- The Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation discussions with The Kingdom of the Netherlands-Curaçao and Sint Maarten on a lapse of time basis on September 2, 2025.
- In both islands, economic activity was strong, driven by tourism and construction, and the near-term outlook remains favorable. Consecutive surpluses helped create fiscal space, while public investments have slowly been ramped up. Fiscal accounts are expected to remain guided by the fiscal rule.
- Monetary policy is appropriately targeted towards maintaining the peg and the financial sector is broadly sound. Both countries need to continue advancing their structural reform agenda.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation Discussions for The Kingdom of the Netherlands—Curaçao and Sint Maarten [1] and endorsed the staff appraisal without a meeting on a lapse-of-time basis. [2] These consultation discussions form part of the Article IV consultation with the Kingdom of the Netherlands. The authorities have consented to the publication of the Staff Report prepared for this consultation. [3]
Context. Reaping the post-pandemic tourism boom, Curaçao's and Sint Maarten's economies have been expanding strongly, driven by stayover tourists and construction activity. Disinflation broadly continued, with some uptick in Sint Maarten throughout 2024. The Union's current account deficit remained elevated as rising tourism receipts were offset by construction-related imports. In both countries, the fiscal position remained strong and in compliance with the fiscal rule. Progress on the landspakket, the structural reform package agreed with the Netherlands in 2020, has recently slowed, with notable exceptions around digitalizing permits.
Curaçao outlook. Growth is projected to moderate to 4 percent in 2025, balancing domestic impulses and heightened global uncertainty. Further expansion of stayover tourism and construction activity will continue to support growth in 2025, along with fiscal expansion driven by higher public investments. Growth is expected to moderate to 2 percent over the medium term, given saturation in tourism and slower global demand, while public investments would be carried forward. Inflation is projected to stabilize at 2.5 percent in 2025 and gradually converge to 2 percent in the medium term. Primary fiscal balances would remain in surplus. The current account deficit would decline in the medium term but remain elevated.
Sint Maarten outlook. Growth is projected to remain robust in the near term as tourism capacity expands. Stayover tourism will continue to drive growth in 2025 to 3.0 percent. Further expansion in hotel capacity will add to the island's potential to sustain growth, partially counterbalancing the headwinds from slowing global demand. Over the medium term, growth is expected to converge to 2 percent as tourism is approaching carrying capacity. Inflation would remain broadly contained, at 3.3 percent in 2025, tapering off to 2 percent in the medium term. The fiscal position is expected to deteriorate temporarily on account of stronger investments. The current account balance is envisaged to gradually turn into a small surplus in the medium term.
Risks. Risks to the outlook are tilted to the downside. Global trade policy and investment shocks and a stronger-than-expected global slowdown would adversely impact tourism and could raise import prices on both islands. A stronger-than-expected execution of infrastructure projects could lift growth.
Monetary Union. Monetary policy is appropriately targeted towards maintaining the peg. The financial sector is broadly sound and systemic risks are contained, as banks are adequately capitalized and highly liquid.
Executive Board Assessment [4]
In concluding the 2025 Article IV consultation discussions with The Kingdom of the Netherlands—Curaçao and Sint Maarten, Executive Directors endorsed staff's appraisal, as follows:
Curaçao
Curaçao's economy continued its vigorous expansion in 2024 and the near-term outlook is strong but heightened global uncertainty tilts risks to the downside. Double-digit growth in stayover arrivals outpaced regional peers and, together with renewed public investments and mortgage-driven construction, lifted economic activity by 5 percent in 2024. Real wages rose for the first time in five years and fiscal surpluses increased further. However, job creation remained concentrated in informal and low-skilled sectors, while formal employment continued to decline. Growth is forecasted to moderate and reach its potential of 2 percent over the medium term as tourism nears its capacity and global demand eases, with inflation converging to around 2 percent in tandem. Curaçao's external position was weaker than the level implied by medium-term fundamentals and desirable policies. Key downside risks include weaker global demand or trade shocks, which could hit tourism and raise inflation, while faster progress in renewables could provide an upside scenario.
Safeguarding medium-term fiscal sustainability will require carefully weighing higher investment, social spending priorities, and equitable tax reform. The authorities' plans to introduce a revenue-neutral and equity-enhancing VAT and modernize and digitalize the tax administration are welcome. Expanding the tax base and better tap tourist spending will be critical to offset potential increases in pension spending. Continued improvements in public investment planning and execution will be necessary to ensure efficient use of fiscal space.
