IMF Country Report No. 14/239

KINGDOM OF THE NETHERLANDS—
CURAÇAO AND SINT MAARTEN
August 2014

2014 ARTICLE IV CONSULTATION DISCUSSIONS—STAFF
REPORT AND PRESS RELEASE
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with
members, usually every year. In the context of the 2014 Article IV consultation discussions
with the Kingdom of the Netherlands—Curaçao and Sint Maarten, the following documents
have been released and are included in this package:


The Staff Report prepared by a staff team of the IMF for the Executive Board’s
consideration on July 30, 2014, following discussions that ended on May 19, 2014, with
the officials of the Kingdom of the Netherlands—Curaçao and Sint Maarten on economic
developments and policies. Based on information available at the time of these
discussions, the staff report was completed on July 11, 2014.



An Informational Annex prepared by the IMF.



A Debt Sustainability Analysis prepared by the IMF.



A Press Release

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©2014 International Monetary Fund

KINGDOM OF THE NETHERLANDS—
CURAÇAO AND SINT MAARTEN
July 11, 2014

STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION
DISCUSSIONS

KEY ISSUES
Context: The union’s current account deficit—the key economic vulnerability flagged in
the previous (2011) consultation—has declined over the past few years, including thanks
to fiscal adjustment in Curaçao. But it remains large. Curaçao’s growth and job creation
remain lackluster, due to weak competitiveness, adverse sectoral trends (e.g., in the
international financial center), red tape, and rigid labor laws. Sint Maarten’s
tourism-based economy is recovering but remains vulnerable to shocks and suffers from
weak administrative capacity—as underscored, for example, by weakening tax collection.
Risks: Both Curaçao and, especially, Sint Maarten are exposed to shifts in tourism
demand. Curaçao is vulnerable to the uncertain situation in Venezuela, its main trading
partner. If long-discussed flexibility- and competitiveness-enhancing structural reforms
are not implemented, both countries’ capacity to absorb shocks may prove limited, and
pressures on FX reserves and, ultimately, the peg may intensify.
Policy recommendations: Fiscal policies should entrench recent gains to facilitate
continued external adjustment (especially in Curaçao) and build buffers against shocks.
Curaçao should extend the reform of its pension system to public sector workers, further
streamline its administrative apparatus, and address weak governance and finances in
state companies. Sint Maarten needs to increase revenues to support an expanding
administration, including through stronger tax collection and greater contribution from
its profitable state companies. The common central bank must monitor closely the
deterioration in banks’ loan portfolios and refrain from direct financing of non-financial
companies. It should also use more standard sterilization tools to control banks’ excess
liquidity. Urgent action is required to lower the cost of doing business and remove
pervasive disincentives to both supply and demand of labor.

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Approved By
Ranjit Teja and
Bob Traa

Discussions took place in Willemstad (May 6-12 and May 19) and
Philipsburg (May 13-19). The staff team comprised Messrs. Lombardo
(head), Winnekens (both EUR), and Quayyum (FIN). Messrs Mosch and
Snel (OED) participated, respectively, in all (Mosch)/the key policy
(Snel) meetings. In Curaçao the mission met with Central Bank of
Curaçao and Sint Maarten’s President Tromp, Prime Minister Asjes,
Finance Minister Jardim, Minister of Economic Development Palm,
other senior officials, and financial and industry representatives. In Sint
Maarten, the mission met with Prime Minister Wescot-Williams,
Finance Minister Hassink, Minister of Tourism, Economic Affairs, Traffic
and Telecommunication Richardson, other members of the Cabinet,
senior officials, and financial, industry and union representatives.

CONTENTS
INTRODUCTION _________________________________________________________________________________ 4
RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK ________________________________________ 5
A. Recent Economic Developments _______________________________________________________________ 5
B. Outlook and Risks ______________________________________________________________________________ 6
REDUCING VULNERABILITIES AND CREATING BUFFERS ______________________________________ 7
A. Fiscal Policy ____________________________________________________________________________________ 7
B. Financial Sector Policies _______________________________________________________________________ 11
INCREASING FLEXIBILITY, COMPETITIVENESS, AND GROWTH _____________________________ 12
SOME QUESTIONS AND ANSWERS ON STAFF ANALYSIS ___________________________________ 14
STAFF APPRAISAL _____________________________________________________________________________ 16
BOXES
1. Competitiveness_______________________________________________________________________________ 18
FIGURES
1. Key indicators for Curaçao and Sint Maarten in a Regional Comparison ______________________ 20
2. Curaçao: Current Account Developments _____________________________________________________ 21
3. Curaçao and Sint Maarten: Credit Developments ______________________________________________ 22
TABLES
1. Curaçao: Selected Economic and Financial Indicators, 2009–15 _______________________________ 23

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2. Sint Maarten: Selected Economic and Financial Indicators, 2009–15___________________________ 24
3. Curaçao and Sint Maarten: Monetary Survey, 2007–13 ________________________________________ 25
4. Curaçao and Sint Maarten: Financial Soundness Indicators, 2007–13 __________________________ 26
5. Curaçao and Sint Maarten: Balance of Payments, 2008–19 ____________________________________ 27
6. Curaçao: Macroeconomic Framework, 2008–19 _______________________________________________ 28
7. Sint Maarten: Macroeconomic Framework, 2008–19 __________________________________________ 29
8. Curaçao: Government Operations, 2011–19 ___________________________________________________ 30
9. Sint Maarten: Government Operations, 2011–19 ______________________________________________ 31
ANNEXES
1. The authorities’ response to Past IMF Policy Recommendations ______________________________ 33

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INTRODUCTION
1.
Curaçao and Sint Maarten share many similarities but also important differences. Both
are small open island economies but, while Sint Maarten’s economy is essentially tourism-based,
Curaçao’s is more diversified, featuring also an international financial center (IFC), a transshipment
port, a dry dock, and the oil refinery. Trading partners are also different: Sint Maarten relies mostly
on tourists from the US and Europe, while Curaçao has important trade and tourism links also with
close-by Venezuela and Latin America. Having been established as autonomous countries (out of
the dissolution of the Netherlands Antilles) as recently as late 2010, both need to right-size and
increase the effectiveness of their administrations. But while Curaçao needs to extract efficiency
gains from merging the two pre-existing levels of governments (the Netherlands Antilles’ central
government and Curaçao’s island government), Sint Maarten needs to expand its capacity to
perform some of the functions previously carried out by the Netherlands Antilles’ central
government.
2.
Both countries face many of the challenges of other Caribbean islands (Figure 1),
especially in terms of boosting growth while safeguarding external stability. This is particularly the
case for Curaçao, which has trailed its regional peers at least since the early 2000s. Sint Maarten has
done better, benefiting from a boom in cruise tourism which, however, may face diminishing returns
and could also adversely impact the quality and appeal of stay-over tourism. On the plus side, both
countries’ public debt is low, thanks to the 2010 debt relief, whereby the Netherlands took over all
the Netherlands Antilles’ outstanding public debt in exchange for a significantly smaller amount of
very long-term/low-cost debt issued by the two new countries.
3.
Against these challenges, staff’s advice is predicated on an analytical framework based
on the fixed exchange rate. Curaçao and Sint Maarten form a currency union, whose currency—
the Netherlands Antilles Florin, or guilder (NA.f)—has been pegged to the US dollar at 1.79 since
1971. Since the dissolution of the Netherlands Antilles, there has been some debate whether the
two countries should keep the currency union (the two island nations are far apart—over
550 miles—and trade between them is limited). This debate, partly economic and partly political,
appears to have subsided of late in favor of the status quo. But even if, in consideration of their
economic differences and geographic distance, the two countries were in the future to decide to
adopt separate monetary arrangements, they would still be best served by a fixed exchange rate
regime, given their small open economies. Such a regime helps by preventing unnecessary
exchange rate uncertainty, but it also affords very limited scope for active monetary policy. It thus
puts a premium on creating and keeping fiscal buffers, and requires maintaining competitiveness
and flexibility primarily via structural reforms.
4.
Major data gaps hamper effective macro-economic analysis and surveillance. National
account data are produced only with very long lags. In Curaçao, there is no official breakdown for

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GDP into its demand components after 2009, while for Sint Maarten there are nominal series, but
these often seem difficult to reconcile with all the available information.1 Balance of payments data
for the union as a whole are not consistent with those for the two component countries, and there
are no data on the two countries’ international investment position—a key input in the assessment
of the sustainability of the union’s external position.

RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK
A. Recent Economic Developments
5.
The union’s current account deficit has declined since the last Article IV Consultation
discussions in 2011, but remains a source of vulnerability. In part this improvement reflects
tightened monetary and, especially, fiscal policies in line with staff advice (Annex I). Curaçao’s fiscal
adjustment, in particular, appears to have triggered a significant retrenchment in private domestic
demand—as witnessed, for example, in the imports of cars, which declined by 12 percent in 2013
after growing by 18 percent over the previous 3 years (Figure 2). At 16 percent of GDP, the current
account deficit remains large (see left chart below), pointing to lingering competitiveness issues
(Box). Individual country data, which the Central Bank of Curaçao and Sint Maarten (CBCS) however
cautions are likely incomplete, suggest that the deficit stems from Curaçao (right chart below).
Despite double-digit deficits, there have been no pressures on the guilder and the union’s
international reserves have consistently met the CBCS’ objectives in terms of coverage of imports of
goods and services, reflecting strong capital inflows. However, these inflows are adding to net
external debt, as non-debt creating FDI have averaged a modest 2 percent of GDP over 2009-13
(see Debt Sustainability Analysis, DSA).
The CAD is receding from its peak and reserves
remain at healthy levels.
0

The CAD in the two countries diverged

4

-15
-20
-25

3

.

10

5

5

0

0

-5

-5

Sint Maarten

-10

-10

-15

-15

-20

-20
-25

Curaçao

-30

Gross official reserves excl. Gold (RHS)
2
2006 2007 2008 2009 2010 2011 2012 2013

15

10

-25

Actual CAD

-30

Months of imports

Percent of the Union's GDP

-5
-10

(% of GDP)

15

5

-30

-35

-35
2007

2008

2009

2010

2011

2012

2013

Sources: CBCS, and IMF Staff calculations. For 2009 the low current account deficit reflects debt-relief inflows.
1

For example, official data, which use CPI as deflator, show only a shallow decline in real GDP in the wake of the
2009 global crisis, despite sharp drops in both cruise (10 percent) and stay-over (7 percent) tourist arrivals.

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6.
Growth has remained lackluster in Curaçao, while a recovery from the global recession
appears underway in Sint Maarten. Curaçao’s real GDP is estimated to have contracted by about
½ percent on average per year over 2011-13, reflecting—in addition to long-standing structural
weaknesses (discussed below)—the continued decline in the IFC, the slow global recovery, and
necessary fiscal adjustment in 2012-13. After contracting by an estimated 1¾ in 2011, Sint Maarten’s
real GDP is estimated to have grown by an average of 1¼ percent over 2012-13, benefiting from the
ongoing recovery in the US (which accounts for 60 percent of its tourists) and the construction of
the Simpson Bay causeway. Private investment spending has reportedly remained subdued,
including as a result of policy uncertainty (Sint Maarten has had three governments in the past three
years and new elections are scheduled for August 2014).

B. Outlook and Risks
7.
The improving global outlook is expected to support activity in the near term.
Increasing tourism expenditure would boost activity in both countries, and especially in Sint
Maarten, which could grow by about 2 percent, given the much larger share of tourism in its GDP.
Curaçao may revert to positive growth (about ½ percent) this year if the planned construction of a
new hospital starts without further delay.
8.
Growth should accelerate in the
Medium-term Growth Outlook
(%)
medium term, especially if structural
3.5
3.5
bottlenecks are finally addressed. Curaçao
Average Caribbean
3.0
3.0
Sint Maarten
could grow by around 1-1¼ percent as the
2.5
2.5
decline in the IFC bottoms out, the tourism sector
2.0
2.0
Average Caribbean and main trading partners
1.5
1.5
continues to expand, and a sizeable pipeline of
Curaçao
1.0
1.0
budgeted large public infrastructure projects is
0.5
0.5
implemented. Sint Maarten could grow by
0.0
0.0
around 2½ percent in the medium term, based
-0.5
-0.5
-1.0
-1.0
on current projections for growth in demand of
2013
2014
2015
2016
2017
2018
2019
the tourist origin countries. Faster and sustained
Sources: IMF WEO; and staff projections.
long-run growth would require structural reforms
that enhance both countries’ competitiveness and flexibility (see page 12).
9.
Risks are tilted towards the downside, especially for Curaçao (see Risk Assessment
Matrix, RAM). Both countries would be affected if the euro area recovery proves weaker than
anticipated, for example as a result of recent geopolitical tensions. Further disruption of economic
activity in Venezuela might affect Curaçao’s ability to raise funds for the necessary upgrade of the
Isla refinery in time for the expiration of the current lease to PdVSA in 2019. Failure to overcome its
institutional gaps could weigh on Sint Maarten’s growth potential. An orderly normalization of US
interest rates would lead to some capital outflows and pressures on the union’s international
reserves, but should be otherwise manageable in light of the banks’ ample liquidity (see below) and
the two governments’ access to low-cost funding from the Netherlands. If US rates increase more
rapidly, however, pressures on international reserves could prove more intense (as incentives to
circumvent existing capital controls and bring money out of the country would increase) and may
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require a sharp policy tightening, resulting in weaker growth. Upside risks, on the other hand, stem
primarily from stronger than expected growth in the US and Europe and earlier and larger than
expected benefits from ongoing attempts at diversification (catering tourism to faster-growing
developing markets in Asia and Latin America, a revitalization of the dry dock and the ship repair
business, or new activities such as Curaçao’s new data center for cloud computing).
10.
The peg appears solid but over time could come under pressure if competitivenessand flexibility-enhancing reforms are not implemented. Curaçao’s (and the union’s) current
account deficit is expected to continue to decline steadily, reflecting rebounding external demand,
coupled with slightly declining oil and food prices
Flows from the Netherlands' debt relief will reverse in 2019
(% of Union's GDP)
and still subdued private domestic demand
8
8
(Figure 2). It is essential, however, that this
6
6
improvement is supported by reforms boosting
4
4
both countries’ competitiveness and their capacity
2
2
to adjust to shocks, since pressures on
0
0
international reserves can be expected to increase
over time. In particular, the debt-relief related
-2
-2
inflows, which have thus far provided significant
-4
-4
2012 2013 2014 2015 2016 2017 2018 2019 2020
support to international reserves, are slated to
Sources: CBCS; and IMF staff calculations.
decline gradually over the next few years and to
turn into outright net outflows in 2019 (see chart to the right), as the debt issued by Curaçao and
Sint Maarten as partial offset for the debt relief begins to mature. In 2019 the lease of Curaçao’s oil
refinery to Venezuela—which currently accounts for some 16 percent of FX income—is also set to
expire, as are some preferential tax treatments for companies in Curaçao’s IFC (another major
source of FX for the union).

REDUCING VULNERABILITIES AND CREATING BUFFERS
Macroeconomic policies should be steered towards supporting continued external
adjustment (especially in Curaçao) and creating fiscal buffers to deal with possible shocks.

A. Fiscal Policy
Background
11.
As a quid-pro quo for the 2010 debt relief, both countries agreed to a rule-based fiscal
framework. This consists of a “golden rule” (i.e., borrowing only for investment) and an “interest
burden rule” (i.e., a cap on the ratio of debt service to revenue). Compliance with these rules is
assessed by the Netherlands-headed Council for Financial Oversight (CFT in Dutch). Only once the
CFT ascertains compliance does it permit borrowing, in which case the Dutch treasury stands ready
to offer financing at long maturities and its own borrowing rates.

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12.
Initially both countries failed to comply with the requirements of the framework,
because their budgets were not consistent with a current balance from a multi-annual perspective
and/or because of deep procedural flaws (e.g. Sint Maarten’s budgets for 2011, 2012 and 2013 were
approved by Parliament only very late in the year or even after the year’s completion). This led the
CFT to issue a series of advices/warnings and, eventually, injunctions for remedial measures to both
the government of Curaçao (mid-2012) and of Sint Maarten (September 2013).
13.
More recently, however, the framework has gained traction and helped steer both
countries’ fiscal policies in the right direction:


Curaçao has put its public finances on a sustainable footing, including by addressing
decisively its age-related fiscal pressures. Following the CFT injunction, Curaçao reformed
the basic pension system by increasing the general retirement age from 60 to 65 (with very
limited grandfathering and a short transition period) and overhauled the health care system
by (i) introducing a basic medical insurance scheme (now covering some 80 percent of the
population), (ii) raising premiums by 2.9 percent, and (iii) lowering the medicine bill by some
16 percent (by favoring generics and changing the co-pay system). The authorities also
embarked on an ambitious plan to gradually decrease the number of public servants from
around 4200 (in 2011) to a target of 3350 in 2017, to exploit the scope for synergies and
streamlining from the merger of the former Netherlands Antilles government and the
Curaçao island government. The fiscal adjustment was completed on the revenue side by the
introduction of an additional sales tax category of 9 percent for luxury goods and an
overhaul of the property tax, including to increase its progressivity. In its 2013 annual report,
the CFT estimates that this adjustment improved Curaçao’s long term fiscal position by some
10 percent of GDP, relative to a no-policy change scenario.



Sint Maarten has brought its current budget in balance in the context of the 2014
budget, and achieved some improvement in its financial management. Faced with the
daunting task of setting up a new administration, Sint Maarten initially needed some
correction to achieve the current balance, even though it benefited from more benign
demographics.2 The government increased the turnover tax rate (from 3 to 5 percent) in
2011, shifted its share of the health insurance premiums onto the employees, and tried to
reign in the wage bill (by freezing bonuses and the cost of living adjustment in 2013) and
expenditures on subsidies. The 2014 budget was also approved by Parliament in January of
this year, which—while still not quite timely—represented a major improvement over
previous years’ processes.

14.
These improvements have allowed the CFT to certify compliance with the framework
and paved the way for significant borrowing by both countries from the “standing subscription”
window offered by the Dutch treasury. In 2014, Curaçao plans to borrow some NA.f 436 million
2

8

In 2001, population aged 20-59 was 8 times larger than that aged 60+ in Sint Maarten, but only 3 times in Curaçao.

