In 1998 the supervisory capabilities of the central bank were strengthened with the enactment of a new regulatory framework embodying the Basle Committee Core Principles for Effective Banking Supervision, and similar laws concerning the insurance industry are been finalized for parliamentary consideration. Aruba's non-oil current account improved markedly in 1998 and registered a surplus of about 3 percent of GDP, as a result of strong earnings from tourism. Aruba has generally liberal external policies. In July 1998, the capital account was further liberalized, as licenses were discontinued for transaction below Af. The outlook for GDP growth in 1999 is about 4 percent, on upbeat prospects for tourism.
Inflation is likely to remain subdued.
In the future, economic growth in Aruba will depend on upgrading the quality of tourism and promoting the diversification of the economy, against the backdrop of stability-oriented fiscal and monetary policies. Executive Board Assessment Executive Directors noted that, for much of the past decade, Aruba's performance had been characterized by strong economic growth, moderate inflation, and a high level of employment underpinned by generally sound financial policies. However, this positive performance had been threatened by fiscal laxity in recent years. Directors stressed that the main challenges facing the authorities are to consolidate the ongoing efforts to return the public finances firmly to a sustainable course and to address outstanding structural issues. Directors commended the authorities for the decisive action undertaken from mid-1998 to correct the fiscal imbalances.