WILLEMSTAD - Although the economy is recovering, the challenges for Curaçao remain great. The country must turn the deficit on the regular service into a surplus, bring the public debt to an acceptable level and implement reforms to safeguard the social security system for future generations.
The Board of Financial Supervision (Cft) has this message for the government of Curaçao. Curaçao's government debt now amounts to 4.3 billion guilders. “Curaçao faces a major challenge to reduce government debt and bring it to a sustainable level as quickly as possible.”
The adopted national budget for 2022 shows a deficit of 162 million on the regular service. “The Cft has emphasized that it is of great importance that a budget balance is achieved in 2023 and a surplus in later years, so that a start can be made on paying off the national debt.”
In 2025, for example, a loan of 140 million, which still arises from the debt restructuring in 2010, must be repaid, Cft indicated.
“It is positive that Curaçao has been successful in collecting back taxes in the past six months.” Also in 2022, in addition to a further increase in tax compliance, the announced restructuring of the Tax and Customs Administration should lead to structurally higher tax revenues.
The most important message from Cft chairman Raymond Gradus is 'to use the economic recovery to sustainably strengthen the Curaçao economy'.
“With the recovery of tourism, the economy is also picking up again. Curaçao must use this period of recovery to structurally reform and sustainably strengthen the economy.” The Commission has insisted on this in the discussions with the government of Curaçao.
According to the Central Bank of Curaçao and Sint Maarten (CBCS), the year 2021 ended with a real growth of 1.7 percent. Real growth is projected at 6.6 percent for this year.
“Years of economic downturn and rising government debt have significantly worsened public finances,” notes the Cft. Recently, two new members joined the committees, namely Hans Hoogervorst as a member on the nomination of the Netherlands and Julisa Frans as a member on the nomination of Sint Maarten for the Cft Curaçao and Sint Maarten.
Of course there are the references to the 'reforms' and the 'Country Package': "Reforms as agreed in the National Package are essential to increase the growth potential of the Curaçao economy," the college reports. “The opportunities that the National Package offers to this end must be fully exploited and must be tackled energetically.”
According to the Cft, targeted investments, such as in infrastructure, will contribute to sustainable economic growth. “The preparation of a multi-year investment plan on the basis of which an integral assessment can be made is indispensable.”
According to Gradus, it will then have to be examined in consultation with the Netherlands whether Curaçao can take out loans for capital investments, in anticipation of the balance on the regular service in 2023.