To safeguard stability and inclusive growth across the monetary union
WILLEMSTAD, PHILIPSBURG – Curaçao and Sint Maarten have entered 2025 with renewed growth momentum, yet persistent inflationary pressures pose challenges to ensuring that the benefits of growth are widely shared. “Given their limited ability to curb imported inflation, safeguarding stability will require targeted measures to protect the most vulnerable”, recommended President of the Centrale Bank van Curaçao en Sint Maarten (CBCS), Richard Doornbosch, in the CBCS’ September 2025 Economic Bulletin.
Addressing inflationary pressures through targeted policies
According to Doornbosch, the experience of recent years underscores that inflation in Curaçao and Sint Maarten is largely externally driven, shaped primarily by global cycles in food and energy prices. This leaves both economies vulnerable to higher import costs, reduced purchasing power, and pressures on official reserves, given their strong dependence on imports. “In an environment marked by persistent trade tensions, heightened geopolitical risks, and rising regional frictions, inflation risks are more relevant than ever”, he added.
Inflation has uneven effects across the population, with lower-income households bearing the heaviest burden. Because food, housing, and energy account for a larger share of their consumption basket, even modest price increases erode their purchasing power significantly. This is particularly concerning because inflation places a disproportionate burden on low-income households, which often lack alternatives when the prices of essential goods rise. This regressive impact reduces living standards and exacerbates inequality, particularly in periods of sharp price increases. “However, addressing inflation in a highly import-dependent economy presents a significant challenge as it typically requires a long-term horizon,” Doornbosch cautioned. A structural solution lies in reducing reliance on imports and diversifying the economic base toward sectors less exposed to global price shocks. “Scaling up renewable energy, particularly solar and wind, supported by investment in storage and grid capacity, will not only help limit vulnerability to external shocks but also strengthen the monetary union’s external balance and advance climate and sustainability goals. Likewise, efforts to stimulate local agriculture could help cushion the impact of food price increases, although structural constraints such as limited economies of scale and unfavorable weather conditions in Curaçao limit its potential,” he explained. In the short-term, the governments have used tools such as Curaçao’s Makutu Básiko and Sint Maarten’s Basket of Goods to shield households from rising prices. While carefully designed price controls can provide short-term relief for low-income groups, they also carry risks like shortages, reduced quality of goods and services, the emergence of black markets and lower investment levels if not properly targeted and monitored. “A more effective and sustainable approach is to focus on targeted income support, which directly strengthens households’ purchasing power without distorting markets. Well-tailored programs, like Curaçao’s food assistance initiative during the COVID-19 pandemic, demonstrate how support can be delivered efficiently to those most in need, while reducing inequality, preserving incentives for efficient consumption, and limiting fiscal costs,” recommended Doornbosch.
Beyond targeted assistance, strengthening household resilience is key. Active labor market policies can help unemployed individuals transition into stable jobs, reducing dependence on benefits. To complement this, minimum wage levels should also keep track with overall productivity increases to ensure that the purchasing power of low -income households is protected while preserving competitiveness. At the same time, improving financial literacy and awareness of inflation can empower consumers to better manage their budgets and adapt to rising costs. “Ultimately, sustained stability and inclusive growth will depend on the timely implementation of these policies”, he concluded.