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(8 percent of GDP) to pre-finance the entire cost of the construction of a new hospital. Sint Maarten
plans to borrow NAf143 million (8 percent of GDP), to finance planned investment (including the
purchase of a new government building, which has laid incomplete and unused for many years) and
to replenish its bank deposits, which were run down over the last three years when the government
was not allowed to borrow by the CFT.
Staff’s Views
15.
Both countries should entrench recent gains and overperform on the balanced current
budget rule to build fiscal buffers. The current fiscal framework is beneficial for both countries, as
it gives them access to an independent auditor and very cheap funding. However, since the current
level of low borrowing costs cannot be taken for granted, the interest burden rule does not provide
a sufficiently conservative benchmark to ensure continued debt sustainability. Thus both countries
should aim at maintaining current surpluses in the order of ¾-1 percent of GDP over the mediumterm. Based on current investment plans, this would ensure that public debt peaks under the
baseline at about 37 percent of GDP in Curaçao and 32 percent of GDP in Sint Maarten (see DSA),
thus creating the fiscal space that both countries need, given their vulnerability to sizeable shocks in
the future (e.g., the renovation/clean-up of the refinery in Curaçao, or a weather-related shock to
Sint Maarten). It is also important to ensure that public investments have a sufficiently high internal
social return, irrespective of how low the costs of borrowing might be.
16.
Curaçao must extend the 2013 reform of the old age pension to the public sector
workers’ pension system in a timely manner, given the latter’s fast deteriorating financial
position.3 Sint Maarten’s needs in this area are less pressing, given its younger population.4
Nevertheless its government has appropriately set out to increase the general retirement age to 62,
with a motion to this effect currently in Parliament. Considering foreseeable demographic pressures,
a further gradual increase of the retirement age to 65 could be considered.
17.
Sint Maarten needs to strengthen tax collection. This is essential to sustain the necessary
expansion of the administration in line with its increased responsibilities post-autonomy. Yet
revenue, which stands at only 18.5 percent of GDP, compared to over 21 percent of GDP for other
Caribbean countries, failed to keep pace with economic growth in the past few years. To tackle this
apparent decline in tax compliance, the tax administration needs more suitably trained tax
inspectors and administrators. Synergies could also be exploited with the strong collection efforts of
social funds.

3

The pension fund APC reports that its coverage ratio, which is currently just below 100 percent, would deteriorate
by some 20 percent over the next 15 years with unchanged policies.
4

Sint Maarten’s general basic pension fund is actually accumulating surpluses, because the system is based on the
demographics of the former Netherlands Antilles, whereas Sint Maarten has a much younger population. On this
basis the government has recently increased the pension level, as recommended by Sint Maarten’s Social and
Economic Council. Even with this higher benefit level, the fund is projected to continue accumulating surpluses until
2020 with a pension age of 62 (2032 if the pension age is increased to 65).

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18.
Transparency and oversight of SOEs need to be improved and a clear dividend policy
established. There is an obvious tension between keeping state-owned enterprises (SOEs) at arm’slength, thus minimizing undue political interference, and ensuring that they maximize the interest of
the public shareholder. Some SOEs have in practice soft budget constraints, and translate their
accumulated inefficiencies and above-market wages into higher costs of doing business for the rest
of the economy (e.g., Curaçao’s Aqualectra). Even when they are profitable, in the absence of a solid
governance framework, SOEs might gear their operations towards maximizing their own short-term
profits, including by minimizing their contribution to the public budget (this is, for example, the case
for Sint Maarten’s airport and harbor companies). Therefore, the governance of SOEs must be
improved, including—as a start—by ensuring the timely availability of reliable financial statements
and establishing a clear dividend policy.
19.
A further shift from direct to indirect taxation in the medium term would be desirable.
To boost competitiveness, both countries should consider a further and gradual shift of taxes from
income to consumption, along the lines of the 2009 FAD technical assistance, and replace the
existing turnover tax—with its negative cascading effects—with a value-added tax (VAT). This has
served well many other Caribbean countries.5
Authorities’ Views
20.
Authorities in both countries agreed with the need to create fiscal buffers and
strengthen their medium-term fiscal position:


In Curaçao, they emphasized that negotiations on pension reform with public sector unions
are ongoing, and that they see scope for further expenditure savings.6 They acknowledged
that SOEs’ continued financial woes, despite the greater and timelier pass-through of their
input costs to retail prices, imply that more work is needed in this key area, which has
important implications for the economy’s overall efficiency and competitiveness.



In Sint Maarten, they intend to strengthen tax administration by deploying new IT systems
and additional tax inspectors, and centralizing the tax office. They also expect to enhance
administrative effectiveness (and generate some savings) by moving most government
departments into the new building. Finally, they see merits in staff’s suggestion to introduce
a further gradual increase of the retirement age to 65 in the draft pension reform bill, and
pledged to consider it carefully.

5

Cebotari, Aliona, et al, 2013, “Enhancing Fiscal Revenue,” in The Eastern Caribbean Currency Union: Macroeconomics
and Financial Systems, ed. by Alfred Schipke, Aliona Cebotari, and Nita Thacker (International Monetary Fund).

6

The authorities expect to save an additional NA.f 130 million by 2017 (about 2 percent of GDP) by cutting personnel
expenses (by NA.f 50 million), expenditures on goods and services (by NA.f 50 million), and subsidies (by NA.f 30
million) through such measures as centralizing procurement of goods and moving different ministries to a central
government office (to be built).

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21.
Both authorities also agreed in principle with the merits of shifting the tax burden
towards consumption and away from income. In Curaçao, however, they indicated that they
intend to fully pursue their efficiency-enhancing reforms first, as these might provide scope for an
overall reduction of the direct tax burden over time. In Sint Maarten they noted that it is essential to
proceed with care, and as much as possible in close coordination with the French side, to avoid any
revenue loss from implementation pitfalls, lack of reliable data, and/or tax arbitrage.

B. Financial Sector Policies
Background
22.
Ample bank liquidity has continued to fuel rapid credit expansion, especially in
Curaçao, until late 2013 (Figure 3). Absence of government bonds to invest in, low interest rates
prevailing abroad, and continued large inflows from the debt relief operation have resulted in ample
and growing liquidity for domestic banks, fueling rapid credit growth. When this started to exert
pressures on international reserves, the CBCS attempted to induce banks to reduce lending by
raising reserve requirements multiple times (to 17.5 percent as of May 2014) and, as from March
2012, by imposing temporary bank-level credit ceilings, which have since been recalibrated and
renewed every six months. These measures notwithstanding, credit growth continued unabated in
Curaçao until late 2013, when it abruptly turned negative. Since banks kept excess reserves
throughout and the ceilings were first not observed and then undershot, it would appear that the
slowdown in credit reflects not CBCS measures per se but a reduction in credit demand (likely
triggered by the reduction in disposable income from the fiscal adjustment) and a more cautious
supply of loans by banks (including because of the acceleration in non-performing loans, NPLs, see
below).
23.
Banks still have relatively healthy capital levels, but NPLs are on the rise. At end-2013,
NPLs jumped to 11.9 percent, from 8.6 percent in 2010, and there is a growing concern about asset
quality in general. So far, NPLs seem to be concentrated in certain sectors (tourism and air
transportation), but there is anecdotal evidence—no hard data—that the sustained growth in
mortgages, combined with steady inflows of Dutch retirees and IFC professionals, may have created
froth in some segments of the real estate market in Curaçao. As of end 2013, banks report adequate
capital (12 percent tier-1 capital ratio) and liquidity (30 percent liquid asset ratio), but one bank has
been intervened (reportedly because of the stress caused by a defaulting airline). The situation
warrants continued close monitoring by the CBCS.
Staff’s Views
24.
The CBCS is appropriately trying to slow down credit growth, but should do so more
consistently and rely on more standard sterilization tools:


Dealing with excess liquidity: The CBCS should be prepared to pay a higher interest rate
on its certificates of deposits even though this would lower its profits. It could also raise
reserve requirements further, while simultaneously increasing the interest it charges banks

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KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

for liquidity. Finally, it could use macro-prudential tools to contain growth of specific types
of loans, e.g. reducing maximum loan-to-value ratios to slow down the growth in
mortgages. Over time, it should gradually eliminate remaining limits on outward investments
by pension funds. This would allow the excess liquidity to flow out of the system gradually,
removing distortions on domestic interest rates.


Refraining from direct financing of non-financial companies: While raising reserve
requirements and imposing bank-by-bank credit ceilings, the CBCS has continued to provide
funding to private corporations and
Credit extended by the CBCS created additional liquidity
(NA.f Million)
SOEs (the liquidity thus created is now
800
800
bigger than the banks’ excess liquidity
700
700
Commercial banks' net excess reserves
600
600
which the CBCS is trying to control—
500
500
chart to the right). This funding is not
400
400
300
300
part of a standard central bank toolkit
200
200
and moreover is not justified in a
100
100
situation where the central bank is
0
0
Net CBCS credit to private sector
-100
-100
concerned with excess liquidity
-200
-200
resulting in overall excessive and
10M10 11M2 11M6 11M10 12M2 12M6 12M10 13M2 13M6 13M10
subpar lending.
Sources: CBCS and Fund staff calculations.

Authorities’ Views
25.
The authorities agreed with the thrust of the staff advice. They reported that they do
plan to increase reserve requirements further and raise interest rates on their CDs, as needed, as well
as to further alleviate over time the restrictions on outward investments by pension funds. On the
financing of SOEs, CBCS management indicated that this policy was initially conceived as a way to
facilitate the development of a corporate debt market, but that it has since been discontinued and
that they intend to divest their holdings of non-financial companies’ debt as soon as market
conditions allow.

INCREASING FLEXIBILITY, COMPETITIVENESS, AND
GROWTH
Increasing growth and resilience to shocks requires dealing with long-standing structural
bottlenecks, including stifling red tape and inflexible and dysfunctional labor markets.
Background
26.
Both countries suffer from a rigid labor market and high costs of doing business. Labor
laws are very rigid. For example, laying off workers requires the approval of the labor ministry, even
for bankrupt companies. Welfare support for the unemployed is quite generous (for example, in
Curaçao it is reportedly roughly equivalent to what one would earn from a minimum wage job once
free medical insurance, rent and other subsidies are factored in, and can be received for an
12

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KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

unlimited amount of time). And there are pervasive wage indexation clauses, which can lead wages
to diverge from productivity, thus harming competitiveness. Employers in both countries, as well as
independent observers, decry a cumbersome permit regime, with unclear procedures and
responsibilities, which results in long and unpredictable delays.
27.
These structural weaknesses have been detrimental to economic performance,
especially in Curaçao, whose more diversified economy needs greater scope for reallocation of
labor from declining sectors to growing ones. Curaçao’s growth has been weaker than its regional
peers’ since at least the early 2000’s (see Figure 1), and unemployment higher (currently at
13 percent). But limited price and labor market flexibility also adversely affect the competitive
position of Sint Maarten, as underscored by the recent spell of high inflation, especially vis-à-vis the
US, its key source market (see box).
28.
Little progress has been achieved on competitiveness- and flexibility-enhancing
reforms since the previous consultations (Annex I):


In Curaçao, many structural bottlenecks appear to have in fact worsened. The still
incomplete merger of the two levels of government in the Netherlands Antilles’ structure, for
example, has reportedly generated additional uncertainty as to which agencies retain the
responsibility for processing business permits and licenses in the new setup. The capacity of
the administration to audit and control also appears to have weakened, which is potentially
leading to greater abuse of the welfare system.



In Sint Maarten, there appears to be more focus on monitoring active job search and
to improve training opportunities for unemployed. But the labor market remains overly
regulated, especially when it comes to work permits for foreigners, and receiving permits to
open and operate a business still takes a fairly long time.

Staff’s Views
29.
Price and labor market flexibility are important avenues through which both
economies are expected to adjust to external shocks, given that the fixed exchange rate regime
and the current fiscal framework—both of which have served the countries well—constrain the
scope for stabilization policies.
30.
The labor market must be rendered more flexible and dynamic, especially in Curaçao.
Welfare support for unemployed should be limited in time and eligibility requirements (including
active job search) enforced vigorously, as Sint Maarten has sought to do. Both countries should
render labor dismissal laws more conducive to cyclical shifts in labor demand, so as to raise
employment durably, and ease restrictions on hiring foreign workers while enforcing adequate labor
conditions, to facilitate FDI and the associated inflow of financial resources and know-how.
31.
The costs of doing business need to be lowered. In particular, the business licensing and
permit regimes should be substantially streamlined. This would also help bringing more activity out

INTERNATIONAL MONETARY FUND

13

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

of the shadow economy. Both governments could consider introducing automatic approval for
some classes of permits/licenses if they are not processed in a set period of time. The efficiency and
governance of public utilities and other SOEs need to be enhanced, to lower direct costs of
production and reduce distortions, including in the labor market.
Authorities’ Views
32.
The business environment needs to be strengthened. This is important also to support
external adjustment. In Curaçao, the focus is on improving governance and performance of SOEs,
and proposals are being considered to speed up license and permit procedures by tasking the
Chamber of Commerce with the relevant issuing authority (staff cautioned that this may raise issues
of conflict of interests, as incumbents would effectively be called on to authorize the entry of
potential competitors). In Sint Maarten, the authorities are launching an online business license
information system, which they expect will lead to a significant streamlining of the application
procedures. Reduced red tape would also result into stronger competition and put downward
pressures on domestic prices.
33.
While labor market regulations do result in suboptimal outcomes, reforming them is
difficult and there is scope to make progress within the current system. Authorities in both
countries, for example, noted that rigid labor dismissal laws in practice result in the proliferation of
short-term contracts, with potential perverse effects on workers’ security. At the same time, they felt
that forging the necessary consensus for reform is politically difficult given both countries’
heterogeneous governing coalitions and thin majorities. Nevertheless, Sint Maarten authorities
reported that soon-to-be-released official survey results will show that unemployment has declined
markedly, to around 8 percent as of 2013, and attributed this progress to their intensified controls of
eligibility for various unemployment benefits (including active search for jobs) and greater focus on
training for unemployed. Both authorities considered that further easing hiring of foreign workers
would aggravate the domestic unemployment situation.

SOME QUESTIONS AND ANSWERS ON STAFF
ANALYSIS
The question and answer format of this section is intended to probe further into the
reasoning behind staff recommendations.
34.
Question: On the call for relaxing constraints on hiring foreign workers, would this not
exacerbate the unemployment problem? Unemployment is already high in both countries.
Making it easier to hire foreign workers would reduce the chances for local unemployed people to
find jobs. Foreign workers also often work long hours in conditions which are not ILO-compliant,
thus undercutting the islands’ social fabric and workers’ rights.
35.
Answer: Liberalizing the hiring of foreign workers is necessary to ensure that firms can have
access to all the skills needed in a modern economy, which the two islands are unlikely to produce,
14

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KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

given their small size. Even when the skills required for a particular job are available locally, a foreign
firm may still want to bring in some foreign workers in order to operate on the islands, for example
because these workers have firm-specific know-how and/or experience in the firm’s operations
elsewhere. In the presence of overly restrictive regulations, for instance quantitative targets on the
number of foreign workers, this firm can decide to locate elsewhere. In today’s highly globalized
economy, therefore, the alternative for the local economy is between having a firm operate
competitively with a mix of foreign and local workers versus not having the firm at all. Clearly, the
former outcome is more beneficial to the local economy, including because foreign workers can
provide effective on-the-job training to local workers. Thus less restrictions on foreign workers
should over time result in greater investment and employment for local workers. Finally, as regards
the possibility that foreign workers undercut local labor conditions, there needs to be greater
enforcement of labor laws more generally to ensure that no workers, local or foreign, are abused.
The still incomplete capacity to enforce such standards by the two administrations should not be a
reason to block hiring of foreign workers, especially those who have special expertise and contribute
positively to the local economy.
36.
Question: Would not the use of more standard sterilization tools result in higher
sterilization costs? Raising the interest rates on certificates of deposits, currently near zero, to—
say—some 0.75 percent would cost approximately NA.f 1.5 million per year. This would negatively
impact the CBCS’ operational profit (around NA.f 3.5 million for the last two years).
37.
Answer: Yes, but it would also increase transparency and reduce other distortions. Raising
the interest rate on certificate of deposits is a more efficient, more transparent and less distortionary
way to absorb the system’s excess liquidity than the current bank level credit ceilings, which are a
rather brunt instrument and expose the CBCS to lobbying for exemptions. The central bank’s
mandate is, first and foremost, to conduct sound monetary policy. It is, therefore, quite common for
central banks to utilize their profits for effective monetary policy. If absorbing excess liquidity is
deemed an important enough monetary policy objective, the central bank needs to be prepared to
incur the associated costs, even if this results in less transfer of seignorage to the government.
38.
Question: On the advice to over-perform on the current balance rule, does this imply
that the rule-based fiscal framework is not sufficient to ensure sustainability? Currently public
debt is very low in both Curaçao (around 31 percent of GDP) and Sint Maarten (24 percent of GDP),
especially in a regional comparison, and the debt service is well within the cap imposed by the
interest-burden rule. Thus the rule-based fiscal framework, which is widely seen as appropriate for
the two countries, does not require going beyond a balanced current account, and doing so would
be unduly contractionary.
39.
Answer: The current low interest rates cannot be assumed to be permanent, which means
that the interest burden rule does not presently provide a sufficiently prudent benchmark for debt
sustainability. Moreover, both island countries are vulnerable to external shocks and have no scope
for monetary stabilization given the currency peg. Thus they need to build up fiscal buffers. Both
governments have ample room to increase revenues (e.g. improved tax collection in Sint Maarten)
and/or reduce expenditures (e.g. rightsizing of the public apparatus in Curaçao), so that maintaining
INTERNATIONAL MONETARY FUND

15

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

a surplus of the current budget to the tune of ¾ to 1 percent of GDP, as advocated by staff, should
be feasible. As to whether this would be unduly contractionary, it needs to be kept in mind that
fiscal multipliers are small in small open economies, so that the stimulus that would result from
unwinding the current balances all the way down to zero would likely be very small.
40.
Question: Might the liberalization of outward investment by pension funds not result
in a loss of FX reserves? Liberalizing the current restrictions for the pension funds to invest abroad
would lead to an outflow of funds from the economy and hence would lower international reserves.
41.
Answer: There is indeed a risk of disruptions and pressures on FX reserves. Staff advice is
therefore for such liberalization to proceed gradually. It is important to keep in mind the rationale
for liberalization. The impediments to outward investments by pension funds distort local interest
rates and can generate locally a search for yields, resulting in a build-up of risks to financial stability.
Moreover, they unduly limit the pension funds’ capacity to pursue greater returns and risk
diversification on their investments. This is especially problematic given the domestic economies’
small size and their vulnerability to large shocks. Failure to appropriately diversify can ultimately
result in significant shortfalls between the pension funds’ obligations and their resources, which
would have to be borne by higher taxes or higher contributions by workers—both of which would
be detrimental to growth and jobs.

