 | 2894 | 2570 | 2532 | 2589 | 2700 | 2770 | 2870 | 2962 |
| of which : Social benefits | 1232 | 1232 | 1277 | 1290 | 1272 | 1315 | 1346 | 1375 | 1419 | 1462 |
| Net acquisition of nonfinancial assets | 71 | 59 | -23 | -42 | 136 | 38 | 51 | 71 | 87 | 97 |
| Overall balance | -134 | -107 | -711 | -335 | -290 | -86 | -5 | 29 | 30 | 33 |
| Primary balance | -74 | -42 | -651 | -274 | -219 | -1 | 107 | 143 | 148 | 154 |
| Memorandum Items | ||||||||||
| Current account balance, authorities’ definition | -58 | -45 | -719 | -331 | -114 | -13 | 0 | 0 | 0 | 0 |
| Of which : Compensation for past deficits (+: payment) | 4 | 17 | 44 | 0 | 0 | 0 | 41 | 91 | 108 | 121 |
| Interest rule (interest/revenue) (percent) 6/ | 2.9 | 2.7 | 2.8 | 2.6 | 3.1 | 3.8 | 4.7 | 4.5 | 4.3 | 4.2 |
| Government debt service | 78 | 78 | 177 | 133 | 1001 | 1021 | 214 | 408 | 315 | 336 |
| Gross government debt 7/ | 3050 | 3103 | 3952 | 4309 | 4342 | 4368 | 4352 | 4307 | 4260 | 4211 |
| Net government debt | 2847 | 2895 | 3436 | 3842 | 3961 | 3980 | 3960 | 3905 | 3850 | 3792 |
| Government deposits | 203 | 208 | 516 | 467 | 381 | 388 | 393 | 401 | 410 | 419 |
| Nominal GDP | 5406 | 5361 | 4468 | 4832 | 5210 | 5703 | 6075 | 6377 | 6647 | 6882 |
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Government Operations, 2018–271/
(Millions of NAf unless otherwise indicated)
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Prel. | Prel. | Projection | ||||||
| Budgetary Central Government | ||||||||||
| Revenue | 1639 | 1625 | 1428 | 1448 | 1614 | 1722 | 1877 | 1966 | 2045 | 2117 |
| Tax | 1484 | 1525 | 1321 | 1351 | 1495 | 1585 | 1725 | 1806 | 1879 | 1944 |
| Taxes on income and profits | 646 | 664 | 580 | 503 | 556 | 606 | 658 | 691 | 721 | 746 |
| Taxes on property | 33 | 30 | 34 | 51 | 49 | 49 | 53 | 56 | 58 | 60 |
| Taxes on goods and services | 572 | 621 | 541 | 617 | 683 | 713 | 788 | 827 | 862 | 893 |
| Taxes on international trade and transactions | 233 | 210 | 166 | 181 | 207 | 217 | 226 | 231 | 237 | 245 |
| Grants | 46 | 32 | 40 | 39 | 38 | 40 | 42 | 44 | 46 | 47 |
| Other revenue | 109 | 68 | 67 | 59 | 81 | 96 | 110 | 116 | 121 | 125 |
| Expenditure | 1778 | 1711 | 2085 | 1738 | 1746 | 1766 | 1883 | 1937 | 2015 | 2084 |
| Expense (current expenditure) | 1707 | 1653 | 2109 | 1780 | 1713 | 1729 | 1831 | 1866 | 1928 | 1987 |
| Compensation of labor | 585 | 585 | 597 | 595 | 596 | 606 | 637 | 657 | 685 | 710 |
| Wages and salaries 2/ | 483 | 482 | 494 | 480 | 494 | 502 | 526 | 544 | 567 | 587 |
| Social contributions | 101 | 103 | 103 | 116 | 103 | 105 | 110 | 114 | 119 | 123 |
