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International Monetary Fund. Western Hemisphere Dept.

exchange rate pressures. The recovery in Sint Maarten is vulnerable to delays in key projects such as airport reconstruction and frequent changes in government that impede the implementation of key reforms. Both countries remain vulnerable to a slowdown in main trading partners. Improving the functioning of the Union requires better policy frameworks, stronger buffers and a consistent and credible macro framework based on better data. A significant improvement in data availability and quality is needed as current gaps hamper effective macroeconomic analysis and

International Monetary Fund. Western Hemisphere Dept.
This 2019 Article IV Consultation focuses on Curaçao and Sint Maarten’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. The fiscal position in Curaçao improved in the past two years, in part due to implemented fiscal measures. Both Curaçao and Sint Maarten would benefit from introducing a Fiscal Responsibility Framework. It could incorporate a central government debt ratio as a long-term anchor and operational rules calibrated to meet it. The report suggests that risks in the financial sector need to be addressed as a matter of priority. The authorities should develop a strategy for addressing financial sector vulnerabilities with the objective of preserving financial stability while minimizing fiscal costs. Significant strengthening of supervision and a complete overhaul of the bank resolution framework are also urgently needed. An across-the board improvement in the governance framework should be a key priority in both countries. Vulnerabilities in the financial system point to the need to strengthen governance in the financial sector.
International Monetary Fund. Western Hemisphere Dept.

capacity . A. Enhancing Potential Growth and Overcoming Small Island Constraints 15. The Union is facing structural rigidities . Both countries are saddled with long-standing structural impediments such as cumbersome permit processes, rigid labor market regulations, skills mismatches, infrastructure bottlenecks and slow implementation of structural reforms. These factors weigh on the Union’s labor productivity, especially in Curaçao, and reduce its ability to adjust to shocks, as highlighted by the uneven post-hurricane recovery in Sint Maarten. Curasao