STAFF APPRAISAL
42.
The authorities of both countries have made important efforts to strengthen their
underlying fiscal positions. Curaçao, in particular, has decisively tackled the spending pressures
from its ageing society, with difficult but necessary reforms of the general pension and health
system. Sint Maarten has attempted to expand its administrative capacity while keeping costs in
check, in particular by freezing bonuses and cost-of-living adjustments in 2013, and has
appropriately embarked on a reform of the pension system to safeguard its strength from
foreseeable, albeit not imminent, demographic pressures.
43.
Looking forward, they should continue to gear fiscal policy towards supporting
ongoing external adjustment and building buffers. Curaçao should reform the public sector
pension system, achieve further efficiency gains in the public apparatus, and improve the
governance of its public companies. Sint Maarten needs to strengthen its tax administration to
tackle declining tax compliance and to fund its newly acquired functions. The latter could also be
further bolstered by increased contributions to the budget by public companies. The next
government after the coming elections should build on the current administration’s efforts to keep
public wage developments in check, including by reviewing the existing indexation mechanisms.
These policies would allow both countries to maintain public debt at sustainable levels despite
important investment needs, and build buffers to respond to future shocks. Keeping public sector
wage growth firmly in line with productivity is also important for its signaling effect on private sector
wages.

16

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

44.
The central bank should encourage prudent lending behavior and closely monitor
banks’ deteriorating asset quality. Banks’ excess liquidity should be sterilized through a more
aggressive use of certificates of deposits, and further reserve requirement increases as appropriate.
Over time, the existing limits and penalties on outward investment by pension funds should be
gradually removed. As planned, the central bank should divest its holdings of non-financial
corporates’ bonds, and refrain from direct financing of SOEs in the future. To underpin the
sustainable development of Curaçao’s IFC and reduce risks, the authorities are encouraged to
further strengthen the implementation of the Anti-Money Laundering/Combating the Financing of
Terrorism (AML/CFT) international standards.
45.
Significantly greater effort is needed in tackling structural impediments to growth and
job creation. A dynamic private sector, which is the linchpin of sustained growth in the medium
term, requires tackling the maze of permits and licenses, which has hampered investment and
innovation, especially in Curaçao. Rigid labor laws and the system of welfare payments for
unemployed should be reviewed, to shift emphasis from protecting jobs to protecting workers,
facilitate needed cyclical adjustments in the workforce, and ensure adequate incentives and support
for job search by the unemployed. Restrictions to hiring foreign workers should be removed, while
at the same time ensuring that all workers (local and domestic) are afforded adequate labor
conditions.
46.
These policies and reforms are necessary to increase the economies’ flexibility,
competitiveness, and capacity to withstand shocks. This is essential to underpin the peg, which
has provided both countries with a stable macroeconomic environment since 1971, and in light of
the limited scope for active stabilization policies.
47.
Finally, staff urges both governments to improve the statistical infrastructure and
data. Presently available data are not adequate for effective macroeconomic analysis and
surveillance. This hinders an accurate diagnosis of the problems and the identification and
calibration of the most appropriate policy responses. Both countries’ statistical agencies are making
efforts to improve on the situation, but more investments, including in human capital, are needed.
Staff encourages the authorities to give this issue the strategic priority it deserves, and pursue timely
advances including, where appropriate, through technical assistance.
48.
It is proposed that the next Article IV consultation discussions with Curaçao and
Sint Maarten will be held in 24 months time.

INTERNATIONAL MONETARY FUND

17

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Box 1. Competitiveness
Competitiveness indicators offer a mixed picture, though on the whole Curaçao seems to face
more challenges than Sint Maarten:



A comparison of the real effective exchange rates (REERs) with their estimated equilibrium values
(charts below) suggests that, though on a depreciating trend, Curaçao’s REER remained slightly
overvalued as of end 2013, while Sint Maarten’s appears to be below its equilibrium level, despite
some upward trend due to its recent relatively high inflation. The equilibrium values are derived
from a PPP-based panel estimation of a sample of Caribbean and South and Central American
countries for the period 1985-2013. These should be treated with caution as many relevant
variables (e.g., net foreign assets) had to be left out of the model because of data limitations.
Curaçao: Real Effective Exchange Rate
(Index, REER: 2007 = 100)
130

140

140

150

120

130

130

140

120

120

110

110

100

100

90

90

80

80

70

70

110

REER

100

90

Equilibrium REER

80
70

2000



Sint Maarten: Real Effective Exchange Rate
(Index, REER: 2007 = 100)

2002

2004

2006

2008

2010

2012

130

120

REER

110
100

90

Equilibrium REER

70

2000

2002

2004

2006

2008

2010

2012

The countries’ shares in world exports have been on a secular decline, though recently at a slowing
rate (in 2012 they have recovered slightly). Given both countries’ relative specialization, with Sint
Maarten in particular basically exporting only tourism, this metric might be misleading: these
shares would be expected to be falling, regardless of the two countries’ competitiveness, if world
trade in goods that the two countries do not produce increases. Comparing the two countries’
export performance only with that of their Caribbean peers (possibly excluding Trinidad and
Tobago, which is a relatively large energy exporter) does give a more favorable picture, suggesting
that, as far as tourism is concerned, the two countries are doing relatively well (charts below).
Curaçao: Export Market Share
(Index, 2000 = 100)

Sint Maarten: Export Market Share
(Index, 2000 = 100)

140

140

140

140

120

120

120

120

100

100

100

100

80

80

80

80

60

60

40

40

20

20

0

0

60
40
20

Caribbean exports excl. Trinidad and Tobago
Caribbean exports
World exports

0
2000

2002

2004

2006

2008

2010

2012

Caribbean exports excl. Trinidad and Tobago
Caribbean exports

INTERNATIONAL MONETARY FUND

60
40
20

World exports

0
2000

2002

2004

2006

2008

2010

2012

Sources: Caribbean Tourism Organization, National authorities, World Bank Development Indicators,
and IMF staff calculations.

18

80

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Box 1. Competitiveness (Concluded)
Curaçao’s wide (though declining) current account deficit also points to underlying
competitiveness issues (see text chart on page 4). To the extent that its share of stay-over tourists in
the Caribbean is bouncing back from its 2010 trough, Curaçao’s lingering competitiveness woes and
overall lackluster growth seem to stem from an inability of the economy to absorb effectively declining
productivity in other major sectors, such as the oil refining and financial sectors, and relocate
effectively workers from declining to more promising activities, as attested by the stubbornly high
unemployment.
This underscores the importance of competitiveness-enhancing structural reforms. In particular,
greater wage and price flexibility would allow both countries to enhance their competitiveness, reduce
unemployment, and increase their economies’ resilience to shocks. This is especially important given
the limited room for policy maneuver resulting from the fixed exchange rate.

INTERNATIONAL MONETARY FUND

19

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure
1. indicators
Curacao and
Maarten:
Economic
IndicatorsComparison
Figure
1. Key
forSint
Curaçao
and Selected
Sint Maarten
in a Regional
Real GDP growth shows a mixed picture for the two countries... ...while per capita GDP fares favorably compared to regional peers.
25

110

100

100

90

90
2000

2002

2004

2006

2008

2010

10

10

5

5

0

0

2012

Jamaica

110

15

St. Lucia

120

20

St. Kitts and Nevis

120

25

15

Antigua and Barbuda

130

30

20

Barbados

140

Curacao

130

GDP per Capita, 2012
(Thsd. USD)

Bahamas

140

30

150

Real GDP Developments
(Index, 2000 = 100)
Average of select Caribbean peers 1/
St. Maarten
Curacao

St. Maarten

150

The CA deficit is large though not unusual for the region...

...while public debt is low thanks to the debt relief of 2010.

0
-5
-10
-15
-20
-25
-30
-35

160
140
120
100
80
60
40
20
0

High external debt may be a source of vulnerability...
120
External Debt, 2013
(% GDP)

St. Maarten

Curacao

Bahamas

St. Lucia

St. Kitts and Nevis

Barbados

Antigua and Barbuda

18

18
Unemployment, 2013
(%)

100

16

80

14

60

60

12

12

40

40

10

10

20

8

8

6

6

4

4

2

2

80

20
Bahamas, The

St. Kitts and Nevis

Antigua and
Barbuda

Barbados

Jamaica

St. Maarten

St. Lucia

0

Curacao

0

0

INTERNATIONAL MONETARY FUND

16
14

0
Jamaica

Curacao Barbados Bahamas

St.
Maarten

Sources: IMF World Economic Outlook, CBCS, National Authorities; and IMF staff calculations.

20

160
140
120
100
80
60
40
20
0

...while high unemployment indicates a competitiveness issue.
120

100

Public Debt, 2013
(% GDP)

Jamaica

St. Kitts & Nevis

Jamaica

Barbados

St. Lucia

Antigua & Barbuda

CSM

The Bahamas

St. Vincent & Grenadines

Current Account Deficit, 2013
(% GDP)

0
-5
-10
-15
-20
-25
-30
-35

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

#. Country
Name:
Title,
Date
Figure Figure
2. Curaçao:
Current
Account
Developments
The union's current account deficit has been widening since 2005 ... ...reflecting the impact of oil prices on the oil balance,...
5

Current Account Deficit of the Union
(% GDP)

0

5

-1,600

0

-1,400

-5

-10

-10

-15

-15

-600

-20

-20

-400

-25

-25
2003

2006

2009

20
18
16
14
12
10
8
6
4
2
0

Private consumption
65

Private credit growth (RHS)

55
2003

2005

2007

60
40

Oil balance
20

-200
0

0

...and a decline in the international financial service sector.

70

2001

Oil price (RHS)

-800

2000 2002 2004 2006 2008 2010 2012

Consumption in Curacao
(% GDP / % change)

60

80

-1,000

2012

...a consumption boom in Curacao, supported by
rapid credit growth....
75

100

-1,200

-5

2000

120

Oil Balance and Oil Price Developments
(NAf millions / USD)

7

7

International Financial Sector Exports
(% GDP)

6

6

5

5

4

4

3

3

2

2009

2
2007

2008

2009

2010

2011

2012

2013

The CAD's recent decline is attributable to a retrenchment
in domestic demand (as suggested by car imports)...

...and should continue if prudent policies are kept, thanks to
supportive exogenous factors.

-200

200

125

180

120

-400

Car imports (RHS) 160

115

140

110

Curacao: Current Account Deficit
-300 and Car Imports (Millions of USD/NA.f)

-500

120

-600

100

-700

80

-800

60

-900

Current account deficit

-1000
-1100
2007

2009

2011

2013

125

External Developments
(Index, 2013 = 100)

120
115

Growth of CUR's
partner countries

105
100

40

20

85

0

80

105
100

Food price

95

90

110

95

90
85

Oil price

80
2013

2014

2015

2016

2017

2018

2019

Sources: CBCS; National authorities; IMF World Economic Outlook; and IMF staff calculations and
estimates.

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21

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure and
2. Credit
developments
Figure 3. Curaçao
Sint Maarten:
Credit Developments
Credit has been growing steadily...
90
Bank Credit to
Private Sector

85
80

Percent of GDP

...especially in the mortgage segment.
20%

120%

100%

70

0%

65

Annual growth (RHS)

60

-10%

55
50

Credit-to-GDP ratio

45

80%

80%

60%

60%

40%

40%

20%

20%

0%

0%
2007 2008 2009 2010 2011 2012 2013
Mortgages
Business
Consumer

-20%
2000 2002 2004 2006 2008 2010 2012

Fueling the current accountdeficit...

82

100%

10%

75

84

120%

Loans by Segment
(% Total Loans)

Credit and Imports
(% GDP)

Credit

80

78

...and raising concerns about bank asset quality.
105

12
100

95

76

Imports (RHS)

74

72

14

90

85
2007 2008 2009 2010 2011 2012 2013

14
Non-performing Loans
(% Gross Loans)

12

2008

10

10

2013

8

8

6

6

4

4

2

2

0

0

In response, the CBCS increased reserve requirements.... ...and imposed credit ceilings, whose effectiveness has been mixed at best.
Commercial banks' reserves at the CBCS and reserve requirements

1,800

NA.f million

1,300

required reserves
excess reserves
reserve requirement (RHS)

800

20%

3.5
3.0

15%
10%

2.5

5%

-200
0%
10M10 11M4 11M10 12M4 12M10 13M4 13M10

Sources: CBCS; and IMF staff calculations.

INTERNATIONAL MONETARY FUND

4.0

Credit Ceilings and Credit Growth
(%)

3.5
3.0

Credit growth

2.5

2.0

2.0

1.5

1.5

1.0
300

22

4.0

Credit ceiling

0.5

0.0

1.0
0.5

0.0

-0.5

-0.5
12M3

12M7

12M11

13M3

13M7

13M11

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 1. Curaçao: Selected Economic and Financial Indicators, 2009–15
Area
Percent of population below age 15 (2013)
Percent of population aged 65+ (2013)
Infant mortality, over 1,000 live births (2012)

444 (km2)
20.5
13.7
11.3

Population, thousand (2013)
Literacy rate, in percent (2010)
Life expectancy at birth, male (2012)
Life expectancy at birth, female (2012)

152.8
96.7
74.4
80.7

2009

2010

2011

2012

2013

2014
Proj.

2015

Real economy (change in percent)
Real GDP 1/
Private consumption
Public consumption
Gross fixed investment
Net foreign balance 2/
CPI (12-month average)
Unemployment rate (in percent)

-0.6
-5.5
2.9
1.3
1.0
1.8
9.6

-3.6
7.0
1.6
-2.8
-8.5
2.8
9.7

-0.5
0.0
-2.0
0.4
3.0
2.3
9.8

-0.5
-0.5
-0.1
0.2
-0.1
3.2
11.5

-0.6
-2.5
-3.8
0.1
1.6
1.3
13.0

0.7
-1.0
0.1
2.5
0.4
1.9
12.4

0.9
0.3
0.3
0.4
0.4
2.0
11.9

General government finances (in percent of GDP) 3/
Primary balance
Primary balance w/o debt relief
Current balance
Overall balance
Public debt

10.4
2.1
8.1
7.8
43.6

11.5
5.4
10.0
9.6
28.1

-2.1
-2.1
-1.5
-3.0
34.5

-0.5
-1.5
0.3
-1.4
29.9

-1.1
-1.1
1.5
-2.0
31.3

-1.6
-1.6
1.2
-2.4
37.6

-1.6
-1.6
1.0
-2.4
36.2

Balance of payments (in percent of GDP)
Goods trade balance
Exports of goods
Imports of goods
Service balance
Exports of services
Imports of services
Current account
Capital and financial account
Net FDI
Net official reserves (in millions of US dollars)
(in months of imports of goods)
(In percent of short-term debt)
External debt (in percent of GDP)

-37.0
23.5
60.5
13.7
37.1
23.4
-16.7
8.5
1.7
929.4
6.4
76.2
74.2

-41.3
23.1
64.4
8.4
32.4
23.9
-30.9
26.7
2.4
1,234.0
7.8
83.8
107.3

-39.5
30.5
70.1
14.3
40.4
26.2
-27.3
26.4
3.2
1,244.1
7.0
90.5
102.8

-41.7
30.3
72.0
17.4
45.4
28.0
-28.1
24.8
1.4
1,246.3
6.6
109.9
93.2

-38.3
22.4
60.8
21.7
49.7
28.0
-21.1
19.5
1.0
1,220.6
7.6
124.6
103.3

-37.1
22.6
59.7
23.4
50.5
27.1
-17.1
18.1
2.4
1,293.8
7.9
119.9
109.6

-36.4
22.5
58.9
25.3
51.4
26.1
-13.3
16.1
2.4
1,440.4
8.6
122.9
114.7

2,871
-4.1
93.8

2,951
2.3
100.1

3,039
2.5
97.6

3,131
2.0
96.3

3,282
2.8

3,407
2.8

Memorandum items:
Nominal GDP (in millions of US dollars)
Per capita GDP (change in percent)
Real effective rate (2007=100)

3,162
0.0
95.6 ..

Fund position

Curaçao is part of the Kingdom of the Netherlands
and does not have a separate quota.

Exchange rate

The Netherlands' Antilles guilder is pegged to the U.S. dollar

…

at NA.f 1.79 = US$1.
Sources: Data provided by the authorities; and IMF staff estimates.
1/ Based on IMF staff estimates of deflators.
2/ Contribution to GDP growth.
3/ Data from 2009-2010 reflect the fiscal operations of the local island government. Data from 2011 onwards refer to the new island
government that has integrated the fiscal operations of the previous central government of the Netherlands Antilles.

