St. Maarten is expected to see its gross domestic product (GDP) increase by three per cent next year, according to the Central Bank of Curaçao and St. Maarten (CBCS) in its most recent publication. That is in principle good news, but people must keep in mind that the local tourism economy continues to recover from a massive blow dealt by Hurricane Irma in September 2017.
The Committee for Financial Supervision CFT had earlier mentioned an eight per cent contraction in 2018 followed by a 2.5 per cent expansion in 2019. However, CBCS now says the latter was 5.5 per cent, which could mean getting back to the pre-Irma level already next year.
It’s encouraging that this is taking place with the airport still operating in a makeshift facility expected to go from 60 to 80 per cent of 2016 arrivals and despite a drop in cruise-ship visits. In addition, several large resorts, including Royal Palm, Flamingo Beach and the hotel part of Westin, are yet to reopen and the room inventory of Great Bay Sonesta, Summit Hotel, Ocean Club and others is – at least for now – gone.
So, things are not so bad under the circumstances and look to get better as more rebuilt properties come online and new ones are constructed. The home-sharing phenomenon also helped promote alternative visitor accommodations.
Prudence anyhow remains in order, with consecutive deficits on the national budgets and an ongoing need for liquidity support from the Netherlands. Fiscal risks should be avoided where possible.
Take, for example, the hospital project. The new Curaçao Medical Centre (CMC) announced that its day tariff is double that of the highest category in first class at the former St. Elisabeth Hospital and more than four times that of the lowest category in third class.
This is something especially that country’s Social Insurance Bank SVB must take into consideration, although the improvements in medical care are also to save millions in referrals abroad. The same argument is made regarding St. Maarten’s future hospital, but a rate increase of 100-plus per cent seems rather steep.
Curaçao’s government took the position that opening CMC may not lead to collective health coverage premium hikes. Can St. Maarten do the same regarding Social and Health Insurances SZV that is co-financing the hospital project at Cay Hill?
Time will tell.
