Curaçao has escaped a budgetary instruction for now. However, the Rhuggenaath Cabinet needs to quickly come up with structural reforms to both reduce the deficits in compliance with the consensus Kingdom Law Financial Supervision via its enforcement arm CFT and grow the slumping economy as also pointed out by the International Monetary Fund (IMF). So, it’s not “either/or” but rather “and” in this case, making the challenge even bigger.
In addition to public finances, the negative balance of payments is becoming a problem that – if left unchecked – could ultimately also affect St. Maarten should it ever put pressure on the value of the monetary union’s shared currency the Netherlands Antilles guilder and its peg to the US dollar. Keeping the foreign exchange reserves at an adequate level is obviously crucial in that sense.
The PAR/MAN/PIN government in Willemstad will have its hands full with tackling these two already-by-themselves complicated issues simultaneously. Moreover, it must do so with the Isla refinery, oil transhipment facility and all related shipping plus other business activities practically at a standstill until perhaps long after the ongoing crisis in neighbouring Venezuela is finally resolved, which will be who-knows-when.
While allowed some deficits due to the devastation caused by Hurricanes Irma and Maria in September 2017, St. Maarten too is finding it difficult to meet the budget requirements. These are being set not just by CFT but also the Dutch government as a condition for liquidity support needed to cover the shortfalls and keep the country running.
It must be said, despite the blow suffered by the local hospitality industry, the Dutch side has held its own in foreign exchange earnings, thanks in part to insurance payments and assistance from the Netherlands. The latter included early relief but also the first disbursements of the Dutch-sponsored Trust Fund managed by the World Bank.
In addition to urgently passing and implementing the 2019 budget, the focus must be on further reviving the tourism economy to create the necessary income, for which reconstruction of the airport is a key ingredient. And yes, here too, this must be done at the same time and will take some quality multi-tasking.