INTERNATIONAL MONETARY FUND

23

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 2. Sint Maarten: Selected Economic and Financial Indicators, 2009–15
Area
Percent of population below age 15 (2010)
Percent of population aged 65+ (2010)
Infant mortality, over 1,000 live births (2010)

34 (km2)
23.4
3.6
6.0

Population (2012)
Literacy rate, in percent (2010)
Life expectancy at birth, male (2010)
Life expectancy at birth, female (2010)

39
95.8
73.1
78.2

2009

2010

2011

2012

2013

2014
Proj.

2015

Real economy (change in percent)
Real GDP 1/
Private consumption
Public consumption
Gross fixed investment
Net foreign balance 2/
CPI (12-month average)
Unemployment rate (in percent)

-5.0
-5.0
6.2
1.2
3.0
0.7
12.2

0.0
-6.9
-0.9
-10.7
7.2
3.2
12.0

-1.7
-2.0
2.0
-1.3
-1.5
4.6
12.0

1.3
0.5
1.7
2.8
0.1
4.0
10.4

0.9
0.0
-1.7
0.7
0.8
2.5
8.5

1.7
1.1
1.5
1.4
0.5
2.1
8.4

1.8
3.0
1.5
2.1
-0.4
2.1
8.2

General government finances (in percent of GDP) 3/
Primary balance
Primary balance w/o debt relief
Current balance
Overall balance
Public debt

-1.0
-1.0
-0.2
-1.0
33.4

7.0
2.9
7.8
7.0
15.4

-1.0
-1.0
-0.3
-1.7
25.0

-0.3
-0.1
0.9
-1.0
24.6

-0.5
-0.5
-0.3
-1.1
24.3

-1.6
-1.6
0.0
-2.0
30.8

-1.5
-1.5
0.5
-2.0
31.5

Balance of payments (in percent of GDP)
Goods trade balance
Exports of goods
Imports of goods
Service balance
Exports of services
Imports of services
Current account
Capital and financial account
Net FDI
Net official reserves (in millions of US dollars)
(in months of imports of goods)
(In percent of short-term debt)
External debt (in percent of GDP)

-71.0
15.2
86.2
63.4
89.3
25.9
-15.1
12.4
4.6
293.5
4.8
62.0
113.2

-66.9
13.8
80.7
67.0
90.7
23.7
-6.2
-0.2
3.3
389.7
6.5
82.1
126.3

-65.1
13.6
78.7
71.5
96.8
25.4
-0.3
-0.2
-5.3
249.1
4.1
54.7
111.3

-64.8
13.3
78.1
79.4
105.7
26.3
9.6
-18.5
1.8
249.5
3.9
60.3
95.1

-73.5
17.3
90.7
78.4
104.2
25.9
1.4
-8.8
3.0
239.6
3.1
63.6
82.0

-76.1
14.9
91.0
82.6
107.4
24.8
1.5
1.0
3.0
277.2
3.4
76.3
75.4

-78.5
14.8
93.4
84.9
109.1
24.3
2.2
1.3
3.3
333.5
3.8
95.4
69.6

855
3.9
101.4

892
7.9
103.0

932
2.7
103.5

983
3.9
106.2

1,021
1.0
104

1,070
4.1

1,117
3.8

…

…

Memorandum items:
Nominal GDP (in millions of US dollars)
Per capita GDP (change in percent)
Real effective rate (2000=100)
Fund position

St. Maarten is part of the Kingdom of the Netherlands
and does not have a separate quota.

Exchange rate

The Netherlands' Antilles guilder is pegged to the U.S. dollar
at NA.f 1.79 = US$1.

Sources: Data provided by the authorities; and IMF staff estimates.
1/ Based on IMF staff estimates of deflators.
2/ Contribution to GDP growth.
3/ Data from 2009-2010 reflect the fiscal operations of the local island government. Data from 2011 onwards refer to the new island
government that has integrated the fiscal operations of the previous central government of the Netherlands Antilles.

24

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 3. Curaçao and Sint Maarten: Monetary Survey, 2007–13 1/
(In millions of Netherlands' Antilles Guilders; end of period)
2007

2008

2009

2010

2011

2012

2013

Net Foreign Assets

2,121.6

2,600.6

3,232.3

4,520.5

4,080.6

3,899.8

3,565.7

Central Bank

1,620.6

2,010.7

2,188.9

2,906.4

2,886.3

2,845.3

2,609.0

Gross Foreign Assets

2,285.1

3,041.9

2,984.9

3,573.3

3,707.1

3,451.1

3,140.5

Gross Foreign Liabilities

664.5

1,031.2

796.0

666.9

820.8

605.8

531.5

Valuations
Commercial Banks

501.0

589.9

1,043.4

1,614.1

1,194.3

1,054.6

956.7

Gross Foreign Assets

2,083.8

2,856.7

3,553.8

4,279.8

3,504.9

3,114.0

3,450.4

Gross Foreign Liabilities

1,582.8

2,266.8

2,510.4

2,665.7

2,310.6

2,059.4

2,493.7

Net domestic assets

2,762.4

2,720.9

2,595.7

551.2

920.9

1,134.6

1,884.3

Domestic credit

3,961.8

4,257.2

4,225.9

2,696.0

3,227.5

3,541.4

3,921.1

Net Claims on the Government of Curacao

276.2

325.9

50.4

-347.6

-333.6

-180.7

-192.7

Net Claims on the Government of St. Maarten

-38.5

-47.7

-62.4

-245.4

-181.6

-131.9

-76.2

38.5

47.7

62.5

245.5

181.7

132.0

76.3

4,532.9

5,091.4

5,634.0

5,545.9

6,155.7

6,373.8

6,307.4

-

-

263.9

270.3

272.5

339.0

367.7

4,532.9

5,091.4

5,370.1

5,275.6

5,883.2

6,034.8

5,939.7

Securities

183.5

232.6

99.9

88.2

400.3

290.3

266.2

Amounts Receivable

74.8

75.1

71.1

91.2

100.9

102.5

84.6

4,274.6

4,783.7

5,199.1

5,096.2

5,382.0

5,641.9

5,588.9

Business

1,610.8

1,736.8

1,754.4

1,714.6

1,772.7

1,952.4

1,873.9

Mortgage

1,385.6

1,784.8

2,145.0

2,055.8

2,276.4

2,396.6

2,495.6

Consumer

1,288.7

1,277.1

1,317.1

1,335.5

1,334.3

1,293.5

1,219.3

Other Items Net

-1,199.4

-1,536.3

-1,630.2

-2,144.8

-2,306.6

-2,406.8

-2,036.8

Money supply (M2)

6,083.4

6,857.8

7,458.2

7,216.5

7,308.1

7,441.2

7,486.8

Money (M1)

2,298.6

2,896.4

3,266.9

3,131.2

3,148.8

3,365.3

3,450.7

304.4

315.1

334.1

320.6

301.3

331.8

340.6

Demand Deposits

1,994.2

2,581.3

2,932.8

2,810.6

2,847.5

3,033.5

3,110.2

Local Currency

1,441.5

1,923.3

2,265.0

2,218.6

2,174.7

2,292.3

2,325.7

Foreign Currency

552.7

658.0

667.8

592.0

672.8

741.2

784.5

3,784.8

3,961.4

4,191.3

4,325.5

4,357.6

4,253.9

4,214.9

Savings Deposits

1,530.5

1,720.0

2,016.0

1,898.7

1,892.9

1,926.4

1,943.6

Local Currency

1,291.0

1,469.0

1,805.0

1,652.0

1,640.3

1,665.7

1,669.4

Foreign Currency

239.5

251.0

211.0

246.7

252.7

260.7

274.2

2,254.3

2,241.4

2,175.3

2,426.8

2,464.6

2,327.5

2,271.3

Local Currency

1,669.0

1,818.0

1,972.0

1,875.1

1,921.9

1,840.2

1,724.6

Foreign Currency

585.3

423.4

203.3

551.7

542.8

487.3

546.7

Deposits
Claims on the Private Sector
From Central Bank
From Commercial Banks

Loans

Currency in Circulation Outside Banks

Quasi Money

Time Deposits

(Percent change, year-on-year)
Net foreign assets

19.7

22.6

24.3

39.9

-9.7

-4.4

-8.6

Net domestic assets

3.2

-1.5

-4.6

-78.8

67.1

23.2

66.1

Broad money

12.1

12.7

8.8

-3.2

1.3

1.8

0.6

(Percent change, by contribution to the broad money)
Net foreign assets

6.4

7.9

9.2

17.3

-6.1

-2.5

-4.5

Net domestic assets

1.6

-0.7

-1.8

-27.4

5.1

2.9

10.1

(Percent of GDP)
Loans to the private sector

74.5

77.2

80.6

76.7

82.8

81.9

78.1

Broad money

100.0

104.0

111.8

104.9

102.8

101.0

100.0

1.0

1.0

1.0

1.0

1.0

1.0

(Percent)
Pledging rate

5.0

Sources: Central Bank of Curaçao and Sint Maarten , IMF staff calculations.
1/ Data prior to 2010 is estimated based on data for the Netherlands' Antilles.

INTERNATIONAL MONETARY FUND

25

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 4. Curaçao and Sint Maarten: Financial Soundness Indicators, 2007–13
(in percent)
Mortgage credit (in percent of total assets)
Consumer credit (in percent of total assets)
Corporate credit (in percent of total assets)

2007

2008

2009

2010

2011

2012

2013

16.7
15.5
22.9

18.9
23.1
21.9

20.4
22.9
28.8

20.8
24.2
30.3

23.0
25.5
31.5

23.8
24.5
32.3

24.7
24.7
32.1

11.7
14.3

12.7
14.9

13.2
15.5

13.1
15.8

12.5
15.1

12.9
15.6

12.1
15.2

10.3
4.6

6.6
4.0

8.0
5.5

8.6
5.8

10.9
7.9

11.3
8.0

11.9
8.1

1.9
19.5
47.1
51.4

1.9
18.8
59.0
68.3

1.7
16.0
65.1
70.8

1.5
13.6
67.5
73.5

1.6
14.7
67.2
71.9

1.4
12.2
66.6
76.2

0.9
8.3
67.6
86.0

29.1
37.3
61.4

28.8
36.9
64.5

32.3
40.5
63.2

27.0
34.3
67.2

25.3
33.4
70.6

27.5
36.1
71.0

30.1
38.6
70.8

68.4
4.6

65.4
4.1

95.6
4.4

97.2
4.3

73.8
4.5

74.9
4.6

77.0
4.5

Capital
Tier 1 Capital to Risk Weighted Assets
Tier 1 and Tier 2 Capital to Risk Weighted Assets
Asset Quality
NPLs/Gross Loans
NPLs Net of All Provisions/Gross Loans
Earnings and Profitability
ROA Before Taxes
ROE Before Taxes
Interest Margin/Gross Income
Non-Interest Expenses to Gross Income
Liquidity
Liquid Assets/Total Assets
Liquid Assets/Short Term Liabilities
Loans/Deposits
Sensitivity to Market Risk
NFA/Regulatory Capital
Interest Rate Margin
Source: Central Bank of Curaçao and Sint Maarten .

26

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 5. Curaçao and Sint Maarten: Balance of Payments, 2008–19
2008

2009

2010

2011

2012

2013

2014

2015

2016
Proj.

2017

2018

2019

(In millions of US dollars, unless otherwise indicated)
Current account
Goods and services balance

-922
-895

-609
-735

-968
-968

-833
-709

-784
-619

-655
-477

-545
-382

-427
-307

-372
-259

-322
-214

-319
-181

-307
-165

Exports of goods and services
Goods
Services

2926
1076
1849

2634
805
1829

2572
807
1765

3185
1055
2130

3539
1079
2461

3522
886
2635

3708
901
2806

3903
934
2969

4085
960
3125

4263
985
3278

4452
1009
3444

4647
1033
3614

Imports of goods and services
Goods
Services

3821
2989
832

3369
2474
894

3540
2622
918

3895
2863
1031

4158
3022
1136

3998
2848
1150

4089
2934
1155

4210
3050
1161

4344
3176
1168

4478
3301
1176

4634
3444
1190

4812
3604
1208

Income
Compensation of employees
Investment income

-34.1
-24.6
-9.5

-79.2
-13.2
-66.0

-43.2
-5.0
-38.2

-48.3
1.2
-49.5

-70.4
-4.8
-65.7

-69.0
7.3
-76.3

-71.1
-7.5
-63.6

-60.4
-2.4
-58.0

-50.9
-2.8
-48.1

-46.8
-9.3
-37.5

-74.3
-38.4
-35.9

-77.0
-40.3
-36.7

7.4
0.2

204.6
5.5

43.5
1.1

-75.4
-1.9

-94.2
-2.3

-109.1
-2.6

-92.4
-2.1

-59.2
-1.3

-62.0
-1.3

-60.7
-1.3

-63.0
-1.3

-65.4
-1.3

Capital and financial account

845

358

809

825

603

549

628

579

590

597

579

488

Capital account
Financial account
Direct investment
Portfolio investment
Financial derivatives
Other investment
Reserve assets

33
812
218
-45
0
639
-77

34
324
89
-66
0
301
167

641
169
104
-869
0
934
14

69
756
49
106
0
600
-27

39
564
63
333
0
168
155

35
515
64
139
0
312
27

35
593
114
183
0
296
-83

35
545
121
185
0
239
-152

35
556
129
181
0
246
-218

35
562
127
181
0
254
-275

35
544
132
150
0
262
-260

35
454
137
47
0
270
-181

Reserves and external debt
Gross Reserves, excluding gold
Net Official reserves
in months of goods imports
over short term debt
Gross external debt (percent of GDP)
of which short term debt

1395
1123
4.5
2.2
34.4
13.7

1311
1223
5.9
0.7
83.2
45.4

1405
1624
7.4
0.8
111.7
50.7

1290
1493
6.3
0.8
104.8
46.1

1135
1496
5.9
1.0
93.7
37.6

1108
1460
6.2
1.1
98.1
32.4

1191
1571
6.4
1.1
101.2
33.1

1343
1774
7.0
1.2
103.5
33.6

1562
2063
7.8
1.3
106.0
34.2

1837
2423
8.8
1.4
108.5
34.8

2097
2765
9.6
1.6
110.0
35.1

2278
3004
10.0
1.7
109.6
34.8

Memorandum item:
GDP at current prices

3684

3726

3844

3970

4114

4183

4352

4524

4680

4848

5024

5197

Current transfers
(percent of GDP)

(In percent of GDP)
Current Account
Curacao and St. Maarten
St. Maarten
Curacao
G & S Balance
Curacao and St. Maarten
St. Maarten
Curacao

-25.0
-20.6
-26.4

-16.4
-15.1
-16.7

-25.2
-6.2
-30.9

-21.0
-0.3
-27.3

-19.0
9.6
-28.1

-15.7
1.4
-21.1

-12.5
1.5
-17.1

-9.4
2.2
-13.3

-7.9
1.8
-11.2

-6.6
1.0
-9.2

-6.3
1.0
-8.9

-5.9
0.8
-8.3

-24.3
-12.6
-27.8

-19.7
-7.6
-23.3

-25.2
0.2
-32.9

-17.9
6.3
-25.3

-15.0
14.6
-24.3

-11.4
4.9
-16.7

-8.8
6.5
-13.7

-6.8
6.3
-11.1

-5.5
5.9
-9.3

-4.4
5.2
-7.6

-3.6
5.0
-6.6

-3.2
4.8
-6.0

(In millions of US dollars)
Exports of Goods
St. Maarten
Curacao
Exports of Services
St. Maarten
Curacao
Imports of Goods and Services
St. Maarten
Curacao

133
943

130
675

123
683

127
928

130
948

177
710

159
742

166
768

172
787

179
806

187
822

195
837

824
1025

763
1066

809
956

902
1228

1040
1421

1064
1571

1149
1657

1219
1750

1299
1825

1386
1892

1486
1957

1593
2021

1065
2756

958
2411

931
2609

970
2925

1027
3131

1190
2808

1239
2850

1314
2896

1404
2940

1503
2975

1609
3024

1724
3088

Sources: Central bank of Curaçao and St. Maarten; and IMF staff projections.
1/ Overall numbers are the sum of the two countries' BOP.

INTERNATIONAL MONETARY FUND

27

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 6. Curaçao: Macroeconomic Framework, 2008–19
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Proj.
(Percentage change, unless otherwise indicated)
Output and demand (volumes)
GDP
Domestic demand
Private consumption
Public consumption
Gross fixed capital formation
Private investment
Exports of goods and services
Imports of goods and services
Net exports (contribution to growth in percent of GDP)

3.5
3.1
3.1
-2.0
-3.1
-2.9
12.4
9.5
-0.1

-0.6
-1.4
-5.5
2.9
1.3
0.9
-7.4
-7.1
1.0

-3.6
4.3
7.0
1.6
2.3
2.2
-9.1
5.1
-8.5

-0.5
-2.1
0.0
-2.0
0.4
0.4
23.8
12.1
3.0

-0.5
-0.3
-0.5
-0.1
0.2
0.2
8.8
6.6
-0.1

-0.6
-2.0
-2.5
-3.8
0.1
0.1
1.0
-1.0
1.6

0.7
0.1
-1.0
0.1
2.5
0.3
3.1
2.0
0.4

0.9
0.3
0.3
0.3
0.4
0.4
3.9
2.7
0.4

1.1
0.4
0.4
0.4
0.5
0.5
3.8
2.5
0.4

1.1
0.5
0.6
0.6
0.1
1.0
3.2
2.2
0.4

1.3
0.7
0.6
0.8
1.0
1.0
3.0
2.2
0.3

1.3
0.8
0.7
0.9
1.0
1.0
2.9
2.1
0.2

Prices, costs, and income
Consumer price inflation (harmonized, average)
Consumer price inflation (harmonized, end-year)
GDP deflator
Labor productivity

6.9
7.9
5.5
-1.0

1.8
0.4
1.9
-0.7

2.8
1.9
6.6
-8.0

2.3
3.0
3.5
-4.9

3.2
2.5
3.5
-1.6

1.3
0.7
1.6
-1.8

1.9
1.9
3.1
-1.1

2.0
2.0
2.8
-0.5

2.0
2.0
2.0
-0.1

2.1
2.1
0.2
2.1

2.1
2.1
2.0
0.4

2.1
2.1
1.7
0.4

Labor market
Labor force
Employment
Unemployment rate (in percent)

2.1
4.6
10.3

4.4
0.1
9.6

0.5
0.0
9.7

1.0
0.5
9.8

1.5
1.8
11.5

1.3
1.8
13.0

1.0
1.8
12.4

1.0
1.5
11.9

1.0
1.3
11.7

1.0
1.0
11.7

0.8
0.8
11.7

0.5
0.8
11.5

(In percent of GDP)
General government finances 1/
Overall balance
Primary balance
Gross debt

-1.5
1.4
51.7

7.8
10.4
43.6

9.6
11.5
28.1

-3.0
-2.1
34.5

-1.4
-0.5
29.9

-2.0
-1.1
31.3

-2.4
-1.6
37.6

-2.4
-1.6
36.2

-1.8
-1.0
34.6

-1.1
-0.3
34.6

-0.9
-0.2
34.4

-0.9
-0.2
34.4

Balance of payments
Current account balance
Goods trade balance
Service trade balance
Net FDI
Gross external debt

-26.4
-42.9
15.1
5.2
30.4

-16.7
-37.0
13.7
1.7
74.2

-30.9
-41.3
8.4
2.5
107.3

-27.3
-39.5
14.3
3.3
102.8

-28.1
-41.7
17.4
1.4
93.2

-21.1
-38.3
21.7
1.1
103.3

-17.1
-37.1
23.4
2.5
109.6

-13.3
-36.4
25.3
2.5
114.7

-11.2
-35.9
26.6
2.5
119.9

-9.2
-35.2
27.6
2.5
125.1

-8.9
-34.9
28.3
2.5
129.2

-8.3
-34.9
28.9
2.5
130.7

Exchange rates (period average)
LCU per US$

1.79

1.79

1.79

1.79

1.79

1.79

…

…

…

…

…

…

Sources: Central Bank of Curaçao and St. Maarten; and IMF staff estimations and projections.
1/ Data from 2008-2010 reflects the fiscal operations of the local island government. Data from 2011 onwards refers to the new
island government that has integrated the fiscal operations of the previous central government of the Netherlands' Antilles.