| Goods and services | 196 | 171 | 216 | 184 | 221 | 204 | 201 | 201 | 210 | 217 |
| Consumption of fixed capital | 88 | 93 | 90 | 76 | 76 | 90 | 98 | 102 | 106 | 110 |
| Interest payments | 70 | 68 | 69 | 61 | 71 | 85 | 112 | 115 | 118 | 121 |
| Subsidies 3/ | 0 | 0 | 95 | 101 | 0 | 0 | 0 | 0 | 0 | 0 |
| Grants | 588 | 558 | 802 | 522 | 558 | 551 | 593 | 600 | 610 | 623 |
| Social benefits | 179 | 174 | 231 | 237 | 189 | 189 | 189 | 189 | 197 | 204 |
| Other expense | 2 | 3 | 8 | 3 | 2 | 2 | 2 | 2 | 2 | 2 |
| Net acquisition of nonfinancial assets | 71 | 59 | -23 | -42 | 33 | 38 | 51 | 71 | 87 | 97 |
| Net acquisition of nonfinancial assets (capital) | 159 | 152 | 66 | 34 | 109 | 128 | 149 | 172 | 193 | 206 |
| Net operating (current) balance | -68 | -28 | -680 | -332 | -99 | -7 | 46 | 100 | 117 | 130 |
| Overall balance | -139 | -87 | -657 | -290 | -132 | -44 | -5 | 29 | 30 | 33 |
| Primary balance | -79 | -21 | -597 | -229 | -62 | 40 | 107 | 143 | 148 | 154 |
| Financing, net | -311 | -210 | -555 | -227 | -132 | -44 | -5 | 29 | 30 | 33 |
| Net acquisition of financial assets 4/ | -303 | -158 | 294 | 122 | -99 | -19 | -21 | -17 | -17 | -17 |
| Net incurrence of liabilities | 9 | 53 | 849 | 349 | 33 | 26 | -15 | -46 | -46 | -50 |
| Loans | -8 | 53 | 908 | 349 | 33 | 26 | -15 | -46 | -46 | -50 |
| Borrowing | 0 | 99 | 1016 | 415 | 963 | 961 | 86 | 248 | 151 | 165 |
| Amortization | 8 | 46 | 108 | 65 | 931 | 936 | 101 | 294 | 197 | 215 |
| Other accounts payable, incl. arrears | 17 | 0 | -59 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Statistical discrepancies | 172 | 124 | -102 | -63 | 0 | 0 | 0 | 0 | 0 | 0 |
| General Government 5/ | ||||||||||
| Revenue | 2447 | 2423 | 2160 | 2193 | 2378 | 2541 | 2746 | 2869 | 2987 | 3092 |
| of which : Social contributions | 777 | 772 | 701 | 727 | 744 | 798 | 846 | 880 | 918 | 950 |
| Expenditure | 2581 | 2530 | 2871 | 2528 | 2667 | 2627 | 2751 | 2840 | 2957 | 3059 |
| Expense | 2510 | 2471 | 2894 | 2570 | 2532 | 2589 | 2700 | 2770 | 2870 | 2962 |
| of which : Social benefits | 1232 | 1232 | 1277 | 1290 | 1272 | 1315 | 1346 | 1375 | 1419 | 1462 |
| Net acquisition of nonfinancial assets | 71 | 59 | -23 | -42 | 136 | 38 | 51 | 71 | 87 | 97 |
| Overall balance | -134 | -107 | -711 | -335 | -290 | -86 | -5 | 29 | 30 | 33 |
| Primary balance | -74 | -42 | -651 | -274 | -219 | -1 | 107 | 143 | 148 | 154 |
| Memorandum Items | ||||||||||
| Current account balance, authorities’ definition | -58 | -45 | -719 | -331 | -114 | -13 | 0 | 0 | 0 | 0 |
| Of which : Compensation for past deficits (+: payment) | 4 | 17 | 44 | 0 | 0 | 0 | 41 | 91 | 108 | 121 |
