Curaçao’s journey to constitutional autonomy was intended to mark a new era of economic stability and self-sufficiency. As part of the transition, a package of debt relief and structural reforms was envisioned to create a resilient foundation for the island’s future.
However, while the debt relief (through forgiveness) materialized, the crucial structural reforms did not. Consequently, Curaçao entered its new status already in a less than ideal state, a vulnerability that would soon be severely tested by shocks.
The economic downturn caused by the collapse of trade with Venezuela, followed by the closure of the refinery, once a cornerstone of Curaçao’s economy, and ultimately the COVID-19 pandemic, exposed the country’s fragile fiscal health with the latter contributing to cost of goods rising faster than wages, and thereby causing serious cost-of-living pressures. Without the promised reforms that should have strengthened public finances, Curaçao found itself “flatfooted” (unprepared and financially weak).
Hence the return of the focus on the unfinished structural reforms once more, through the so called “land package”. The pandemic was merely the final blow in a series of missed opportunities, proving that economic sustainability cannot be built on debt forgiveness alone.
As of late, Curaçao is finally recovering, buoyed by a growth spurt in tourism that has helped restore GDP to pre-pandemic levels. However, the long-overdue reform efforts are still incomplete. Many still need to be implemented, and put on a sustainable footing. Not to mention that outcomes and effects still remains to be seen.
So, whilst the urgency of structural reforms remains, yet another looming threat could once again catch the island off guard: the return of Donald Trump to the U.S. presidency and the uncertainty surrounding his policies stances. Trump’s previous term saw an approach that disrupted global trade, affected financial markets, and strained relations with traditional allies.
This new term appears to be building on the first, by adding protectionist measures, tighten economic policies, or shift geopolitical priorities in ways that probably will negatively impact small economies like Curaçao (see CBCS publication). Given Curaçao’s persistent economic fragility, it cannot afford to be continuously blindsided by external shocks.
The key lesson is clear: We have been busy with structural reforms for close to 15 years, and we cannot delay this more. They need to be implemented diligently. They are necessary safeguards against inevitable economic storms.
The island must solidify its fiscal policies, diversify its economy, and strengthen financial buffers before the next crisis strikes. Otherwise, Curaçao risks repeating the mistakes of the past, once again finding itself flat-footed when the world changes overnight.
The time for action is now.
Michael “Mike” Willem
Former minister and commissioner