28

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 7. Sint Maarten: Macroeconomic Framework, 2008–19
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Proj.
(Percentage change, unless otherwise indicated)
Output and demand (volumes)
GDP
0.3
Domestic demand
4.2
Private consumption
13.0
Public consumption
-1.5
Gross fixed capital formation
-1.9
Private investment
-0.9
Exports of goods and services
-8.6
Imports of goods and services
-4.7
Net exports (contribution to growth in percent of GDP) -3.9

-5.0
-7.7
-5.0
6.2
1.2
0.8
-2.7
-5.8
3.0

0.0
-7.2
-6.9
-0.9
-10.7
-11.6
0.5
-7.1
7.2

-1.7
-0.1
-2.0
2.0
-1.3
-1.3
-0.2
1.5
-1.5

1.3
1.2
0.5
1.8
2.8
0.5
2.0
2.1
0.1

0.9
-0.3
0.0
-1.7
0.7
0.8
2.4
1.6
0.8

1.7
1.2
1.1
1.5
1.4
2.3
3.4
3.1
0.5

1.8
2.5
3.0
1.5
2.1
2.3
3.8
4.5
-0.4

2.2
2.7
3.4
1.5
2.1
2.3
4.2
4.7
-0.3

2.4
3.1
4.0
1.5
2.0
2.0
4.3
4.9
-0.4

2.6
3.1
4.0
1.5
2.0
2.0
4.5
5.0
-0.3

2.5
3.1
4.0
1.5
2.0
2.0
4.5
5.0
-0.4

Prices, costs, and income
Consumer price inflation (harmonized, average)
Consumer price inflation (harmonized, end-year)
GDP deflator
Labor productivity

4.6
-0.4
5.5
-1.2

0.7
6.0
5.8
-6.5

3.2
1.4
4.4
-1.7

4.6
5.1
6.3
-3.2

4.0
3.6
4.2
-1.6

2.5
2.7
2.9
-2.5

2.1
2.3
3.0
0.4

2.1
2.1
2.5
0.3

2.1
2.1
2.0
1.0

2.1
2.1
1.2
2.1

2.1
2.1
2.3
1.3

2.1
2.1
2.3
1.4

Labor market
Labor force
Employment
Unemployment rate (in percent)

2.5
1.6
11.4

2.5
1.6
12.2

1.5
1.8
12.0

1.5
1.5
12.0

1.3
3.0
10.4

1.3
3.5
8.5

1.3
1.3
8.4

1.3
1.5
8.2

1.0
1.2
8.0

1.0
1.1
7.9

1.0
1.3
7.6

1.0
1.2
7.5

(In percent of GDP)
General government finances 1/
Overall balance
Primary balance
Gross debt

-0.3
-0.3
30.9

-1.0
-1.0
33.4

7.0
7.0
15.4

-1.7
-1.0
25.0

-1.0
-0.3
24.6

-1.1
-0.5
24.3

-2.0
-1.6
30.8

-2.0
-1.5
31.5

-1.8
-1.4
32.0

-1.7
-1.3
32.3

-1.5
-1.1
32.3

-0.8
-0.5
31.6

Balance of payments
Current account balance
Goods trade balance
Service trade balance
Net FDI
Gross external debt

-20.6
-81.7
69.1
8.3
47.7

-15.1
-71.0
63.4
4.6
113.2

-6.2
-66.9
67.0
3.3
126.3

-0.3
-65.1
71.5
-5.3
111.3

9.6
-64.8
79.4
1.8
95.1

1.4
-73.5
78.4
3.0
82.0

1.5
-76.1
82.6
3.0
75.4

2.2
-78.5
84.9
3.3
69.6

1.8
-81.8
87.6
3.5
64.1

1.0
-85.2
90.4
3.0
58.9

1.0
-88.2
93.3
3.0
53.7

0.8
-91.4
96.2
3.0
48.9

Exchange rates (period average)
LCU per US$

1.79

1.79

1.79

1.79

1.79

1.79

…

…

…

…

…

…

Sources: Central Bank of Curaçao and St. Maarten; and IMF staff estimations and projections.
1/ Data from 2008-2010 reflects the fiscal operations of the local island government. Data from 2011 onwards refers to the new
island government that has integrated the fiscal operations of the previous central government of the Netherlands' Antilles.

INTERNATIONAL MONETARY FUND

29

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 8. Curaçao: Government Operations, 2011–19
(In percent of GDP)

2011

2012

2013

2014

2015

2016

2017

2018

2019

Total Revenue
Tax Revenue
Taxes on income and profits
Profit tax
Wage tax
Taxes on property
Taxes on goods and services
Excises
Sales tax
Other taxes on goods and services
Taxes on intenational transactions
Other taxes
Grants 1/
Other revenue
Capital revenue

29.2
26.2
12.9
3.6
9.3
0.9
9.0
1.9
5.7
1.4
3.3
0.1
0.3
2.5
0.2

29.8
25.5
12.7
3.6
8.9
0.8
9.0
1.4
6.6
1.0
3.0
0.1
1.1
3.1
0.1

28.5
25.3
11.9
3.1
8.7
0.8
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.9
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

28.3
25.5
11.9
3.1
8.7
0.9
9.7
1.7
6.9
1.2
2.8
0.1
0.3
2.5
0.0

Total Expenditure
Current Expenditure
Wage and Salaries
Goods and Services
Social Benefits 2/
Subsidies
Interest Payments
Capital Expenditure

32.2
30.7
13.2
3.9
11.5
1.1
0.9
1.5

31.2
29.5
12.8
3.8
10.8
1.2
0.9
1.7

30.5
27.0
12.5
3.6
8.8
1.2
0.9
3.5

30.7
27.1
12.4
3.6
9.1
1.2
0.8
3.6

30.6
27.2
12.3
3.6
9.3
1.2
0.8
3.4

30.1
27.3
12.2
3.6
9.5
1.2
0.8
2.8

29.3
27.3
12.1
3.6
9.7
1.2
0.8
2.0

29.2
27.3
12.0
3.6
9.8
1.2
0.7
1.9

29.2
27.4
11.8
3.6
10.1
1.2
0.7
1.8

Overall Balance
Primary Balance
Current Balance

-3.0
-2.1
-1.5

-1.4
-0.5
0.3

-2.0
-1.1
1.5

-2.4
-1.6
1.2

-2.4
-1.6
1.0

-1.8
-1.0
1.0

-1.1
-0.3
0.9

-0.9
-0.2
0.9

-0.9
-0.2
0.9

34.4

34.4

Projection

Memorandum item:
Gross Government debt
34.5
29.9
31.3
37.6
36.2
34.6
34.6
Sources: Data provided by the authorities and IMF staff estimates.
1. Grants in 2012 reflect the debt relief to settle arrears.
2. Includes transfers to cover the deficit of funds not integrated into the central budget, such as those for social security/insurance.

30

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Table 9. Sint Maarten: Government Operations, 2011–19
(In percent of GDP)
2011

2012

2013

2014

2015

2016

2017

2018

2019

Projection

Revenue
Taxes
Taxes on income, profits, and capital gains
Taxes on payroll & workforce
Taxes on property
Taxes on goods and services
Other taxes
Capital Grants
Other revenue

24.1
18.7
1.6
7.3
0.9
8.9
0.0
0.3
5.2

25.6
18.9
1.3
7.1
0.6
9.8
0.1
0.0
6.7

23.1
18.5
1.2
7.0
0.5
9.7
0.1
0.0
4.6

23.1
18.5
1.2
7.0
0.5
9.7
0.1
0.0
4.6

23.3
18.7
1.3
7.0
0.5
9.8
0.1
0.0
4.6

23.5
18.9
1.3
7.1
0.5
9.9
0.1
0.0
4.6

23.7
19.1
1.3
7.2
0.5
10.0
0.1
0.0
4.6

23.8
19.2
1.3
7.3
0.5
10.0
0.1
0.0
4.6

23.9
19.3
1.3
7.4
0.5
10.0
0.1
0.0
4.6

Expense
Compensation of employees
Goods and services
Consumption of fixed capital
Social benefits 1/
Subsidies
Interest

24.4
9.5
6.1
0.5
1.5
6.2
0.7

24.7
10.1
7.1
0.5
1.4
4.9
0.7

23.4
10.0
5.2
0.5
2.3
4.7
0.6

23.1
10.0
5.2
0.5
2.4
4.5
0.5

22.8
10.1
5.2
0.5
2.5
4.0
0.4

22.9
10.2
5.2
0.5
2.6
3.9
0.4

22.9
10.3
5.2
0.5
2.7
3.8
0.4

22.8
10.4
5.2
0.5
2.8
3.5
0.4

22.8
10.6
5.2
0.5
2.9
3.3
0.3

Gross Operating Balance
Net Operating Balance 2/

0.2
-0.3

1.4
0.9

0.2
-0.3

0.5
0.0

1.0
0.5

1.2
0.6

1.3
0.8

1.5
1.0

1.5
1.0

Net Acquisition of Nonfinancial Assets

1.4

1.9

0.8

2.0

2.5

2.5

2.5

2.5

1.9

Overall Balance

-1.7

-1.0

-1.1

-2.0

-2.0

-1.8

-1.7

-1.5

-0.8

1.0
-1.1
32.3

1.0
-0.5
31.6

Memorandum items:
Current Balance
-0.3
0.9
-0.3
0.0
0.5
0.6
0.8
Primary Balance
-1.0
-0.3
-0.5
-1.6
-1.5
-1.4
-1.3
Gross debt
25.0
24.6
24.3
30.8
31.5
32.0
32.3
Sources: Data provided by the authorities and IMF staff estimates.
1. Includes transfers to cover the deficit of funds not integrated into the central budget, such as those for social security/insurance.

2. Gross operating balance minus consumption of fixed capital.

INTERNATIONAL MONETARY FUND

31

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

CURAÇAO AND SINT MAARTEN: RISK ASSESSMENT MATRIX (RAM) /1
Nature/source of main risk

Relative

Potential impact if realized

likelihood

(high, medium, low)

Suggested policy response

(high,
medium,
low)
Protracted period of slower
growth in Europe (larger
than expected deleveraging
or negative surprises on
potential growth.)
Financial stress in the Euro
area re-emerges triggered
by stalled or incomplete
delivery of national and euro
area policy commitments
Political and economic
instability in Venezuela
(ongoing protests result in
major disruptions of
economic activity, requiring
tightened limits on exports of
hard currency/travel)
Surges in global financial
market volatility (related to
UMP exit), leading to
economic and fiscal stress,
and constraints on country
policy settings.

High

Medium

Medium

High

Medium
Both countries, and Curaçao
in particular, source a large
share of their tourists from
Europe
Medium
Both countries, and Curaçao
in particular, source a large
share of their tourists from
Europe
High for Curaçao
Low for Sint Maarten
Venezuela is Curaçao’s main
trading partner, accounting
for the second largest share
of tourists. Oil price to
Curaçao may also increase.
Medium
While capital controls should
prevent immediate large
outflows, intensified
pressures on reserves might
raise questions on the peg.

Any built fiscal margins could
be used to buffer the brunt.
Monetary policy needs to
remain geared to remove
distortions.
Any built fiscal margins could
be used to buffer the brunt.
Monetary policy needs to
remain geared to remove
distortions.

Any built fiscal margins could
be used to buffer the brunt.
Monetary policy needs to
remain geared to remove
distortions.

The peg should be defended,
if necessary by tightening
monetary policy and slowing
down the planned public
investments to reduce
imports.

1/ The RAM shows events that could materially alter the baseline path discussed in this report (which is the scenario
most likely to materialize in the view of the staff). The relative likelihood of risks listed is the staff’s subjective
assessment of the risks surrounding this baseline. The RAM reflects staff's views on the source of risks and overall
level of concerns as of the time of discussions with the authorities.

32

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Annex 1: The authorities’ response to Past IMF Policy Recommendations
IMF 2011 Article IV Recommendations

Authorities’ Response

Fiscal Policy I
Tighten fiscal policy in the order of 2-3 percentage

Progress is ongoing, particularly in Curaçao where

point of GDP to mitigate external vulnerabilities.

the need for adjustment was greatest.

Fiscal Policy II
Shift tax burden from direct to indirect taxation.

Still being considered but details have yet to be
worked out.

Fiscal Policy III
Tax compliance in Sint Maarten needs to be

Progress is ongoing.

enhanced.
Fiscal Policy IV
Curaçao needs to review the generosity of

No action taken.

unemployment benefits, particularly with regards to
the duration.
Structural Reforms I
Enhance labor market flexibility, liberalize the

No action taken.

administered price regime and reduce red tape.
Structural Reforms II
Implement measures to increase the efficiency and

Remained broadly unchanged though the pass-

governance of public utilities and public enterprises,

through of input costs to retail prices has been
improved.

Monetary Policy I
Strengthen financial crisis resolution mechanisms.

Plans for deposit insurance scheme are currently
being reviewed in cooperation with the FDIC.

Monetary Policy II
Use monetary and macroprudential tools to reduce

Reserve requirements have been gradually

credit growth below that of nominal GDP.

increased and bank level credit ceilings
introduced.

INTERNATIONAL MONETARY FUND

33

KINGDOM OF THE NETHERLANDS—
CURAÇAO AND SINT MAARTEN
STAFF REPORT FOR THE 2014 ARTICLE IV
July 11, 2014

CONSULTATION—INFORMATIONAL ANNEX
Prepared By

European Department

CONTENTS
FUND RELATIONS _______________________________________________________________________ 2
STATISTICAL ISSUES ____________________________________________________________________ 4

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

FUND RELATIONS
Mission: Willemstad (May 6-12 and May 19) and Philipsburg (May 13-19). The concluding
statement of the mission is available at http://www.imf.org/external/np/ms/2014/052014.htm
Staff team: Messrs. Lombardo (head), Winnekens (both EUR), and Quayyum (FIN).
Country interlocutors: Central Bank of Curaçao and Sint Maarten’s President Tromp, Curaçao’s
Prime Minister Asjes, Curaçao’s Finance Minister Jardim, Curaçao’s Minister of Economic
Development Palm, Sint Maarten’s Prime Minister Wescot-Williams, Sint Maarten’s Finance
Minister Hassink, Sint Maarten’s Minister of Tourism, Economic Affairs, Traffic and
Telecommunication Richardson, and other senior officials from both countries’ governments.
Mr. Snel, Executive Director, and Mr Mosch (advisor to the Executive Director) also participated in
the discussions. Additional meetings took place with and financial sector, industry and union
representatives.

Membership Status: The Kingdom of the Netherlands is an original member of the Fund. On
February 15, 1961, the Kingdom accepted the obligations of Article VIII, Sections 2, 3, and 4 of the
Articles of Agreement for all territories.
General Resources Account:

SDR Million

Percent Quota

Quota

5162.40

100.00

Fund holdings of currency

3922.49

75.98

Reserve position in Fund

1239.99

24.02

SDR Department:

SDR Million

Percent Allocation

Net cumulative allocation

4836.63

100.00

Holdings

4560.17

94.28

Outstanding Purchases and Loans: None
Latest Financial Arrangements: None
Projected Obligations to Fund (SDR million; based on existing use of resources and present
holdings of SDRs):

2

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Forthcoming
2014

2015

2016

2017

2018

Charges/interest

0.14

0.31

0.31

0.31

0.31

Total

0.14

0.31

0.31

0.31

0.31

Principal

Exchange Rate Arrangements:
The Netherland Antilles guilder has been pegged to the US dollar at NA.f 1.79 per US$1 since 1971.
Article IV Consultation discussions with Curaçao and Sint Maarten:
This is the second Article IV consultation discussions with Curaçao and Sint Maarten, following the
dissolution of the Netherlands Antilles and the granting of autonomy to both countries on
October 10, 2010. The board concluded the first Article IV consultation discussions on
November 18, 2011, on the basis of IMF Country Report No. 11/342. It is currently envisaged that
the next Article IV consultation discussions with Curaçao and Sint Maarten will be held in 24 months
time.

INTERNATIONAL MONETARY FUND

3

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

STATISTICAL ISSUES
I. Assessment of Data Adequacy for Surveillance
General: Data provision has serious shortcomings that significantly hamper surveillance. Most affected

areas are: national accounts, government finance, and external sector data.
National Accounts: Data are compiled by the Central Bureau of Statistics (CBS) in Curaçao and by the
Department of Statistics in Sint Maarten. Expenditure-side national accounts data have been published
only up to 2009 in Curaçao and 2012 in Sint Maarten. Production-side data in current terms are partially
available for Curaçao up to 2012. Detailed producer price indices to deflate national accounts aggregates
are not available. Instead, the CBS uses the aggregate consumer price index (CPI) to deflate total nominal
GDP—rather than more detailed CPI-data. This method gives rise to distortions in the measurement of
real growth.
Price Statistics: CPI data are compiled and published on a monthly basis but the baskets and weights
have not been updated since 2004 (Curaçao) and 2005 (Sint Maarten).
Government Finance Statistics: Neither Curaçao nor Sint Maarten compile or disseminate GFS data
according to international standards. For surveillance purposes, the Ministry of Finance in Curaçao provides
fiscal data that can broadly be bridged to the cash framework of the 2001 Government Financial Statistics
Manual (GFSM 2001). However, the fiscal reporting standards in Sint Maarten are significantly weaker,
and improvements are needed in grouping and consolidating fiscal data according to the GFSM 2001
Manual. Final data on fiscal operations through 2013 for Sint Maarten have only become available very
recently and there are still some gaps, complicating the assessment of its fiscal policy. Data on the
operations of the individual countries during the time of the Netherlands Antilles must be treated with
caution, hampering the long-term analysis of public finances.
Monetary and Financial Statistics: The methodology used by the Central Bank of Curaçao and Sint
Maarten (CBCS) for compiling monetary statistics is broadly consistent with the IMF Monetary and
Financial Statistics Manual. However, there is some lag in the publication of the data.
Financial sector surveillance: The authorities do not provide any financial soundness indicators (FSIs) for
the IMF FSI database.
External sector statistics: Quarterly balance of payments (BOP) statistics are reported by the CBCS in
accordance with the fifth edition of the Balance of Payments Manual. Monthly data on the official reserve
position are published with a lag of one month. The offshore sector is not covered in the BOP and,
therefore, an appropriate classification of financial account inflows and outflows is problematic. Other
areas requiring improvement include information on intra-union flows and data on the international
investment positions.
II. Data Standards and Quality
Not partaking in the IMF’s data standard initiatives.