| Interest rule (interest/revenue) (percent) 6/ | 2.9 | 2.7 | 2.8 | 2.6 | 3.1 | 3.8 | 4.7 | 4.5 | 4.3 | 4.2 |
| Government debt service | 78 | 78 | 177 | 133 | 1001 | 1021 | 214 | 408 | 315 | 336 |
| Gross government debt 7/ | 3050 | 3103 | 3952 | 4309 | 4342 | 4368 | 4352 | 4307 | 4260 | 4211 |
| Net government debt | 2847 | 2895 | 3436 | 3842 | 3961 | 3980 | 3960 | 3905 | 3850 | 3792 |
| Government deposits | 203 | 208 | 516 | 467 | 381 | 388 | 393 | 401 | 410 | 419 |
| Nominal GDP | 5406 | 5361 | 4468 | 4832 | 5210 | 5703 | 6075 | 6377 | 6647 | 6882 |
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Government Operations, 2018–27 1/
(Percent of GDP unless otherwise indicated)
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Government Operations, 2018–27 1/
(Percent of GDP unless otherwise indicated)
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Prel. | Prel. | Proj. | ||||||
| Budgetary Central Government | ||||||||||
| Revenue | 30.3 | 30.3 | 32.0 | 30.0 | 31.0 | 30.2 | 30.9 | 30.8 | 30.8 | 30.8 |
| Tax | 27.4 | 28.4 | 29.6 | 28.0 | 28.7 | 27.8 | 28.4 | 28.3 | 28.3 | 28.3 |
| Taxes on income and profits | 11.9 | 12.4 | 13.0 | 10.4 | 10.7 | 10.6 | 10.8 | 10.8 | 10.8 | 10.8 |
| Taxes on property | 0.6 | 0.6 | 0.8 | 1.0 | 0.9 | 0.9 | 0.9 | 0.9 | 0.9 | 0.9 |
| Taxes on goods and services | 10.6 | 11.6 | 12.1 | 12.8 | 13.1 | 12.5 | 13.0 | 13.0 | 13.0 | 13.0 |
| Taxes on international trade and transactions | 4.3 | 3.9 | 3.7 | 3.7 | 4.0 | 3.8 | 3.7 | 3.6 | 3.6 | 3.6 |
| Grants | 0.8 | 0.6 | 0.9 | 0.8 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 |
| Other revenue | 2.0 | 1.3 | 1.5 | 1.2 | 1.6 | 1.7 | 1.8 | 1.8 | 1.8 | 1.8 |
| Expenditure | 32.9 | 31.9 | 46.7 | 36.0 | 33.5 | 31.0 | 31.0 | 30.4 | 30.3 | 30.3 |
| Expense (current expenditure) | 31.6 | 30.8 | 47.2 | 36.8 | 32.9 | 30.3 | 30.1 | 29.3 | 29.0 | 28.9 |
| Compensation of labor | 10.8 | 10.9 | 13.4 | 12.3 | 11.4 | 10.6 | 10.5 | 10.3 | 10.3 | 10.3 |
| Wages and salaries 2/ | 8.9 | 9.0 | 11.1 | 9.9 | 9.5 | 8.8 | 8.7 | 8.5 | 8.5 | 8.5 |
| Social contributions | 1.9 | 1.9 | 2.3 | 2.4 | 2.0 | 1.8 | 1.8 | 1.8 | 1.8 | 1.8 |
| Goods and services | 3.6 | 3.2 | 4.8 | 3.8 | 4.3 | 3.6 | 3.3 | 3.2 | 3.2 | 3.2 |
| Consumption of fixed capital | 1.6 | 1.7 | 2.0 | 1.6 | 1.5 | 1.6 | 1.6 | 1.6 | 1.6 | 1.6 |
| Interest payments | 1.3 | 1.3 | 1.5 | 1.3 | 1.4 | 1.5 | 1.9 | 1.8 | 1.8 | 1.8 |
| Subsidies 3/ | 0.0 | 0.0 | 2.1 | 2.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Grants | 10.9 | 10.4 | 18.0 | 10.8 | 10.7 | 9.7 | 9.8 | 9.4 | 9.2 | 9.0 |
| Social benefits | 3.3 | 3.2 | 5.2 | 4.9 | 3.6 | 3.3 | 3.1 | 3.0 | 3.0 | 3.0 |
