Kingdom of the Netherlands-Curaçao and Sint Maarten: 2023 Article IV Consultation Discussions-Press Release; and Staff Report

The 2023 Article IV Consultation with Kingdom of The Netherlands—Curaçao and Sint Maarten continue to recover from major shocks. Both countries have had two years of robust growth driven by a strong rebound of tourism, although the benefits of recovery have not reached all sectors. The recovery in tourist arrivals was among the fastest in the Caribbean and the current outcomes are above the pre-pandemic levels. Sint Maarten has further to go to reach levels seen before hurricane Irma in 2017. Similar to other countries, Curaçao experienced a strong bout of inflation, which affected the vulnerable. The international reserves of the monetary union of Curaçao and Sint Maarten remain at a comfortable level despite the elevated external current account deficit, which was due in part to higher import prices. The banking system remains well capitalized and liquid. After a robust recovery in 2022, estimated at 7.9 percent, output growth is expected to moderate. With post-pandemic recovery growth largely accomplished, activity is expected to encounter harder supply constraints going forward, including hotel room inventory and airport reconstruction. The authorities in both countries should implement broad-based structural reforms to support a robust and inclusive recovery, improve resilience to climate change, limit fiscal risks, and safeguard debt sustainability.