No data ROSC has been conducted.

III. Reporting to STA
The only data currently reported to STA are quarterly BOP, exchange rates, and international liquidity
data.

4

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Curaçao and Sint Maarten: Table of Common Indicators Required for Surveillance
(As of June 19, 2014)

Exchange Rates

International Reserve Assets and Reserve

Date of Latest

Date

Frequency of

Frequency of

Frequency of

Observation

Received

Data

Reporting

Publication

Current

Current

Daily and

Daily and

Daily and

Monthly

Monthly

Monthly

3/14

5/1/14

Weekly

Weekly

Monthly

Reserve/Base Money

3/14

5/1/14

Monthly

Monthly

Monthly

Broad Money

3/14

5/1/14

Monthly

Monthly

Monthly

Central Bank Balance Sheet

3/14

5/1/14

Monthly

Monthly

Monthly

Consolidated Balance Sheet of the Banking

3/14

5/1/14

Monthly

Monthly

Monthly

Interest Rates /1

3/14

5/1/14

Monthly

Monthly

Monthly

Consumer Price Index

3/14

6/11/14

Monthly

Monthly

Monthly

Revenue, Expenditure, Balance and Composition

2013

5/14

Annual

Annual

Annual

2013

5/14

Annual

Annual

Annual

2013

5/14

Annual

Annual

Annual

External Current Account Balance

Q4 2013

6/6/14

Quarterly

Quarterly

Quarterly

Exports and Imports of Goods and Services

Q4 2013

6/6/14

Quarterly

Quarterly

Quarterly

GDP/GNP

2012/2013

5/20/14

Annual

Annual

Annual

2013

5/10/14

Annual

Annual

Annual

NA

NA

NA

Liabilities of the Monetary Authorities

System

of Financing—General Government /2
Revenue, Expenditure, Balance and Composition
of Financing—Central Government /2
Stocks of Central (or General) Government and
Central- (or General-) Government guaranteed
debt 3/

Gross External Debt
International Investment Position /4

1/ Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes
and bonds.
2/ The general government consists of the central government and the social security funds. The composition of financing
distinguishes foreign, domestic bank and domestic nonbank financing.
3/ Including currency and maturity decompositions.
4/ Includes external gross financial asset and liability positions vis-à-vis nonresidents.

INTERNATIONAL MONETARY FUND

5

KINGDOM OF THE NETHERLANDS –
CURAÇAO AND SINT MAARTEN
July 11, 2014

STAFF REPORT FOR THE 2014 ARTICLE IV
CONSULTATION DISCUSSIONS—
DEBT SUSTAINABILITY ANALYSIS
Approved By

Prepared by the Staff of the International Monetary Fund

Ranjit Teja (EUR) and
Bob Traa (SPR)

PUBLIC DEBT SUSTAINABILITY ANALYSIS ______________________________________________ 2
EXTERNAL DEBT SUSTAINABILITY ANALYSIS _________________________________________15
FIGURES
1. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Baseline Scenario __________ 5
2. Curaçao: Public DSA – Composition of Public Debt and Alternative Scenarios __________ 6
3. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Realism of Baseline ________ 7
4. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Stress Tests ________________ 8
5. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Heat Map __________________ 9
6. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Baseline Scenario ____ 10
7. Sint Maarten: Public DSA – Composition of Public Debt and Alternative Scenarios ____ 11
8. Sint Maarten: Public Sector DSA – Realism of Baseline Assumptions ___________________ 12
9. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Stress Tests __________ 13
10. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Heat Map ___________ 14
11. Curaçao and Sint Maarten: External Debt Sustainability: Bound Tests _________________ 16
TABLE
1. Curaçao and Sint Maarten: External Debt Sustainability Framework, 2009–19 __________ 17

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

PUBLIC DEBT SUSTAINABILITY ANALYSIS
Curaçao and Sint Maarten experienced a significant debt relief upon their independence
in October 2010, when the Netherlands took over all of the existing Netherlands Antilles’
debt in exchange for a significantly smaller amount of very long-term/low-cost debt
issued by the two new countries. Under the baseline scenario, public debt will jump in
2014 in light of significant borrowing needs in both countries but will then stabilize
throughout the projection horizon and even decline in outer years. The debt path is
somewhat sensitive to adverse growth, fiscal, and interest rate shocks. Overall, risks of
public debt distress are low, in light of the low debt levels, manageable gross financing
needs, and a growing share of long-term, local currency debt. However, contingent
liabilities associated with state owned enterprises and exogenous shocks, such as weather,
add certain risks to debt sustainability.
1.
Starting off from a low base, thanks to the 2010 debt relief, under the baseline scenario the
public debt ratio in both countries would see an uptick in 2014 before stabilizing, with manageable
gross financing needs and a growing share of long-term, local currency debt representing key
strengths. After a steep increase in 2014 as a result of the need to finance the new hospital in Curaçao
(NAf 436 million) and replenish dilapidated cash deposits in Sint Maarten (NAf 60 million), the debt ratio
would stabilize and even fall in outer years thanks to less capital expenditures. A forecast pick-up in growth,
moderate in Curaçao and more pronounced in Sint Maarten, would also underpin the benign evolution of
the public debt ratio. In addition, the golden rule (enforced by the CFT) safeguards debt sustainability
through two channels: (i) it ensures that the current balance is, at a minimum, in balance; and (ii) it
guarantees the two countries access to long-term/low-cost funding as any new debt issuance is essentially
picked up by the Netherlands at Dutch public sector borrowing rates (the Netherlands also assumes the FX
risk, as it lends in guilders).
2.

The analysis is based on the following main assumptions:



Real GDP growth will remain positive in both countries in the medium term (around
1 percent in Curaçao and slightly above 2 percent in Sint Maarten) as public investment
projects kick off in Curaçao and a pick-up in tourism supports economic activity in
Sint Maarten. Both growth forecasts face some downside risks (e.g., public investments
projects in Curaçao might continue to stall, negotiations to upgrade Curacao’s Isla refinery in
time for the 2019 expiration of the current lease to Venezuela’s PdVSA might fail, and
weather-related disruptions might hurt tourism in Sint Maarten).



Inflation (as measured by the change in the CPI), is expected to accelerate again and hover
around 2 percent throughout the forecast horizon.



Fiscal consolidation will continue to play an important role in ensuring debt sustainability.
Both authorities have plans and significant scope to increase revenues (Sint Maarten) and
decrease expenditures (Curaçao).

2

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN



Market access is assumed to remain adequate to cover maturing debt and the flow of
deficits under the presumption that the arrangement with the Netherlands and CFT will
remain in place, though interest rates will gradually increase over time in line with the
forecast for the Netherlands’ long-term borrowing rates.

3.
The analysis focuses on the central government as no separate data for other entities is
available. Important fiscal risks arise from contingent liabilities of state-owned enterprises (SOEs) and, as
mentioned above, from potential sizable calls on public finances for either the necessary upgrade or the
demolition/clean-up of the refinery in Curaçao or for weather-related shocks to Sint Maarten. For the latter
shocks, a 10 percentage point increase in expenditures would translate into a 5-percentage point increase
in the steady state levels of the public debt ratios. Recent reports indicate that, for some individual SOEs,
debt could amount to as much as 5 percent of GDP. However, a fuller assessment of the actual risk is not
possible, as financial statements are either not available or outdated due to very long publication delays.
4.
Sensitivity analysis shows that the debt path is somewhat susceptive to adverse growth and
fiscal policy shocks. In particular:


The debt ratio would enter an increasing path and reach around 45 percent in Curaçao and
42 percent in Sint Maarten in 2019 if growth is temporarily (in 2015 and 2016) lower by one
historical standard deviation.



Similarly, a standard combined macro-fiscal shock would gradually bring the debt ratio to
around 46 percent in Curaçao and 42 percent in Sint Maarten.



The materialization of a debt shock (from unexpected expenditures on the refinery or
because of other contingent liabilities in Curaçao, or a weather-related expenditure shock in
Sint Maarten), as captured by a one-off 10 percent increase in expenditures in 2017
(Curaçao) and 2015 (Sint Maarten) respectively, would result in a debt path qualitatively
similar to that in the baseline scenario, but correspondingly higher.

5.
The reliability of the assessment depends on the realism of assumptions/forecasts on the
evolution of key economic variables. With this in mind, the results have to be interpreted with caution.
Data reliability and availability is a significant problem in both countries. For example, expenditure-side data
for Sint Maarten have only recently become available and still have significant gaps. Regardless of the data
shortcomings, staff considers that public debt should remain manageable in both countries as long as their
policies are bound by the current rule-based framework. Compliance with said framework is currently
enforced by the Dutch oversight council CFT. This arrangement is expected to be reviewed in 2015, and it
would be important that the existing safeguards and the process improvements achieved under the
oversight of the CFT are not foregone.
6.
The template’s heat map underscores that the public debt held by non-residents could be a
vulnerability. However, it is important to note that this results from the peculiar institutional set-up, by
virtue of which the Netherlands automatically subscribes to the full amount of debt issued by both
countries once the CFT approves the budget as in line with the golden rule. A key concern is that the
current arrangement may run out at some point, exposing both countries to significantly higher borrowing
costs.

INTERNATIONAL MONETARY FUND

3

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

7.
The authorities broadly agree with staff’s assessment that overperforming on the current
budget rule is needed to safeguard debt sustainability in light of potential shocks. Both authorities
have plans for revenue and expenditure-side reforms that should help create and maintain fiscal space to
keep public debt low even in the presence of shocks.

4

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Figure 1. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Baseline Scenario
(in percent of GDP unless otherwise indicated)

Debt, Economic and Market Indicators 1/
Nominal gross public debt
Public gross financing needs
Real GDP growth (in percent)
Inflation (GDP deflator, in percent)
Nominal GDP growth (in percent)
Effective interest rate (in percent)

4/

Actual
2003-2011 2/ 2012
47.0
29.9
-2.8
0.6
0.5
-0.5
3.0
3.2
3.9
3.0
5.5
2.6

2013
31.3
1.1
-0.6
1.9
1.0
3.0

2014
37.6
2.5
0.7
1.9
3.8
2.8

2015
36.2
2.7
0.9
2.0
3.8
2.8

Projections
2016 2017
34.6
34.6
2.1
1.4
1.1
1.1
2.0
2.1
3.2
3.3
2.8
2.8

2018
34.4
1.2
1.3
2.1
3.1
2.8

2019
34.4
1.3
1.3
2.1
2.9
2.8

As of March 31, 2014
Sovereign Spreads
EMBIG (bp) 3/
35
5Y CDS (bp)
35
Ratings
Foreign Local
Moody's
n.a.
n.a.
S&Ps
AAFitch
n.a.
n.a.

cumulative debt-stabilizing
primary
3.0

Contribution to Changes in Public Debt
Actual
2012
-4.5

2013
1.4

2014
6.2

2015
-1.4

2016
-1.6

2017
0.0

Projections
2018 2019
-0.1
0.0

Identified debt-creating flows
-1.9
0.6
Primary deficit
-2.8
0.6
Primary (noninterest) revenue and grants23.5
29.7
Primary (noninterest) expenditure
20.7
30.3
Automatic debt dynamics 5/
0.9
0.0
Interest rate/growth differential 6/
0.9
0.0
Of which: real interest rate
1.2
-0.2
Of which: real GDP growth
-0.3
0.2
Exchange rate depreciation 7/
0.0
0.0
Other identified debt-creating flows
0.0
0.0
Please specify (1) (e.g., drawdown of deposits)
0.0
(negative)
0.0
Contingent liabilities
0.0
0.0
Please specify (2) (e.g., ESM and Euroarea
0.0loans)
0.0
8/
Residual, including asset changes
0.2
-5.1

1.7
1.1
28.5
29.7
0.5
0.5
0.3
0.2
0.0
0.0
0.0
0.0
0.0
-0.3

1.8
1.7
28.2
29.9
0.1
0.1
0.3
-0.2
…
0.0
0.0
0.0
0.0
4.5

1.6
1.7
28.2
29.8
0.0
0.0
0.3
-0.3
…
0.0
0.0
0.0
0.0
-3.0

1.0
1.1
28.2
29.3
-0.1
-0.1
0.3
-0.4
…
0.0
0.0
0.0
0.0
-2.6

0.3
0.4
28.1
28.6
-0.1
-0.1
0.2
-0.4
…
0.0
0.0
0.0
0.0
-0.3

0.1
0.3
28.1
28.4
-0.2
-0.2
0.2
-0.4
…
0.0
0.0
0.0
0.0
-0.2

Change in gross public sector debt

2003-2011
-1.7

0.1
0.3
28.1
28.5
-0.2
-0.2
0.2
-0.4
…
0.0
0.0
0.0
0.0
-0.2

balance 9/
-0.2

4.9
5.5
168.9
174.4
-0.6
-0.6
1.6
-2.2
…
0.0
0.0
0.0
0.0
-1.8

10

8

Debt-Creating Flows

projection
6

(in percent of GDP)

5

4

0

2
-5
0
-10

-2

-15

-4

-6

-20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Primary deficit

Real GDP growth

Real interest rate

Other debt-creating flows

Residual

Change in gross public sector debt

cumulative

Exchange rate depreciation

Source: IMF staff.
1/ Public sector is defined as general government.
2/ Based on available data.
3/ Long-term bond spread over German bonds.
4/ Defined as interest payments divided by debt stock (excluding guarantees) at the end of previous year.
5/ Derived as [(r - π(1+g) - g + ae(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate;
a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
6/ The real interest rate contribution is derived from the numerator in footnote 5 as r - π (1+g) and the real growth contribution as -g.
7/ The exchange rate contribution is derived from the numerator in footnote 5 as ae(1+r).
8/ Includes asset changes and interest revenues (if any). For projections, includes exchange rate changes during the projection period.
9/ Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.

INTERNATIONAL MONETARY FUND

5

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure 2. Curaçao: Public DSA – Composition of Public Debt and Alternative Scenarios
Composition of Public Debt
By Maturity

By Currency

(in percent of GDP)

(in percent of GDP)

60

60
Medium and long-term
Short-term

50

Local currency-denominated
Foreign currency-denominated

50

40

40

30

30

20

20

projection

10

projection

10

0
2003

2005

2007

2009

2011

2013

2015

2017

0
2003

2019

2005

2007

2009

2011

2013

2015

2017

2019

Alternative Scenarios
Baseline

Historical
Expenditure Shock - Refinery

Constant Primary Balance

Gross Nominal Public Debt

Public Gross Financing Needs

(in percent of GDP)
60

(in percent of GDP)
14
12

50

10

40

8

30

6

20
10

projection

4
2

projection

0
2012

2013

2014

2015

2016

2017

2018

0
2012

2019

2013

2014

2015

2016

2017

2018

2019

2017
0.3
2.1
0.8
2.8

2018
0.3
2.1
0.8
2.9

2019
0.3
2.1
0.8
2.9

Underlying Assumptions
(in percent)

Baseline Scenario
Real GDP growth
Inflation
Primary Balance
Effective interest rate

2014
0.7
1.9
-1.7
2.8

2015
0.9
2.0
-1.7
2.8

2016
1.1
2.0
-1.1
2.8

2017
1.1
2.1
-0.4
2.8

2018
1.3
2.1
-0.3
2.8

2019
1.3
2.1
-0.3
2.8

Constant Primary Balance Scenario
Real GDP growth
0.7
Inflation
1.9
Primary Balance
-1.7
Effective interest rate
2.8

0.9
2.0
-1.7
2.8

1.1
2.0
-1.7
2.8

1.1
2.1
-1.7
2.8

1.3
2.1
-1.7
2.8

1.3
2.1
-1.7
2.9

Source: IMF staff.

6

INTERNATIONAL MONETARY FUND

Historical Scenario
Real GDP growth
Inflation
Primary Balance
Effective interest rate

2014
0.7
1.9
-1.7
2.8

2015
0.3
2.0
0.8
2.8

2016
0.3
2.0
0.8
2.8

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Figure 3. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Realism of Baseline
Assumptions

INTERNATIONAL MONETARY FUND

7

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure 4. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Stress Tests
Macro-Fiscal Stress Tests
Baseline
Real GDP Growth Shock

Primary Balance Shock
Real Exchange Rate Shock

Gross Nominal Public Debt

Gross Nominal Public Debt

(in percent of GDP)
50
45
40
35
30
25
20
15
10
5
0
2014 2015 2016

2017

Real Interest Rate Shock

2018

Public Gross Financing Needs

(in percent of Revenue)
180

(in percent of GDP)
5

160

4

140

4

120

3

100

3

80

2

60

2

40

1

20

1

0
2014

2019

2015

2016

2017

2018

2019

0
2014

2015

2016

2017

2018

2019

Additional Stress Tests
Baseline

Combined Macro-Fiscal Shock

Gross Nominal Public Debt

Gross Nominal Public Debt

(in percent of GDP)
50
45
40
35
30
25
20
15
10
5
0
2014 2015 2016

Public Gross Financing Needs

(in percent of Revenue)
180
160
140
120
100
80
60

40
20
2017

2018

0
2014

2019

2015

2016

2017

2018

2019

(in percent of GDP)
5
5
4
4
3
3
2
2
1
1
0
2014 2015 2016

2017

2018

2019

Underlying Assumptions
(in percent)

Primary Balance Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

2014
0.7
1.9
-1.7
2.8

2015
0.9
2.0
-2.7
2.8

2016
1.1
2.0
-2.2
2.9

2017
1.1
2.1
-0.4
2.9

2018
1.3
2.1
-0.3
2.9

2019
1.3
2.1
-0.3
2.9

Real GDP Growth Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

2014
0.7
1.9
-1.7
2.8

2015
-1.2
1.5
-2.7
2.8

2016
-1.0
1.5
-3.0
2.9

2017
1.1
2.1
-0.4
2.9

2018
1.3
2.1
-0.3
2.9

2019
1.3
2.1
-0.3
2.9

Real Interest Rate Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

0.7
1.9
-1.7
2.8

0.9
2.0
-1.7
2.8

1.1
2.0
-1.1
3.1

1.1
2.1
-0.4
3.2

1.3
2.1
-0.3
3.4

1.3
2.1
-0.3
3.5

Real Exchange Rate Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

0.7
1.9
-1.7
2.8

0.9
2.2
-1.7
2.8

1.1
2.0
-1.1
2.8

1.1
2.1
-0.4
2.8

1.3
2.1
-0.3
2.8

1.3
2.1
-0.3
2.9

Combined Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

0.7
1.9
-1.7
2.8

-1.2
1.5
-2.7
2.8

-1.0
1.5
-3.0
3.1

1.1
2.1
-0.4
3.4

1.3
2.1
-0.3
3.5

1.3
2.1
-0.3
3.7

Source: IMF staff.

