WILLEMSTAD - In concluding the 2018 Article IV consultation with the Kingdom of the Netherlands—Curaçao and Sint Maarten, Executive Directors endorsed staff’s appraisal, as follows: 

Weak growth and underlying structural vulnerabilities persist in both Curaçao and Sint Maarten. Large negative external shocks—including spillovers from one of Curaçao’s largest trading partners and the impact of Hurricanes Irma and Maria on Sint Maarten— have significantly magnified these weaknesses. The fiscal and external positions of both countries have deteriorated, and high uncertainty is weighing on economic activity and outlook. 

After another year of recession in 2018 in both Curaçao and Sint Maarten, growth will pick up slowly over the medium term. However, without major structural reforms, growth in Curaçao will remain weak. In Sint Maarten, a speedy and sustainable recovery and post-hurricane rebuilding remain the main priority. Risks are mainly on the downside reflecting both external and domestic vulnerabilities. The union’s current account deficit is expected to gradually improve over the medium term but remain elevated.  

Curaçao and Sint Maarten should adopt a medium-term fiscal framework, with a long-term debt anchor, to help address structural fiscal challenges in a sustainable way. Further reforms are needed to ensure financial viability of the countries’ social security funds and healthcare systems and to systemically address budgetary arrears and fiscal risks. To facilitate effective policy analyses and decision-making, it is imperative to improve fiscal transparency, reporting and coverage, including by adopting international standards on government finance statistics. Budgetary decisions should be aligned with the governments' policy priorities. Fiscal institutions and public financial management systems should be strengthened to support the implementation, monitoring, and enforcement of the medium-term fiscal framework and rules.