Published On: Sat, Dec 29th, 2012

Export grows faster than import

WILLEMSTAD - The deficit in the current account of the payments of the monetary union is expected to be lower in 2012 than in 2011.

This is the expectation of the Central Bank of Curaçao and Sint Maarten (CBCS). “This improvement is the result of a growth in net exports of goods / services and less net income transfers to the abroad.” Exports grew faster than imports, especially among influence of the favorable development in tourism, the growth in the re-exports of the free zone and the higher foreign exchange revenue in the context of large maintenance of the refinery.

Import growth was mitigated by lower imports of wholesale and retail trade as a result of lower spending in Curacao. The income balance deteriorated however. On the one hand was less interest income received from the abroad by lower international interest rates. On the other hand was more interest to the paid abroad in connection to the bonds Curacao and St. Maarten had issued for the settlement of the debt and purchased by the Dutch State.

Since the net inflow of capital is insufficient to cover the deficit on the current account, a balance of payment deficit is expected of 100 million guilders. This is however, a significant improvement from a deficit of 507 million in 2011.

The lower deficit on the current account and the balance of payments as a whole are, in addition the decline in domestic uses, the result of the tightening monetary policy of the Central Bank. The gradual increase of the 'reserve requirement' (obligatory reserve commercial banks should persist with the Central Bank) was March 2012 supplemented with freezing of private lending till August.

This policy resulted in a decline in credit growth and contributed to an inhibition of the degradation of foreign exchange reserves. In this respect, the CBCS eased the credit measure slightly in September by allowing a growth of more than 1 percent till February 2013.

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