8

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Figure 5. Curaçao: Public Sector Debt Sustainability Analysis (DSA) – Heat Map
Heat Map
Debt level

1/

Gross financing needs

Debt profile

2/

Real GDP
Primary Balance
Growth Shock
Shock

Real Interest
Rate Shock

Exchange Rate
Shock

Contingent
Liability shock

Real GDP
Primary Balance
Growth Shock
Shock

Real Interest
Rate Shock

Exchange Rate
Shock

Contingent
Liability Shock

External
Financing
Requirements

Change in the
Share of ShortTerm Debt

Public Debt
Held by NonResidents

Foreign
Currency
Debt

Market
Perception

3/

Evolution of Predictive Densities of Gross Nominal Public Debt
(in percent of GDP)
Baseline

10th-25th

Percentiles:

Symmetric Distribution

25th-75th

75th-90th

Restricted (Asymmetric) Distribution

45

45

40

40

35

35

30

30

25

25

20

20

15

15

Restrictions on upside shocks:

10

10

5

5

no restriction on the growth rate shock
no restriction on the interest rate shock
0 is the max positive pb shock (percent GDP)
no restriction on the exchange rate shock

0
2012

2013

2014

2015

2016

2017

2018

0
2012

2019

2013

2014

2015

2016

2017

2018

2019

Debt Profile Vulnerabilities
(Indicators vis-à-vis risk assessment benchmarks, in 2013)

Lower early warning

Curacao

Upper early warning
100%

57%

Not applicable for
Example
600

25

1.5

45

400

17

1

30

26 bp
1

0%
2

1

2

Bond spread

External Financing
Requirement

(in basis points) 4/

(in percent of GDP) 5/

1
2
Annual
Change
in
Short-Term Public
Debt

(in percent of total)

1

2

1

2

Public Debt Held by
Non-Residents

Public Debt in
Foreign Currency

(in percent of total)

(in percent of total)

Source: IMF staff.
1/ The cell is highlighted in green if debt burden benchmark of 85% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not baseline,
red if benchmark is exceeded under baseline, white if stress test is not relevant.
2/ The cell is highlighted in green if gross financing needs benchmark of 20% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not
baseline, red if benchmark is exceeded under baseline, white if stress test is not relevant.
3/ The cell is highlighted in green if country value is less than the lower risk-assessment benchmark, red if country value exceeds the upper risk-assessment benchmark, yellow if
country value is between the lower and upper risk-assessment benchmarks. If data are unavailable or indicator is not relevant, cell is white.
Lower and upper risk-assessment benchmarks are:
400 and 600 basis points for bond spreads; 17 and 25 percent of GDP for external financing requirement; 1 and 1.5 percent for change in the share of short-term debt; 30 and 45
percent for the public debt held by non-residents.
4/ Long-term bond spread over German bonds, an average over the last 3 months, 31-Dec-13 through 31-Mar-14.
5/ External financing requirement is defined as the sum of current account deficit, amortization of medium and long-term total external debt, and short-term total external debt at
the end of previous period.

INTERNATIONAL MONETARY FUND

9

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure 6. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Baseline Scenario
(in percent of GDP unless otherwise indicated)

Debt, Economic and Market Indicators 1/
Actual
2006-2011 2/ 2012
27.0
24.6
0.7
0.3

Nominal gross public debt
Public gross financing needs
Real GDP growth (in percent)
Inflation (GDP deflator, in percent)
Nominal GDP growth (in percent)
Effective interest rate (in percent)

4/

1.4
2.7
4.8
0.8

1.3
4.0
5.5
2.8

2013
24.3
0.5

2014
30.8
2.0

2015
31.5
2.2

0.9
2.1
3.8
2.5

1.7
2.1
4.8
1.9

1.8
2.1
4.4
2.2

Projections
2016 2017
32.0
32.3
1.9
1.8
2.2
2.1
4.3
2.2

2.4
2.1
4.5
2.2

2018
32.3
1.5

2019
31.6
0.9

2.6
2.1
5.0
2.3

2.5
2.1
5.0
2.3

As of March 31, 2014
Sovereign Spreads
EMBIG (bp) 3/
35
5Y CDS (bp)
35
Ratings
Moody's
S&Ps
Fitch

Foreign Local
Baa1
Baa1
n.a.
n.a.
n.a.
n.a.

Contribution to Changes in Public Debt
Actual
2012
-0.5

2013
-0.2

2014
6.5

2015
0.7

2016
0.5

2017
0.3

Projections
2018 2019
-0.1
-0.7

Identified debt-creating flows
0.1
-0.3
Primary deficit
0.7
0.3
Primary (noninterest) revenue and grants18.5
25.6
Primary (noninterest) expenditure
19.1
25.9
Automatic debt dynamics 5/
-0.6
-0.6
6/
Interest rate/growth differential
-0.6
-0.6
Of which: real interest rate
-0.5
-0.3
Of which: real GDP growth
-0.1
-0.3
Exchange rate depreciation 7/
0.0
0.0
Other identified debt-creating flows
0.0
0.0
Please specify (1) (e.g., drawdown of deposits)
0.0
(negative)
0.0
Contingent liabilities
0.0
0.0
Please specify (2) (e.g., ESM and Euroarea
0.0loans)
0.0
Residual, including asset changes 8/
4.1
-0.1

0.4
0.5
23.1
23.6
-0.1
-0.1
0.1
-0.2
0.0
0.0
0.0
0.0
0.0
-0.6

1.1
1.6
23.1
24.7
-0.5
-0.5
0.0
-0.4
…
0.0
0.0
0.0
0.0
5.3

1.0
1.5
23.3
24.8
-0.5
-0.5
0.0
-0.5
…
0.0
0.0
0.0
0.0
-0.3

0.8
1.4
23.5
24.9
-0.6
-0.6
0.0
-0.7
…
0.0
0.0
0.0
0.0
-0.2

0.6
1.3
23.7
25.1
-0.7
-0.7
0.0
-0.7
…
0.0
0.0
0.0
0.0
-0.3

0.4
1.1
23.8
25.0
-0.8
-0.8
0.0
-0.8
…
0.0
0.0
0.0
0.0
-0.4

Change in gross public sector debt

2006-2011
4.2

-0.2
0.5
23.9
24.4
-0.7
-0.7
0.0
-0.8
…
0.0
0.0
0.0
0.0
-0.5

cumulative debt-stabilizing
primary
7.2
balance
-0.7

3.6
7.5
141.4
148.8
-3.8
-3.8
0.1
-3.9
…
0.0
0.0
0.0
0.0
3.6

25

12

Debt-Creating Flows

20

projection

10

(in percent of GDP)

15

8

10

6

5

4

0

2

-5

0

-10

-2

-15

-4

-6

-20
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Primary deficit

Real GDP growth

Real interest rate

Other debt-creating flows

Residual

Change in gross public sector debt

2019

1/ Public sector is defined as general government.
2/ Based on available data.
3/ Long-term bond spread over German bonds.
4/ Defined as interest payments divided by debt stock (excluding guarantees) at the end of previous year.
5/ Derived as [(r - π(1+g) - g + ae(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate;
a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
6/ The real interest rate contribution is derived from the numerator in footnote 5 as r - π (1+g) and the real growth contribution as -g.
7/ The exchange rate contribution is derived from the numerator in footnote 5 as ae(1+r).
8/ Includes asset changes and interest revenues (if any). For projections, includes exchange rate changes during the projection period.
9/ Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.

INTERNATIONAL MONETARY FUND

cumulative

Exchange rate depreciation

Source: IMF staff.

10

9/

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Figure 7. Sint Maarten: Public DSA – Composition of Public Debt and Alternative Scenarios
Composition of Public Debt
By Maturity

By Currency

(in percent of GDP)

(in percent of GDP)

40

40

Medium and long-term
Short-term

35

30

30

25

20

25

15

20

10

15

5

0
-52006

Local currency-denominated
Foreign currency-denominated

35

projection
2008

2010

2012

projection

10

2014

2016

5

2018

-10

0
2006

2008

2010

2012

2014

2016

2018

Alternative Scenarios
Baseline

Historical
Expenditure shock - Hurricane

Constant Primary Balance

Gross Nominal Public Debt

Public Gross Financing Needs

(in percent of GDP)
50

(in percent of GDP)
14

45

12

40

10

35

30

projection

8

25

20

6

15

4

10
5

projection

0
2012

2013

2014

2

2015

2016

2017

2018

0
2012

2019

2013

2014

2015

2016

2017

2018

2019

2017
1.9
2.1
-0.6
2.1

2018
1.9
2.1
-0.6
2.0

2019
1.9
2.1
-0.6
2.0

Underlying Assumptions
(in percent)

Baseline Scenario
Real GDP growth
Inflation
Primary Balance
Effective interest rate

2014
1.7
2.1
-1.6
1.9

2015
1.8
2.1
-1.5
2.2

2016
2.2
2.1
-1.4
2.2

2017
2.4
2.1
-1.3
2.2

2018
2.6
2.1
-1.1
2.3

2019
2.5
2.1
-0.5
2.3

Constant Primary Balance Scenario
Real GDP growth
1.7
Inflation
2.1
Primary Balance
-1.6
Effective interest rate
1.9

1.8
2.1
-1.6
2.2

2.2
2.1
-1.6
2.2

2.4
2.1
-1.6
2.2

2.6
2.1
-1.6
2.3

2.5
2.1
-1.6
2.3

Historical Scenario
Real GDP growth
Inflation
Primary Balance
Effective interest rate

2014
1.7
2.1
-1.6
1.9

2015
1.9
2.1
-0.6
2.2

2016
1.9
2.1
-0.6
2.2

Source: IMF staff.

INTERNATIONAL MONETARY FUND

11

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure 8. Sint Maarten: Public Sector DSA – Realism of Baseline Assumptions

12

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Figure 9. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Stress Tests
Macro-Fiscal Stress Tests
Baseline
Real GDP Growth Shock

Primary Balance Shock
Real Exchange Rate Shock

Gross Nominal Public Debt

Gross Nominal Public Debt

(in percent of GDP)
45

40
35

30
25
20

15
10

5
0
2014

2015

2016

2017

Real Interest Rate Shock

2018

2019

(in percent of Revenue)
200
180
160
140
120
100
80
60
40
20
0
2014 2015 2016

Public Gross Financing Needs
(in percent of GDP)
6
5
4

3
2
1

2017

2018

2019

0
2014

2015

2016

2017

2018

2019

Additional Stress Tests
Baseline

Combined Macro-Fiscal Shock

Gross Nominal Public Debt

Gross Nominal Public Debt

(in percent of GDP)
45
40

35
30

25
20
15

10
5

0
2014

2015

2016

2017

2018

2019

(in percent of Revenue)
200
180
160
140
120
100
80
60
40
20
0
2014 2015 2016

Public Gross Financing Needs
(in percent of GDP)
6

5
4
3
2

1

2017

2018

2019

0
2014

2015

2016

2017

2018

2019

Underlying Assumptions
(in percent)

Primary Balance Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

2014
1.7
2.1
-1.6
1.9

2015
1.8
2.1
-3.4
2.2

2016
2.2
2.1
-3.2
2.3

2017
2.4
2.1
-1.3
2.4

2018
2.6
2.1
-1.1
2.4

2019
2.5
2.1
-0.5
2.5

Real GDP Growth Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

2014
1.7
2.1
-1.6
1.9

2015
-3.0
0.9
-3.2
2.2

2016
-2.6
0.9
-4.7
2.3

2017
2.4
2.1
-1.3
2.4

2018
2.6
2.1
-1.1
2.5

2019
2.5
2.1
-0.5
2.5

Real Interest Rate Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

1.7
2.1
-1.6
1.9

1.8
2.1
-1.5
2.2

2.2
2.1
-1.4
2.4

2.4
2.1
-1.3
2.5

2.6
2.1
-1.1
2.6

2.5
2.1
-0.5
2.8

Real Exchange Rate Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

1.7
2.1
-1.6
1.9

1.8
2.3
-1.5
2.2

2.2
2.1
-1.4
2.2

2.4
2.1
-1.3
2.2

2.6
2.1
-1.1
2.3

2.5
2.1
-0.5
2.3

Combined Shock
Real GDP growth
Inflation
Primary balance
Effective interest rate

1.7
2.1
-1.6
1.9

-3.0
0.9
-3.4
2.2

-2.6
0.9
-4.7
2.5

2.4
2.1
-1.3
2.8

2.6
2.1
-1.1
2.9

2.5
2.1
-0.5
3.0

Source: IMF staff.

INTERNATIONAL MONETARY FUND

13

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN

Figure 10. Sint Maarten: Public Sector Debt Sustainability Analysis (DSA) – Heat Map
Heat Map
Debt level

1/

Gross financing needs 2/

Debt profile

Real GDP
Primary Balance
Growth Shock
Shock

Real Interest
Rate Shock

Exchange Rate
Shock

Contingent
Liability shock

Real GDP
Primary Balance
Growth Shock
Shock

Real Interest
Rate Shock

Exchange Rate
Shock

Contingent
Liability Shock

External
Financing
Requirements

Change in the
Share of ShortTerm Debt

Public Debt
Held by NonResidents

Foreign
Currency
Debt

Market
Perception

3/

Evolution of Predictive Densities of Gross Nominal Public Debt
(in percent of GDP)
Baseline

10th-25th

Percentiles:

Symmetric Distribution
40
35

30
25
20

15
10
5

2013

2014

75th-90th

Restricted (Asymmetric) Distribution

45

0
2012

25th-75th

2015

2016

2017

2018

2019

50
45
40
35
30
25
20
15
10
5
0
2012

Restrictions on upside shocks:
no restriction on the growth rate shock
no restriction on the interest rate shock
0 is the max positive pb shock (percent GDP)
no restriction on the exchange rate shock

2013

2014

2015

2016

2017

2018

2019

Debt Profile Vulnerabilities
(Indicators vis-à-vis risk assessment benchmarks, in 2013)

Lower early warning

Sint Maarten

Upper early warning
95%

39%

Not applicable for
Example
600

25

1.5

400

17

1

45
0.5%

30

26 bp
1

2

1

2

Bond spread

External Financing
Requirement

(in basis points) 4/

(in percent of GDP) 5/

1
2
Annual
Change
in
Short-Term Public
Debt

(in percent of total)

1

2

1

2

Public Debt Held by
Non-Residents

Public Debt in
Foreign Currency

(in percent of total)

(in percent of total)

Source: IMF staff.
1/ The cell is highlighted in green if debt burden benchmark of 85% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not baseline,
red if benchmark is exceeded under baseline, white if stress test is not relevant.
2/ The cell is highlighted in green if gross financing needs benchmark of 20% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not
baseline, red if benchmark is exceeded under baseline, white if stress test is not relevant.
3/ The cell is highlighted in green if country value is less than the lower risk-assessment benchmark, red if country value exceeds the upper risk-assessment benchmark, yellow if
country value is between the lower and upper risk-assessment benchmarks. If data are unavailable or indicator is not relevant, cell is white.
Lower and upper risk-assessment benchmarks are:
400 and 600 basis points for bond spreads; 17 and 25 percent of GDP for external financing requirement; 1 and 1.5 percent for change in the share of short-term debt; 30 and 45
percent for the public debt held by non-residents.
4/ Long-term bond spread over German bonds, an average over the last 3 months, 31-Dec-13 through 31-Mar-14.
5/ External financing requirement is defined as the sum of current account deficit, amortization of medium and long-term total external debt, and short-term total external debt at
the end of previous period.

14

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

EXTERNAL DEBT SUSTAINABILITY ANALYSIS
1.
The need to finance large external deficits and public investment budgets will push gross
external debt higher over the projection horizon. Under the baseline scenario, gross external debt
would increase from 98 percent of the union’s combined GDP to 110 percent in 2018, from where it would
embark on a gradual decline. This forecast is based on the following assumptions:
1) Average non-debt creating FDI of about 2.5 percent of GDP, versus an average of 1.7% of GDP in
the post-independence (2010-13) period, reflecting some increased appeal of the two islands to
foreign investors from the pick-up in global tourism demand and assumed progress on structural
reforms;
2) An average of about 3 percent over 2014-2018 in inflows associated to the repayment by the
Netherlands of the Netherlands’ Antilles’ debt. This financing source is a reduction of the union’s
external assets and thus results in an increase of net external debt, but not of gross external debt.
3) Other macroeconomic variables as per the baseline macroeconomic framework.
2.
A full assessment of whether this constitutes a threat to debt sustainability is hampered,
however, by lack of information on the two countries’ external assets. These are presumed to be
large, in line with the two countries’ high per-capita income.1 However, the fact that the gross debt is
projected to reach levels in line with pre-debt relief peaks suggests that the associated vulnerabilities may
stay in the period ahead.
3.
Gross external debt is sensitive to growth and especially current account shocks, which
further underscores the importance of flexibility- and competitiveness-enhancing reforms for overall
sustainability. The impact of an exchange rate depreciation would be attenuated by the fact that public
external debt is in local currency (and at very long maturities).

1

In its March 2014 reaffirmation of Curacao’s 'A-/A-2' (investment grade) ratings, Standard and Poor’s indicated that
it “estimates that Curacao is a large net external creditor, which mitigates its weak liquidity position,” while noting
that ”official data on Curacao's international investment position are lacking, representing a significant gap in terms
of statistical coverage.”

