International Monetary Fund. Western Hemisphere Dept.
The currency union of Curaçao and Sint Maarten has important strengths, including a high level of development, good infrastructure, and relatively low public debt. However, preserving these going forward will require surmounting some critical challenges. GDP per capita is already at high-income country levels, but the islands must combat lackluster growth and high unemployment levels by addressing weak competitiveness and improving the investment environment. The fiscal situation remains relatively stable, following the debt relief in 2010, but sustained efforts on fiscal and structural reforms are required to lock in gains and ensure continued fiscal and debt sustainability. The authorities' structural reform plans are welcomed, but continuity in policy will be essential going forward, particularly in the context of the upcoming elections in both countries, scheduled for September 2016.
The two newly autonomous countries within the Kingdom of the Netherlands face substantial challenges. Growth has been low, and unemployment high. The current account deficit has widened to worrisome levels, increasing the vulnerability of the peg to the U.S. dollar and stimulating calls for dollarizing or dissolving the currency union. A substantial adjustment is needed to bring the underlying current account deficit to historically sustainable levels over the medium term. This could be facilitated by measures to restrain credit growth, supported by fiscal consolidation.
The Netherlands has a long-standing legal framework concerning Anti-Money Laundering and Combating the Financing of Terrorism preventive measures, which dates back to 1993. The legal framework for Customer Due Diligence is generally adequate; however, a number of provisions are problematic. The Dutch system of preventive measures emphasizes the risk-based approach, complemented by a principles-based approach. The principles-based approach should be better supported with guidance for financial institutions. Although most elements of the Suspicious Transaction Report reporting requirements are in place, the reporting regime has one minor legal shortcoming and raises effectiveness concerns.