WILLEMSTAD - The Pisas government, like the Jacobs government of Sint Maarten, intends to freeze civil servants' wages in order to keep budget expenditures under control. The International Monetary Fund (IMF) reported on this last month.
The IMF paid a virtual visit to Curaçao and Sint Maarten. The 'Concluding Statement' states how the budget deficits will be eliminated. Both governments indicate that they intend to maintain wage freezes in the coming years to monitor government spending. In the case of Curaçao, it is added that the government has prepared a package of measures to reduce healthcare costs as much as possible.
In its Concluding Statement, the IMF also considers the Caribbean Reform and Development Agency (COHO). According to the IMF, efforts so far have focused on diagnostics and planning, and the implementation phase has yet to begin. “Both islands had unfinished reform agendas when the coronavirus pandemic began. This changed the circumstances," the IMF said.
The Curaçao government is advised by the IMF to introduce a full VAT system (value added tax) instead of the current OB (sales tax). The economy has started to recover in the second half of 2021, according to the IMF. Employment in the formal sector is still down. This is partly due to the further contraction of the Curaçao refinery and is probably a move towards the informal sector. Both islands are experiencing higher inflation due to rising prices for imports and disruption of the global supply side.
“We are counting on a GDP growth (gross domestic product) of two percent for Curaçao this year and seven percent next year. On Sint Maarten, GDP is expected to increase by four percent in 2021 and by twelve percent in 2022," according to the IMF.