INTERNATIONAL MONETARY FUND

15

KINGDOM OF THE NETHERLANDS—CURAÇAO AND SINT MAARTEN
Figure 1. Curacao and Sint Maarten: External Debt Sustainability: Bound Tests 1/2/
1/ 2/

Figure 11. Curaçao and Sint Maarten: External Debt Sustainability: Bound Tests
(External debt in percent of GDP)
(External debt in percent of GDP)
Interest rate shock (in percent)

Baseline and historical scenarios
180

Gross financing need
under baseline Historical
(right scale)

170

160
150

140
130
120

110
Baseline

100

90
80
2010

2012

2014

2016

2018

150

170

Baseline:

4.6

160

Scenario:

5.5

Historical:

5.6

150

140
130
120

i-rate
shock

110
100

Baseline

90
80
2010

2012

2014

2016

2018

180

180

160

180

Non-interest current account shock
(in percent of GDP)

Growth shock
(in percent per year)
170

95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0

Baseline:

1.5

Scenario:

0.2

Historical:

0.7

170

Baseline:

-2.6

160

Scenario:

-6.4

150

Historical:

-

140

140

130

130

120

110
100

CA shock

120

Growth
shock

110
Baseline

100

Baseline

90

90
80
2010

2012

2014

2016

2018

80
2010

2012

2014

2016

Combined shock 3/

Real depreciation shock 4/

180

180
Combined
shock

170

160

2018

170

160

150

150

140

140

130

130

120

120

30 %
depreciation

110

110
100

Baseline

100

Baseline

90

90
80
2010

2012

2014

2016

2018

80
2010

2012

2014

2016

2018

Sources: International Monetary Fund, Country desk data, and staff estimates.
1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation
shocks. Figures in the boxes represent average projections for the respective variables in the baseline
and scenario being presented. Ten-year historical average for the variable is also shown.
2/ For historical scenarios, the historical averages are calculated over the ten -year period, and the
information is used to project debt dynamics five years ahead.
3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current
account balance.

16

INTERNATIONAL MONETARY FUND

KINGDOM OF THE NETHERLANDS – CURAÇAO AND SINT MAARTEN

Table 1. Curaçao and Sint Maarten: External Debt Sustainability Framework, 2009–19
(In percent of GDP, unless otherwise indicated)

2010

Actual
2011
2012

2014

2015

2016

Projections
2017
2018

2019

Baseline: External debt

111.7

104.8

93.7

98.1

101.2

103.5

106.0

108.5

110.0

109.6

Change in external debt
Identified external debt-creating flows (4+8+9)
Current account deficit, excluding interest payments
Deficit in balance of goods and services
Exports
Imports
Net non-debt creating capital inflows (negative)
Automatic debt dynamics 1/
Contribution from nominal interest rate
Contribution from real GDP growth
Contribution from price and exchange rate changes 2/
Residual, incl. change in gross foreign assets (2-3) 3/

28.6
19.9
22.3
25.2
66.9
92.1
-2.7
0.3
2.9
2.2
-4.8
8.6

-6.9
16.2
15.9
17.9
80.2
98.1
-1.2
1.5
5.0
0.9
-4.5
-23.1

-11.1
13.9
14.7
15.0
86.0
101.1
-1.5
0.7
4.3
0.1
-3.7
-25.0

4.4
12.6
11.0
11.4
84.2
95.6
-1.5
3.1
4.7
0.2
-1.8
-8.2

3.1
9.0
7.8
8.8
85.2
94.0
-2.6
3.9
4.8
-0.9
...
-5.9

2.4
5.6
4.7
6.8
86.3
93.1
-2.7
3.6
4.7
-1.1
...
-3.3

2.5
3.8
3.3
5.5
87.3
92.8
-2.7
3.2
4.6
-1.4
...
-1.3

2.4
2.5
1.9
4.4
87.9
92.4
-2.6
3.2
4.7
-1.5
...
-0.1

1.5
2.0
1.6
3.6
88.6
92.2
-2.6
3.0
4.7
-1.7
...
-0.5

-0.4
1.5
1.3
3.2
89.4
92.6
-2.6
2.8
4.6
-1.7
...
-2.0

External debt-to-exports ratio (in percent)

167.0

130.6

108.9

116.5

118.8

120.0

121.5

123.3

124.1

122.5

Gross external financing need (in billions of US dollars) 4/
in percent of GDP

3.3
86.0

3.4
85.8

3.2
77.6

2.8
67.6

2.6
59.2

2.6
57.4

2.7
57.1

2.8
57.0

2.9
57.7

3.0
57.8

101.2

112.5

125.3

139.5

153.6

166.2

0.9
3.1
5.1
5.3
2.3
-7.8
2.6

1.2
2.7
4.8
5.3
3.0
-4.7
2.7

1.4
2.0
4.6
4.7
3.2
-3.3
2.7

1.4
2.1
4.6
4.4
3.1
-1.9
2.6

1.6
2.0
4.5
4.4
3.5
-1.6
2.6

1.6
1.8
4.3
4.4
3.8
-1.3
2.6

2013

10-Year

10-Year

Historical
Average

Standard
Deviation

0.7
3.3
5.6
6.2
6.7
-11.9
1.6

2.5
2.1
1.8
9.7
8.7
7.6
2.2

Scenario with key variables at their historical averages 5/
Key Macroeconomic Assumptions Underlying Baseline
Real GDP growth (in percent)
GDP deflator in US dollars (change in percent)
Nominal external interest rate (in percent)
Growth of exports (US dollar terms, in percent)
Growth of imports (US dollar terms, in percent)
Current account balance, excluding interest payments
Net non-debt creating capital inflows

-2.8
6.1
3.6
-2.4
5.1
-22.3
2.7

-0.8
4.2
4.7
23.9
10.0
-15.9
1.2

-0.1
3.7
4.3
11.1
6.8
-14.7
1.5

-0.3
1.9
5.1
-0.5
-3.9
-11.0
1.5

Debt-stabilizing
non-interest
current account 6/
-1.7

1.0

1/ Derived as [r - g - r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms,
g = real GDP growth rate, e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
2/ The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0)
and rising inflation (based on GDP deflator).
3/ For projection, line includes the impact of price and exchange rate changes.
4/ Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
5/ The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
6/ Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP)
remain at their levels of the last projection year.

INTERNATIONAL MONETARY FUND

17

Press Release No. 14/384
FOR IMMEDIATE RELEASE
August 27, 2014

International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA

IMF Executive Board Concludes 2014 Article IV Consultation Discussions with the
Kingdom of the Netherlands—Curaçao and Sint Maarten
On July 30, 2014, the Executive Board of the International Monetary Fund concluded the
2014 Article IV consultation discussions with Curaçao and Sint Maarten, two autonomous
countries within the Kingdom of the Netherlands, and considered and endorsed the staff
appraisal without a meeting.1,2
After some initial slippages, both countries have brought their fiscal policies in compliance with
the fiscal rules that had been agreed with the Netherlands in 2010 in exchange for significant
debt relief. Curaçao in particular has decisively addressed the spending pressures related to its
aging population, which were especially acute. This supported a gradual but steady reduction in
the union’s current account deficit—the key economic vulnerability flagged by the
2011 Article IV Consultation discussions—though this remains large.
Curaçao's real GDP contracted by an estimated 0.5 percent in both 2012 and 2013 due to the
needed fiscal adjustment, a continued decline in the international financial sector, and the slow
global recovery, all combined with long-standing structural weaknesses. Sint Maarten has been
recovering, growing by about 1 percent on average over 2012-13, thanks to the ongoing recovery
in the United States (the source of 60 percent of its tourists) and the construction of the Simpson
Bay causeway.
The improving global outlook and the recovery in tourism are expected to support economic
activity in the near term, especially in Sint Maarten. Curacao’s economic activity will also
1

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually
every year. A staff team visits the country, collects economic and financial information, and discusses with officials
the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which
forms the basis for discussion by the Executive Board.
2

Article IV consultations are concluded without a Board meeting when the following conditions apply: (i) there are
no acute or significant risks, or general policy issues requiring Board discussion; (ii) policies or circumstances are
unlikely to have significant regional or global impact; (iii) in the event a parallel program review is being completed,
it is also being completed on a lapse-of-time basis; and (iv) the use of Fund resources is not under discussion or
anticipated.

2
benefit from the construction of a large new hospital. Growth should accelerate in the medium
term, especially if structural bottlenecks hampering investment, innovation, and competitiveness
are addressed.
Executive Board Assessment
In concluding the 2014 Article IV consultation with Curaçao and Sint Maarten, Executive
Directors endorsed the staff’s appraisal, as follows:

The authorities of both countries have made important efforts to strengthen their underlying
fiscal position. Looking forward, they should continue to gear fiscal policy toward supporting
ongoing external adjustment and building buffers. Curaçao should reform the public sector
pension system, achieve further efficiency gains in the public apparatus, and improve the
governance of its public companies. For Sint Maarten, strengthening the tax administration to
tackle declining tax compliance and fund its newly acquired functions is critical. The latter could
also be bolstered by increased contributions to the budget by public companies. The next
government after the coming elections should build on the current administration’s efforts to
keep public wage developments in check, including by reviewing the existing indexation
mechanisms. These policies would allow both countries to maintain public debt at sustainable
levels despite important investment needs, and build buffers to respond to future shocks.
Keeping public sector wage growth firmly in line with productivity is also important for its
signaling effect on private sector wages.
The central bank should encourage prudent lending behavior and closely monitor banks’
deteriorating asset quality. Rather than resorting to bank-level credit ceilings, banks’ excess
liquidity should be sterilized through a more aggressive use of certificates of deposits and further
reserve requirement increases as appropriate. Over time, the existing limits and penalties on
outward investment by pension funds should be removed. As planned, the central bank should
divest its holdings of non-financial corporates’ bonds, and refrain from direct financing of nonfinancial companies in the future.
Significantly greater effort is needed in tackling structural impediments to growth and job
creation. A dynamic private sector, which is the linchpin of sustained growth in the medium
term, requires tackling the maze of permits and licenses, which has hampered investment and
innovation, especially in Curaçao. Rigid labor laws and the system of welfare payments for
unemployed should be reviewed, to shift emphasis from protecting jobs to protecting workers,
facilitate needed cyclical adjustments in the workforce, and ensure adequate incentives and
support for job search by the unemployed. Restrictions to hiring foreign workers should be
removed, while at the same time ensuring that all workers (local and domestic) are afforded
adequate labor conditions. These policies and reforms would also underpin the currency peg
(which has provided both countries with a stable macroeconomic environment since 1971) via
increased flexibility, competitiveness, and capacity to withstand shocks.

3

Finally, both governments should improve the statistical infrastructure and data—which are
presently not adequate for effective macroeconomic analysis, surveillance, and policy
response—through greater investment and, where appropriate, technical assistance.

4
Curacao: Selected Economic and Financial Indicators, 2009–15
2

Area

444 (km )

Population, thousand (2013)

152.8

Percent of population below age 15 (2013)

20.5

Literacy rate, in percent (2010)

96.7

Percent of population aged 65+ (2013)

13.7

Life expectancy at birth, male (2012)

74.4

Infant mortality, over 1,000 live births (2012)

11.3

Life expectancy at birth, female (2012)

80.7

2009

2010

2011

2012

2013

2014
Proj.

2015

Real economy (change in percent)
Real GDP 1/

-0.6

-3.6

-0.5

-0.5

-0.6

0.7

0.9

Private consumption

-5.5

7.0

0.0

-0.5

-2.5

-1.0

0.3

Public consumption

2.9

1.6

-2.0

-0.1

-3.8

0.1

0.3

Gross fixed investment

1.3

-2.8

0.4

0.2

0.1

2.5

0.4

Net foreign balance 2/

1.0

-8.5

3.0

-0.1

1.6

0.4

0.4

CPI (12-month average)

1.8

2.8

2.3

3.2

1.3

1.9

2.0

Unemployment rate (in percent)

9.6

9.7

9.8

11.5

13.0

12.4

11.9

Primary balance

10.4

11.5

-2.1

-0.5

-1.1

-1.6

-1.6

Primary balance w/o debt relief

2.1

5.4

-2.1

-1.5

-1.1

-1.6

-1.6

Current balance

8.1

10.0

-1.5

0.3

1.5

1.2

1.0

Overall balance

7.8

9.6

-3.0

-1.4

-2.0

-2.4

-2.4

Public debt

43.6

28.1

34.5

29.9

31.3

37.6

36.2

Goods trade balance

-37.0

-41.3

-39.5

-41.7

-38.3

-37.1

-36.4

Exports of goods

23.5

23.1

30.5

30.3

22.4

22.6

22.5

Imports of goods

60.5

64.4

70.1

72.0

60.8

59.7

58.9

13.7

8.4

14.3

17.4

21.7

23.4

25.3

37.1

32.4

40.4

45.4

49.7

50.5

51.4

General government finances (in percent of GDP) 3/

Balance of payments (in percent of GDP)

Service balance
Exports of services
Imports of services
Current account
Capital and financial account

23.4

23.9

26.2

28.0

28.0

27.1

26.1

-16.7

-30.9

-27.3

-28.1

-21.1

-17.1

-13.3

8.5

26.7

26.4

24.8

19.5

18.1

16.1

Net FDI
Net official reserves (in millions of US
dollars)

1.7

2.4

3.2

1.4

1.0

2.4

2.4

929.4

1,234.0

1,244.1

1,246.3

1,220.6

1,293.8

1,440.4

(in months of imports of goods)

6.4

7.8

7.0

6.6

7.6

7.9

8.6

(In percent of short-term debt)

76.2

83.8

90.5

109.9

124.6

119.9

122.9

External debt (in percent of GDP)

74.2

107.3

102.8

93.2

103.3

109.6

114.7

3,407

Memorandum items:
Nominal GDP (in millions of US dollars)

2,871

2,951

3,039

3,131

3,162

3,282

Per capita GDP (change in percent)

-4.1

2.3

2.5

2.0

0.0

2.8

Real effective rate (2007=100)

93.8

100.1

97.6

96.3

95.6

Fund position

..

2.8
…

Curaçao is part of the Kingdom of the Netherlands
and does not have a separate quota.
Exchange rate
The Netherlands' Antilles guilder is pegged to the U.S. dollar
at NA.f 1.79 = US$1.
Sources: Data provided by the authorities; and IMF staff estimates.
1/ Based on IMF staff estimates of deflators.
2/ Contribution to GDP growth.
3/ Data from 2009-2010 reflect the fiscal operations of the local island government. Data from 2011 onwards refer to the
new island government that has integrated the fiscal operations of the previous central government of the
Netherlands Antilles.

5
St. Maarten: Selected Economic and Financial Indicators, 2009–15
2

Area

34 (km )

Population (2012)

Percent of population below age 15 (2010)

23.4

Literacy rate, in percent (2010)

95.8

Percent of population aged 65+ (2010)

3.6

Life expectancy at birth, male (2010)

73.1

Infant mortality, over 1,000 live births (2010)

6.0

Life expectancy at birth, female (2010)

78.2

2009

2010

39

2011

2012

2013

2014

2015

Proj.
Real economy (change in percent)
Real GDP 1/

-5.0

0.0

-1.7

1.3

0.9

1.7

1.8

Private consumption

-5.0

-6.9

-2.0

0.5

0.0

1.1

3.0

Public consumption

6.2

-0.9

2.0

1.7

-1.7

1.5

1.5

Gross fixed investment

1.2

-10.7

-1.3

2.8

0.7

1.4

2.1

Net foreign balance 2/

3.0

7.2

-1.5

0.1

0.8

0.5

-0.4

CPI (12-month average)

0.7

3.2

4.6

4.0

2.5

2.1

2.1

Unemployment rate (in percent)

12.2

12.0

12.0

10.4

8.5

8.4

8.2

Primary balance

-1.0

7.0

-1.0

-0.3

-0.5

-1.6

-1.5

Primary balance w/o debt relief

-1.0

2.9

-1.0

-0.1

-0.5

-1.6

-1.5

Current balance

-0.2

7.8

-0.3

0.9

-0.3

0.0

0.5

Overall balance

-1.0

7.0

-1.7

-1.0

-1.1

-2.0

-2.0

Public debt

33.4

15.4

25.0

24.6

24.3

30.8

31.5

Goods trade balance

-71.0

-66.9

-65.1

-64.8

-73.5

-76.1

-78.5

Exports of goods

15.2

13.8

13.6

13.3

17.3

14.9

14.8

Imports of goods

86.2

80.7

78.7

78.1

90.7

91.0

93.4

63.4

67.0

71.5

79.4

78.4

82.6

84.9

89.3

90.7

96.8

105.7

104.2

107.4

109.1

General government finances (in percent of GDP) 3/

Balance of payments (in percent of GDP)

Service balance
Exports of services

25.9

23.7

25.4

26.3

25.9

24.8

24.3

Current account

Imports of services

-15.1

-6.2

-0.3

9.6

1.4

1.5

2.2

Capital and financial account

12.4

-0.2

-0.2

-18.5

-8.8

1.0

1.3

4.6

3.3

-5.3

1.8

3.0

3.0

3.3

293.5

389.7

249.1

249.5

239.6

277.2

333.5

Net FDI
Net official reserves (in millions of US
dollars)
(in months of imports of goods)

4.8

6.5

4.1

3.9

3.1

3.4

3.8

(In percent of short-term debt)

62.0

82.1

54.7

60.3

63.6

76.3

95.4

External debt (in percent of GDP)

113.2

126.3

111.3

95.1

82.0

75.4

69.6

Nominal GDP (in millions of US dollars)

855

892

932

983

1,021

1,070

1,117

Per capita GDP (change in percent)

3.9

7.9

2.7

3.9

1.0

4.1

3.8

101.4

103.0

103.5

106.2

104

…

…

Memorandum items:

Real effective rate (2000=100)
Fund position
Exchange rate

St. Maarten is part of the Kingdom of the Netherlands and does not have a separate quota.
The Netherlands' Antilles guilder is pegged to the U.S. dollar at NA.f 1.79 = US$1.

Sources: Data provided by the authorities; and IMF staff estimates.
1/ Based on IMF staff estimates of deflators.
2/ Contribution to GDP growth.
3/ Data from 2009-2010 reflect the fiscal operations of the local island government. Data from 2011 onwards refer to the new island
government that has integrated the fiscal operations of the previous central government of the Netherlands Antilles.