August 2, 2023 –WASHINGTON, WILLEMSTAD – The International Monetary Fund (IMF) has concluded its annual consultations with Curaçao and Sint Maarten and made a series of recommendations. According to the IMF, the key to a thriving future for Curaçao lies in a strong development plan, improving the quality of government spending, and necessary structural reforms.
Over the past two years, Curaçao has experienced robust economic growth, mainly driven by the revival of tourism. However, this growth has not been felt in all sectors. The IMF states that although growth is likely to slow down after 2022, a growth of three percent in gross domestic product is still expected for this year and the next.
The future looks promising, but there is work to be done. According to the IMF, the key to realizing Curaçao’s economic potential lies in a strong development plan. This plan should focus on climate adaptation and improving the business climate.
The fund advises reducing the costs of doing business while simultaneously promoting the development of human capital. This would require adjustments in migration and labor policies to align them with the needs of the labor market.
Curaçao’s fiscal policy should concentrate on improving the quality of spending. The IMF suggests investing in growth-enhancing projects and strengthening the management of public investments.
In addition, sufficient resources must be budgeted for priority areas such as implementing reforms and improving data collection. This will contribute to the quality of public services.
The IMF emphasizes the need for reforms in social security and the healthcare sector to restore their financial sustainability and mitigate fiscal risks. It is important to provide sufficient resources to the healthcare sector to ensure the continuity of health services. The pension system also deserves attention.
According to the IMF, there is still room for improvement in governance issues. The timely implementation of reforms aimed at addressing governance weaknesses is crucial for sustained and inclusive growth.
Regarding the Monetary Union of Curaçao and Sint Maarten, the IMF stresses that despite a high current account deficit, international reserves remain comfortable. The fund advises further developing and expanding monetary policy.
Finally, the IMF urges the authorities to continue making progress with their financial reform agenda. Finalizing the deposit guarantee system, which protects account holders in the event of bank failures, and establishing an effective Financial Stability Committee are essential in this regard.
Curaçao faces significant opportunities but also challenges. The IMF’s recommendations provide a roadmap for economic recovery and sustainability. It is now up to the Pisas II government to put them into action.