| Other expense | 0.0 | 0.0 | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net acquisition of nonfinancial assets | 1.3 | 1.1 | -0.5 | -0.9 | 0.6 | 0.7 | 0.8 | 1.1 | 1.3 | 1.4 |
| Net acquisition of nonfinancial assets (capital) | 2.9 | 2.8 | 1.5 | 0.7 | 2.1 | 2.2 | 2.4 | 2.7 | 2.9 | 3.0 |
| Net operating (current) balance | -1.3 | -0.5 | -15.2 | -6.9 | -1.9 | -0.1 | 0.8 | 1.6 | 1.8 | 1.9 |
| Overall balance | -2.6 | -1.6 | -14.7 | -6.0 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Primary balance | -1.5 | -0.4 | -13.4 | -4.7 | -1.2 | 0.7 | 1.8 | 2.2 | 2.2 | 2.2 |
| Financing, net | -5.8 | -3.9 | -12.4 | -4.7 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Net acquisition of financial assets 4/ | -5.6 | -2.9 | 6.6 | 2.5 | -1.9 | -0.3 | -0.3 | -0.3 | -0.2 | -0.2 |
| Net incurrence of liabilities | 0.2 | 1.0 | 19.0 | 7.2 | 0.6 | 0.5 | -0.3 | -0.7 | -0.7 | -0.7 |
| Loans | -0.2 | 1.0 | 20.3 | 7.2 | 0.6 | 0.5 | -0.3 | -0.7 | -0.7 | -0.7 |
| Borrowing | 0.0 | 1.8 | 22.7 | 8.6 | 18.5 | 16.9 | 1.4 | 3.9 | 2.3 | 2.4 |
| Amortization | 0.2 | 0.9 | 2.4 | 1.4 | 17.9 | 16.4 | 1.7 | 4.6 | 3.0 | 3.1 |
| Other accounts payable, incl. arrears | 0.3 | 0.0 | -1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Statistical discrepancies | 3.2 | 2.3 | -2.3 | -1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| General Government 5/ | ||||||||||
| Revenue | 45.3 | 45.2 | 48.3 | 45.4 | 45.6 | 44.6 | 45.2 | 45.0 | 44.9 | 44.9 |
| of which : Social contributions | 14.4 | 14.4 | 15.7 | 15.0 | 14.3 | 14.0 | 13.9 | 13.8 | 13.8 | 13.8 |
| Expenditure | 47.7 | 47.2 | 64.3 | 52.3 | 51.2 | 46.1 | 45.3 | 44.5 | 44.5 | 44.4 |
| Expense | 46.4 | 46.1 | 64.8 | 53.2 | 48.6 | 45.4 | 44.4 | 43.4 | 43.2 | 43.0 |
| of which : Social benefits | 22.8 | 23.0 | 28.6 | 26.7 | 24.4 | 23.1 | 22.1 | 21.6 | 21.4 | 21.2 |
| Net acquisition of nonfinancial assets | 1.3 | 1.1 | -0.5 | -0.9 | 2.6 | 0.7 | 0.8 | 1.1 | 1.3 | 1.4 |
| Overall balance | -2.5 | -2.0 | -15.9 | -6.9 | -5.6 | -1.5 | -0.1 | 0.5 | 0.5 | 0.5 |
| Primary balance | -1.4 | -0.8 | -14.6 | -5.7 | -4.2 | 0.0 | 1.8 | 2.2 | 2.2 | 2.2 |
| Memorandum Items | ||||||||||
| Current account balance, authorities | -1.1 | -0.8 | -16.1 | -6.8 | -2.2 | -0.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Of which : Compensation for past deficits (+: payment) | 0.1 | 0.3 | 1.0 | 0.0 | 0.0 | 0.0 | 0.7 | 1.4 | 1.6 | 1.8 |
| Interest rule (interest/revenue) (percent) 6/ | 2.9 | 2.7 | 2.8 | 2.6 | 3.1 | 3.8 | 4.7 | 4.5 | 4.3 | 4.2 |
| Government debt service | 1.4 | 1.5 | 4.0 | 2.8 | 19.2 | 17.9 | 3.5 | 6.4 | 4.7 | 4.9 |
| Gross government debt 7/ | 56.4 | 57.9 | 88.4 | 89.2 | 83.3 | 76.6 | 71.6 | 67.5 | 64.1 | 61.2 |
