WILLEMSTAD – A planned increase in the Algemene Ouderdomsverzekering (AOV) will give Curaçao’s economy a short-term boost, but could significantly strain public finances in the years ahead if no additional reforms are implemented. That is the conclusion of a new economic analysis prepared by the Central Bank of Curaçao and Sint Maarten (CBCS) at the request of the government .
The government intends to raise the monthly AOV benefit as of January 1, 2026, after years without indexation despite positive economic growth since 2021. The current maximum AOV benefit stands at 862 guilders per month. According to the Central Bank, around 55,000 people are entitled to AOV payments, of whom approximately 35,000 live in Curaçao, Sint Maarten, or the BES islands.
In its advisory report, the Central Bank analyzed several scenarios for increasing the AOV and assessed their impact on economic growth, inflation, employment, and government finances through 2029. The findings show that higher pensions would stimulate consumption and modestly increase economic growth in the short term. However, the report also warns that higher payouts will accelerate deficits in the so-called Schommelfonds, the reserve fund used to absorb shortfalls in social security schemes.
Once that fund turns negative, the government is legally required to cover the deficit, placing direct pressure on the national budget. Without compensating measures, some scenarios could eventually lead to breaches of Curaçao’s fiscal rules.
The Central Bank stresses that any AOV increase should be accompanied by broader reforms to safeguard long-term sustainability, particularly in light of Curaçao’s rapidly aging population and declining labor force participation.