Healthcare reform is an urgent priority to restore financial sustainability and limit fiscal risks. Curaçao's health expenditures are high by both regional and OECD standards, and annual deficits in the healthcare fund and hospital remain unsustainable. Efficiency gains should be pursued through greater use of cost-effective generic pharmaceuticals, expanded primary and preventive care, and re-evaluation of laboratory tariffs. On the revenue side, broadening the contributor base, increasing co-payments for higher-income households, and exploring supplementary private insurance options are recommended.
A fiscally responsible pension adjustment to secure living standards for vulnerable households needs to be accompanied by a broadening of the contributor base. A reassessment of benefit levels is commendable given a significant loss in purchasing power over the past decade. Indexing residents' pensions to inflation and providing a supplement for low-income pensioners should be funded by expanding contributor base via legalizing young migrant workers. The planned mandatory second-pillar occupational pensions would help diversify savings and reduce the current account deficit.
Labor market policies must address growing informality and skill mismatches to support inclusive growth. The decline in formal employment, particularly among prime-age men, highlights the need for stronger incentives for formal work, improved enforcement, and better targeting of social assistance. Investments in education infrastructure, vocational training, and streamlined labor permitting for high-skill workers are positive steps, as is the integration of migrants into the workforce. These initiatives should be complemented by employer-led training and measures to attract graduates back to Curaçao.
Fostering competitiveness and diversification is essential to maintain the growth momentum, particularly at the current juncture, and help lower the elevated CAD. Upgrading transportation and maritime infrastructure, expanding into new tourism segments (such as yachting), and tapping new source markets in South America will help sustain growth and reduce vulnerability to external shocks. Non-tourism sectors, such as data centers and renewable energy, offer promising avenues for diversification, provided electricity costs and grid capacity are addressed. Regional integration and trade diversification, especially with Latin American partners, will further bolster resilience.
Governance, anti-corruption and financial integrity reforms have advanced, strengthening Curaçao's institutional framework. The approval of the online gaming law, accession to the UN Convention Against Corruption, and removal from the EU grey list are important milestones. Continued implementation of UNCAC commitments, AML/CFT reforms and addressing shortcomings identified in the recent mutual evaluation will further enhance anti-corruption frameworks, financial integrity, and international cooperation.
Sint Maarten
Sint Maarten's economy has been thriving on tourism and reconstruction activity. Economic growth reached 3.3 percent in 2024, supported by robust tourism arrivals and the completion of major Trust Fund infrastructure projects, including the new airport. Despite a brief setback from the electricity crisis, tourism-related transportation and construction further supported activity. Inflation rose to 3.6 percent, mainly due to higher transportation costs and rental house prices, while formal employment stayed below pre-pandemic levels, indicating persistent informality in the labor market. Sint Maarten's external position in 2024 was broadly in line with the level implied by medium-term fundamentals and desirable policies.
A pivot towards private and local government investment is needed to sustain growth beyond the Trust Fund's lifespan and brace against a global slowdown. With Trust Fund investments gradually unwinding, private real estate and government infrastructure investments need to step up. Major hotel developments - delayed due to a backlog in building permits – are expected to start, alongside the construction of new government facilities, and would underpin robust growth in the near term, in addition to tourist arrivals. Activity is then expected to gradually converge to 2 percent over the medium term. However, uncertainty persists around the government's capacity to execute projects after the Trust Fund's closure and risks to the outlook are tilted to the downside. These further include global trade shocks that could weaken tourism and increase inflation, notably given Sint Maarten's elevated exposure to the North American market.
Improving social development requires fiscal space via further revenue mobilization. Sint Maarten has relatively high inequality, lower life expectancy, and higher adolescent fertility rate than countries with comparable income levels. Shaping fiscal policies in an equitable manner should become an integral expenditure and tax policies. Mobilizing additional revenues to create space for priority spending includes the planned tourism levy and dividend tax, improving compliance for short-term rentals, taxing casino turnover and winnings, and continuing tax administration reforms. Considerations of a bank transaction tax should be weighed carefully due to its potentially regressive effects.