| Net government debt | 52.7 | 54.0 | 76.9 | 79.5 | 76.0 | 69.8 | 65.2 | 61.2 | 57.9 | 55.1 |
| Government deposits | 3.8 | 3.9 | 11.5 | 9.7 | 7.3 | 6.8 | 6.5 | 6.3 | 6.2 | 6.1 |
| Nominal GDP | 5406 | 5361 | 4468 | 4832 | 5210 | 5703 | 6075 | 6377 | 6647 | 6882 |
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Government Operations, 2018–27 1/
(Percent of GDP unless otherwise indicated)
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Prel. | Prel. | Proj. | ||||||
| Budgetary Central Government | ||||||||||
| Revenue | 30.3 | 30.3 | 32.0 | 30.0 | 31.0 | 30.2 | 30.9 | 30.8 | 30.8 | 30.8 |
| Tax | 27.4 | 28.4 | 29.6 | 28.0 | 28.7 | 27.8 | 28.4 | 28.3 | 28.3 | 28.3 |
| Taxes on income and profits | 11.9 | 12.4 | 13.0 | 10.4 | 10.7 | 10.6 | 10.8 | 10.8 | 10.8 | 10.8 |
| Taxes on property | 0.6 | 0.6 | 0.8 | 1.0 | 0.9 | 0.9 | 0.9 | 0.9 | 0.9 | 0.9 |
| Taxes on goods and services | 10.6 | 11.6 | 12.1 | 12.8 | 13.1 | 12.5 | 13.0 | 13.0 | 13.0 | 13.0 |
| Taxes on international trade and transactions | 4.3 | 3.9 | 3.7 | 3.7 | 4.0 | 3.8 | 3.7 | 3.6 | 3.6 | 3.6 |
| Grants | 0.8 | 0.6 | 0.9 | 0.8 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 |
| Other revenue | 2.0 | 1.3 | 1.5 | 1.2 | 1.6 | 1.7 | 1.8 | 1.8 | 1.8 | 1.8 |
| Expenditure | 32.9 | 31.9 | 46.7 | 36.0 | 33.5 | 31.0 | 31.0 | 30.4 | 30.3 | 30.3 |
| Expense (current expenditure) | 31.6 | 30.8 | 47.2 | 36.8 | 32.9 | 30.3 | 30.1 | 29.3 | 29.0 | 28.9 |
| Compensation of labor | 10.8 | 10.9 | 13.4 | 12.3 | 11.4 | 10.6 | 10.5 | 10.3 | 10.3 | 10.3 |
| Wages and salaries 2/ | 8.9 | 9.0 | 11.1 | 9.9 | 9.5 | 8.8 | 8.7 | 8.5 | 8.5 | 8.5 |
| Social contributions | 1.9 | 1.9 | 2.3 | 2.4 | 2.0 | 1.8 | 1.8 | 1.8 | 1.8 | 1.8 |
| Goods and services | 3.6 | 3.2 | 4.8 | 3.8 | 4.3 | 3.6 | 3.3 | 3.2 | 3.2 | 3.2 |
| Consumption of fixed capital | 1.6 | 1.7 | 2.0 | 1.6 | 1.5 | 1.6 | 1.6 | 1.6 | 1.6 | 1.6 |
| Interest payments | 1.3 | 1.3 | 1.5 | 1.3 | 1.4 | 1.5 | 1.9 | 1.8 | 1.8 | 1.8 |
| Subsidies 3/ | 0.0 | 0.0 | 2.1 | 2.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Grants | 10.9 | 10.4 | 18.0 | 10.8 | 10.7 | 9.7 | 9.8 | 9.4 | 9.2 | 9.0 |
| Social benefits | 3.3 | 3.2 | 5.2 | 4.9 | 3.6 | 3.3 | 3.1 | 3.0 | 3.0 | 3.0 |
| Other expense | 0.0 | 0.0 | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net acquisition of nonfinancial assets | 1.3 | 1.1 | -0.5 | -0.9 | 0.6 | 0.7 | 0.8 | 1.1 | 1.3 | 1.4 |
| Net acquisition of nonfinancial assets (capital) | 2.9 | 2.8 | 1.5 | 0.7 | 2.1 | 2.2 | 2.4 | 2.7 | 2.9 | 3.0 |
| Net operating (current) balance | -1.3 | -0.5 | -15.2 | -6.9 | -1.9 | -0.1 | 0.8 | 1.6 | 1.8 | 1.9 |
