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International Monetary Fund. Western Hemisphere Dept.

IMF Country Report No. 21/81

International Monetary Fund. Western Hemisphere Dept.
Aruba managed to contain the pandemic in the first months of the outbreak but experienced a resurgence of new infections in the summer. The economic impact of COVID-19 is particularly severe given Aruba’s high dependency on tourism. While the authorities’ swift response has helped contain the human and economic damage, it could not avoid a severe GDP contraction.
International Monetary Fund. Western Hemisphere Dept.

1. The Aruban economy was gaining momentum before the pandemic.1 Several recessions since 2008 had weakened activity and the fiscal accounts, but a slow-paced economic recovery was underway. Real GDP growth is estimated to have softened to 0.4 percent in 2019, as private consumption was held back by increases in indirect taxes, but was projected to firm at about 1 percent in the medium term, underpinned by resilient tourism activity and the coming on stream of large investment projects. As the positive output gap narrowed and energy prices remained at record lows, inflation decreased to 3.6 percent at end-2019 from 4.5 percent at end-2018 and was projected to converge to 2 percent. The unemployment rate declined to 5.2 percent despite increased labor force participation, but per capita real GDP in 2019 was about 14 percent below its 2007 level.

International Monetary Fund. Western Hemisphere Dept.

1. DSA debt perimeter. For the purpose of this DSA, the debt perimeter covers the central government sector due to a lack of consolidated general government2 and public sector data and excludes short-term debt which is roughly 2 percent of GDP. Prior to the COVID-induced recession, the debt of state-owned enterprises (SOEs) presented low fiscal risk to the central government as the three largest SOEs (Aruba Airport Authority, Aruba Port Authority, and Utilities Aruba) were profitable companies with good credit standing. While the balance sheets of these entities have deteriorated as a result of the pandemic, to date there are no explicit contingent liabilities or guarantees.