Published On: Mon, Jan 7th, 2013

Policy Recommendations of the Central Bank of Curaçao and Sint Maarten

WILLEMSTAD – In their Quarterly Bulletin 2012-II, the Central Bank of Curaçao and Sint Maarten looks ahead at the challenges for the New Year. The bank recommends a number of policies aimed at addressing the disequilibria in the public finances. According to the bank, the following policies should be placed at the forefront of the national agendas of of Curaçao and Sint Maarten.

First, the pension system should be reformed to adequately reflect the ageing of the population. Raising the retirement age is consistent with the progress made in the general health care and the medical field as people nowadays live longer and are able to work longer, contributing to the recovery of the financial soundness of the old age pension fund (AOV). However, some differentiation should be considered to account for medical indications.

Second, the rapidly rising health care costs must be brought under control, among other things, through eliminating waste and inefficiencies, and putting more emphasis on prevention.

Third, the transformation of the two layers of government into an efficient and effective government apparatus --the overriding rationale for the constitutional restructuring-- should be finalized on the short term.

Finally, corporate governance should be restored with the public enterprises to minimize the financial risks for the government budget.

Fiscal reforms should be accompanied by a strategy to increase the growth prospects of the economy. This should be attained, on the one hand, by a change in the composition of the population whereby younger, highly skilled and educated professionals will be encouraged to immigrate to our shores. These professionals will contribute to a necessary expansion and rejuvenation of the population and, hence, create economies of scale and a broader base to support the social security and health care systems.

On the other hand, more (foreign) investments should be attracted by addressing the current weaknesses of our investment climate, contributing to more economic activities.

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