| Overall balance | -2.6 | -1.6 | -14.7 | -6.0 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Primary balance | -1.5 | -0.4 | -13.4 | -4.7 | -1.2 | 0.7 | 1.8 | 2.2 | 2.2 | 2.2 |
| Financing, net | -5.8 | -3.9 | -12.4 | -4.7 | -2.5 | -0.8 | -0.1 | 0.5 | 0.5 | 0.5 |
| Net acquisition of financial assets 4/ | -5.6 | -2.9 | 6.6 | 2.5 | -1.9 | -0.3 | -0.3 | -0.3 | -0.2 | -0.2 |
| Net incurrence of liabilities | 0.2 | 1.0 | 19.0 | 7.2 | 0.6 | 0.5 | -0.3 | -0.7 | -0.7 | -0.7 |
| Loans | -0.2 | 1.0 | 20.3 | 7.2 | 0.6 | 0.5 | -0.3 | -0.7 | -0.7 | -0.7 |
| Borrowing | 0.0 | 1.8 | 22.7 | 8.6 | 18.5 | 16.9 | 1.4 | 3.9 | 2.3 | 2.4 |
| Amortization | 0.2 | 0.9 | 2.4 | 1.4 | 17.9 | 16.4 | 1.7 | 4.6 | 3.0 | 3.1 |
| Other accounts payable, incl. arrears | 0.3 | 0.0 | -1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Statistical discrepancies | 3.2 | 2.3 | -2.3 | -1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| General Government 5/ | ||||||||||
| Revenue | 45.3 | 45.2 | 48.3 | 45.4 | 45.6 | 44.6 | 45.2 | 45.0 | 44.9 | 44.9 |
| of which : Social contributions | 14.4 | 14.4 | 15.7 | 15.0 | 14.3 | 14.0 | 13.9 | 13.8 | 13.8 | 13.8 |
| Expenditure | 47.7 | 47.2 | 64.3 | 52.3 | 51.2 | 46.1 | 45.3 | 44.5 | 44.5 | 44.4 |
| Expense | 46.4 | 46.1 | 64.8 | 53.2 | 48.6 | 45.4 | 44.4 | 43.4 | 43.2 | 43.0 |
| of which : Social benefits | 22.8 | 23.0 | 28.6 | 26.7 | 24.4 | 23.1 | 22.1 | 21.6 | 21.4 | 21.2 |
| Net acquisition of nonfinancial assets | 1.3 | 1.1 | -0.5 | -0.9 | 2.6 | 0.7 | 0.8 | 1.1 | 1.3 | 1.4 |
| Overall balance | -2.5 | -2.0 | -15.9 | -6.9 | -5.6 | -1.5 | -0.1 | 0.5 | 0.5 | 0.5 |
| Primary balance | -1.4 | -0.8 | -14.6 | -5.7 | -4.2 | 0.0 | 1.8 | 2.2 | 2.2 | 2.2 |
| Memorandum Items | ||||||||||
| Current account balance, authorities | -1.1 | -0.8 | -16.1 | -6.8 | -2.2 | -0.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Of which : Compensation for past deficits (+: payment) | 0.1 | 0.3 | 1.0 | 0.0 | 0.0 | 0.0 | 0.7 | 1.4 | 1.6 | 1.8 |
| Interest rule (interest/revenue) (percent) 6/ | 2.9 | 2.7 | 2.8 | 2.6 | 3.1 | 3.8 | 4.7 | 4.5 | 4.3 | 4.2 |
| Government debt service | 1.4 | 1.5 | 4.0 | 2.8 | 19.2 | 17.9 | 3.5 | 6.4 | 4.7 | 4.9 |
| Gross government debt 7/ | 56.4 | 57.9 | 88.4 | 89.2 | 83.3 | 76.6 | 71.6 | 67.5 | 64.1 | 61.2 |
| Net government debt | 52.7 | 54.0 | 76.9 | 79.5 | 76.0 | 69.8 | 65.2 | 61.2 | 57.9 | 55.1 |
| Government deposits | 3.8 | 3.9 | 11.5 | 9.7 | 7.3 | 6.8 | 6.5 | 6.3 | 6.2 | 6.1 |
| Nominal GDP | 5406 | 5361 | 4468 | 4832 | 5210 | 5703 | 6075 | 6377 | 6647 | 6882 |
The presentation follows the 2014 Government Finance Statistics Manual.
