WILLEMSTAD, PHILIPSBURG – The International Monetary Fund (IMF) has concluded a technical assistance mission aimed at enhancing the Central Bank of Curaçao and Sint Maarten’s (CBCS) ability to assess and safeguard financial stability. The mission, which took place in January 2025, introduced a comprehensive macro-stress testing framework designed to evaluate the resilience of the banking sector under adverse economic conditions.
According to the high-level report prepared by IMF experts Petr Jakubik and Adam Gersl, the new stress testing system integrates macroeconomic scenarios with sectoral credit risk models and detailed balance sheet and income projections. The initiative is part of broader efforts to strengthen macroprudential oversight within the monetary union shared by Curaçao and Sint Maarten.
The CBCS is now equipped with an Excel-based macro-stress testing tool that enables it to evaluate key financial indicators such as non-performing loan (NPL) ratios, capital adequacy, and income performance across various economic scenarios. These projections are designed to reflect the specific vulnerabilities of the islands’ financial systems, which remain sensitive to external shocks.
The report outlines several areas for improvement, including better calibration of parameters related to credit growth, provisioning, and interest rate pass-throughs. The IMF also recommended expanding data collection practices in line with international financial reporting standards (IFRS 9), particularly in the areas of default probability and expected credit losses.
Among its key recommendations, the IMF advises the CBCS to institutionalize biannual top-down stress tests—one of which should be linked to the annual Financial Stability Report, and the other for internal monitoring purposes. It also suggests strengthening collaboration between the central bank’s Financial Stability and Economic Analysis departments to ensure consistent and well-developed economic scenarios.
Additionally, the IMF recommends incorporating bottom-up stress tests, which would allow for a closer assessment of the resilience of individual banks operating in the jurisdiction.
These efforts, the IMF notes, are essential to reinforcing confidence in the financial system of Curaçao and Sint Maarten and ensuring the region’s preparedness for future economic disruptions.