Healthcare reforms need to be expedited and deepened to achieve sustainability. Healthcare funds in Sint Maarten are facing significant deficits, consuming half of the SZV reserves over the past decade. Reforms are underway but should be expedited to avoid further reserve depletion, including the introduction of general health insurance, rationalizing benefits, strengthening preventive care, and expanding coverage to self-employed and informal workers. A medium-term plan is needed to manage operational costs for the new hospital and mental health facility.
Knowledge transfer from the Trust Fund is essential and should be complemented by strengthened medium-term planning and budgeting. Absorbing Trust Fund operations requires improving public financial management, a roadmap to a medium-term expenditure framework, as well as more flexible and competitive public wage structures to better attract high-skilled talent. Capacity constraints are particularly salient in planning and executing investments, possibly impacting potential growth over the medium term. In the coming years, it will be essential to leverage Trust Fund expertise before its departure to create a centralized planning unit which could build up and coordinate an investment project pipeline and promote execution, while considering outsourcing selected activities to private sector business partners.
Structural reforms to boost potential growth should focus on infrastructure, permitting processes, and skills development. To sustain its position as a leading regional tourism destination, Sint Maarten must invest in road, waste, and electricity infrastructure, and shift from increasing tourist quantity to enhancing value added. Accelerating permitting processes and leveraging digitalization will unlock delayed hotel and real estate investments. Continued reforms in the electricity sector, including empowering the regulator, transitioning to renewables, and strengthening governance, including by extending UNCAC's application, are needed to ensure reliable supply and resilience. Labor market policies should prioritize private sector job creation, formalization, and targeted skills training.
The Monetary Union of Curaçao and Sint Maarten
The current account deficit of the Monetary Union is expected to gradually improve but remains elevated, while reserve coverage remains adequate. After a widening in 2024 driven by construction-related imports in Curaçao, the current account deficit for the Union is expected to narrow toward 10 percent of GDP over the medium term, supported by strong tourism receipts and a moderation in import growth. The deficit would continue to be financed by private investment inflows and decumulation of assets held abroad, while international reserves are projected to remain stable and adequate. The Union's external position was weaker than the level implied by medium-term fundamentals and desirable policies. The assessment is subject to uncertainty given a significant measurement gap with respect to mirror data.
Monetary policy remains appropriately anchored on maintaining the currency peg. The CBCS has kept its benchmark rate unchanged since late 2024, following earlier cuts in line with US monetary policy. However, the transmission of monetary policy to bank lending and deposit rates remains weak, largely due to excess liquidity and the absence of active interbank and government securities markets. Lending rates have declined, and credit growth is now driven almost entirely by mortgages in Curaçao, with real overall credit growth being negative in the Union.
Financial sector risks are contained, but macroprudential surveillance needs to step up as mortgage lending accelerates. Banks are well-capitalized and highly liquid, though profitability falls somewhat behind the regional median and sector concentration remains elevated. Risks have further declined with the resolution of ENNIA and continued progress on the CBCS's reform agenda. However, the rapid growth in mortgage credit—especially in Curaçao—warrants close monitoring and closing of data gaps to identify potential vulnerabilities in household balance sheets and prevent overheating in the real estate sector. The CBCS is making progress in developing macroprudential tools, including countercyclical capital buffers and limits on loan-to-value and debt-service-to-income ratios, to safeguard stability.
The AML/CFT frameworks of Curaçao and Sint Maarten need significant improvements. Close cooperation and more effort are required from all stakeholders to swiftly address the shortcomings identified by CFATF's mutual evaluation and exit the CFATF's enhanced follow-up process. Given an extensive catalogue of measures, work on lower hanging fruits should be expedited in the coming months, including ongoing operationalization of beneficial ownership registers, together with both islands' chambers of commerce. To increase the effectiveness of both countries' AML/CFT frameworks, preventive measures need to be strengthened on the part of high-risk entities such as casinos.
Table 1. Curaçao: Selected Economic and Financial Indicators, 2021–30 |
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Table 2. Sint Maarten: Selected Economic Indicators 2021–30 |
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. At the request or with the consent of the member, IMF staff may hold separate discussions with respect to territories or constituent parts of a member. These Article IV consultation discussions form a part of the member's Article IV consultation. In such cases, a staff team visits the territory or constituent part, collects economic and financial information, and discusses with officials the territory's or constituent part's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board, which in turn constitutes an integral part of the member's AIV consultation for the relevant cycle.
[2] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
[3] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/cuw and www.imf.org/sxm pages.
[4] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