Includes teacher salaries.
Payroll subsidies to the private sector for 2020 and 21.
Mostly changes in deposits.
Consolidated table including the budgetary central government and social security funds (SVB).
The denominator is the average of total revenue in the previous three years.
Defined as balance sheet liabilities of the central government except equities. Includes central government liabilities to the social security funds.
Curaçao: Balance of Payments, 2018–27
Curaçao: Balance of Payments, 2018–27
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Proj. | ||||||||
| (Millions of U.S. dollars) | ||||||||||
| Current account | -813 | -541 | -689 | -592 | -628 | -565 | -561 | -549 | -534 | -526 |
| Goods and services | -810 | -556 | -694 | -633 | -674 | -613 | -593 | -563 | -539 | -522 |
| Exports of goods and services | 1,935 | 1,775 | 1,015 | 1,278 | 1,780 | 1,934 | 2,047 | 2,142 | 2,231 | 2,320 |
| Goods | 586 | 398 | 271 | 343 | 465 | 452 | 436 | 429 | 427 | 432 |
| Services | 1,349 | 1,377 | 744 | 934 | 1,315 | 1,482 | 1,610 | 1,713 | 1,804 | 1,888 |
| Imports of goods and services | 2,745 | 2,331 | 1,709 | 1,911 | 2,454 | 2,547 | 2,640 | 2,705 | 2,770 | 2,842 |
| Goods | 1,757 | 1,461 | 1,209 | 1,482 | 1,950 | 2,012 | 2,065 | 2,094 | 2,132 | 2,183 |
| Services | 988 | 870 | 500 | 429 | 504 | 535 | 575 | 611 | 638 | 659 |
| Income | 31 | 43 | 56 | 57 | 81 | 89 | 67 | 55 | 47 | 39 |
| Of which: Investment income | -27 | -45 | 5 | 10 | 18 | 20 | -7 | -22 | -34 | -45 |
| Current transfers | -34 | -28 | -51 | -16 | -35 | -41 | -35 | -41 | -43 | -43 |
| Capital and financial account | 706 | 469 | 865 | 701 | 446 | 489 | 470 | 484 | 466 | 424 |
| Capital account | 2 | 5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Financial account | 704 | 464 | 865 | 701 | 446 | 489 | 470 | 484 | 466 | 424 |
| Direct investment | 96 | 214 | 149 | 141 | 160 | 175 | 187 | 196 | 186 | 192 |
| Portfolio investment | 164 | 84 | 131 | 43 | 93 | 108 | 122 | 135 | 148 | 153 |
| Financial derivatives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other investment | 444 | 166 | 586 | 517 | 193 | 206 | 161 | 153 | 133 | 78 |
| Net errors and omissions | -7 | 42 | 77 | -5 | 0 | 0 | 0 | 0 | 0 | 0 |
| Overall balance | -113 | -29 | 253 | 105 | -182 | -76 | -92 | -66 | -68 | -102 |
| Reserve assets | 113 | 29 | -253 | -105 | 182 | 76 | 92 | 66 | 68 | 102 |
| (Percent of GDP) | ||||||||||
| Current account | -26.9 | -18.0 | -27.6 | -21.9 | -21.6 | -17.7 | -16.5 | -15.4 | -14.4 | -13.7 |
| Goods and services | -26.8 | -18.6 | -27.8 | -23.4 | -23.2 | -19.2 | -17.5 | -15.8 | -14.5 | -13.6 |
| Exports of goods | 19.4 | 13.3 | 10.9 | 12.7 | 16.0 | 14.2 | 12.9 | 12.0 | 11.5 | 11.2 |
| Imports of goods | 58.2 | 48.8 | 48.4 | 54.9 | 67.0 | 63.1 | 60.9 | 58.8 | 57.4 | 56.8 |
