On January 15, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the 2018 Article IV Consultation discussions1 with Curaçao and Sint Maarten, two autonomous constituent countries within the Kingdom of the Netherlands, and considered and endorsed the staff appraisal without a meeting.2
Economic conditions in Curaçao and Sint Maarten continued to deteriorate over the past years. In Curaçao, spillovers from one of its largest trading partners is taking a toll on the economy, with real GDP contracting in 2016–18. In Sint Maarten, Hurricanes Irma and Maria had a devastating impact in September 2017, causing an over 250 percent of GDP in damages and losses and leading to a significant contraction in output in 2017–18. The fiscal positions of both countries have deteriorated, with the overall deficit reaching 3½ percent of GDP in both Curaçao and Sint Maarten in 2017. The current account deficit of the union continued to widen since 2016.
Economic growth is expected to resume in both economies in 2019. In Curaçao, real GDP growth is projected to turn slightly positive in 2019 and remain below ½ percent in the medium term. In Sint Maarten, a combination of the recovery in the tourism industry and the strong investment for reconstruction is projected to increase real GDP by about 2 percent, keeping it at slightly above its historical trend over the medium term. In both countries, the fiscal position is expected to improve going forward, as the economies recover and fiscal adjustment measures are being implemented. The union’s current account deficit is projected to reach 21 percent of GDP in 2019 and gradually narrow over the medium term.
Risks to the outlook are mainly on the downside. For the union, weaker-than-expected global growth could curb tourism demand, slowing the much-needed tourism sector recovery. For Curaçao, the continuing crisis in Venezuela is the main risk, while in Sint Maarten, where exposure to hurricanes remains a major vulnerability, slower-than-expected progress on reconstruction poses further downside risk.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.