| Exports of services | 44.7 | 46.0 | 29.8 | 34.6 | 45.2 | 46.5 | 47.5 | 48.1 | 48.6 | 49.1 |
| Imports of services | 32.7 | 29.0 | 20.0 | 15.9 | 17.3 | 16.8 | 16.9 | 17.1 | 17.2 | 17.1 |
| Income | 1.0 | 1.5 | 2.3 | 2.1 | 2.8 | 2.8 | 2.0 | 1.5 | 1.3 | 1.0 |
| Current transfers | -1.1 | -0.9 | -2.1 | -0.6 | -1.2 | -1.3 | -1.0 | -1.2 | -1.2 | -1.1 |
| Capital and financial account | 23.4 | 15.7 | 34.7 | 26.0 | 15.3 | 15.3 | 13.8 | 13.6 | 12.6 | 11.0 |
| Of which | ||||||||||
| Direct investment | 3.2 | 7.2 | 6.0 | 5.2 | 5.5 | 5.5 | 5.5 | 5.5 | 5.0 | 5.0 |
| Portfolio investment | 5.4 | 2.8 | 5.2 | 1.6 | 3.2 | 3.4 | 3.6 | 3.8 | 4.0 | 4.0 |
| Other investment | 14.7 | 5.5 | 23.5 | 19.2 | 6.6 | 6.5 | 4.7 | 4.3 | 3.6 | 2.0 |
| Net errors and omissions | -0.2 | 1.4 | 3.1 | -0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Overall balance | -3.8 | -1.0 | 10.1 | 3.9 | -6.2 | -2.4 | -2.7 | -1.8 | -1.8 | -2.7 |
Curaçao: Balance of Payments, 2018–27
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Prel. | Prel. | Proj. | ||||||||
| (Millions of U.S. dollars) | ||||||||||
| Current account | -813 | -541 | -689 | -592 | -628 | -565 | -561 | -549 | -534 | -526 |
| Goods and services | -810 | -556 | -694 | -633 | -674 | -613 | -593 | -563 | -539 | -522 |
| Exports of goods and services | 1,935 | 1,775 | 1,015 | 1,278 | 1,780 | 1,934 | 2,047 | 2,142 | 2,231 | 2,320 |
| Goods | 586 | 398 | 271 | 343 | 465 | 452 | 436 | 429 | 427 | 432 |
| Services | 1,349 | 1,377 | 744 | 934 | 1,315 | 1,482 | 1,610 | 1,713 | 1,804 | 1,888 |
| Imports of goods and services | 2,745 | 2,331 | 1,709 | 1,911 | 2,454 | 2,547 | 2,640 | 2,705 | 2,770 | 2,842 |
| Goods | 1,757 | 1,461 | 1,209 | 1,482 | 1,950 | 2,012 | 2,065 | 2,094 | 2,132 | 2,183 |
| Services | 988 | 870 | 500 | 429 | 504 | 535 | 575 | 611 | 638 | 659 |
| Income | 31 | 43 | 56 | 57 | 81 | 89 | 67 | 55 | 47 | 39 |
| Of which: Investment income | -27 | -45 | 5 | 10 | 18 | 20 | -7 | -22 | -34 | -45 |
| Current transfers | -34 | -28 | -51 | -16 | -35 | -41 | -35 | -41 | -43 | -43 |
| Capital and financial account | 706 | 469 | 865 | 701 | 446 | 489 | 470 | 484 | 466 | 424 |
| Capital account | 2 | 5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Financial account | 704 | 464 | 865 | 701 | 446 | 489 | 470 | 484 | 466 | 424 |
| Direct investment | 96 | 214 | 149 | 141 | 160 | 175 | 187 | 196 | 186 | 192 |
| Portfolio investment | 164 | 84 | 131 | 43 | 93 | 108 | 122 | 135 | 148 | 153 |
| Financial derivatives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other investment | 444 | 166 | 586 | 517 | 193 | 206 | 161 | 153 | 133 | 78 |
| Net errors and omissions | -7 | 42 | 77 | -5 | 0 | 0 | 0 | 0 | 0 | 0 |
| Overall balance | -113 | -29 | 253 | 105 | -182 | -76 | ||||