## 1abwea2023002

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### Context and recent developments
- Tourism-led rebound: tourist arrivals rose above pre-pandemic levels by Q2 2022.
- Real GDP:
  - contracted by 24 percent in 2020.
  - grew by 27.6 percent in 2021.
  - grew by 7.3 percent in 2022.
- Political: 2021 general election returned Prime Minister Evelyn Wever-Croes; next general election in 2025.
- Policy focus: restoring macroeconomic balance, increasing medium-term growth, investing in climate change adaptation.
- Tax and capital flow changes:
  - Authorities implemented tax measures in early 2023 to increase revenues while reducing the tax burden on labor income.
  - Capital flow management measures and exchange restrictions imposed during COVID-19 were removed in September 2021.
- National accounts revisions (selected):
  - Nominal GDP revised up by 2.3 percent for 2018 and 0.7 percent for 2019.
  - CBA unofficial GDP deflators: upward revision in change of GDP deflator of almost 1.2 percentage points in 2018.
  - Resulting real output revisions: downwards by 7.1 percent for 2018 and 12.6 percent for 2019.
  - 2019 nominal GDP remains preliminary and subject to further revisions; capacity development to finalize and publish official GDP deflators underway through CARTAC.
- Inflation:
  - Headline inflation peaked at 7.7 percent in August 2022 and fell to 4.9 percent in April 2023.
  - Food prices are 9.4 percent above the prior year (Annex II).
- Labor market: output gap turned positive in 2022; unemployment fell to 6.6 percent by June 2022.

### Fiscal outcomes, public debt, and financing
- Fiscal deficit and debt:
  - Fiscal deficit narrowed from 16.2 percent of GDP in 2020 to 0.5 percent of GDP in 2022.
  - Central government debt fell from 112.3 percent of GDP in 2020 to 90.7 percent of GDP at end-2022.
  - Total public debt (Central Government Accounts table): 90.7 (Preliminary 2022), projected 85.4 (IMF staff projections 2023).
- Revenue and expenditure drivers:
  - Tourism rebound added almost 2 percent of GDP to tax revenues.
  - End of pandemic measures saved 7 percent of GDP in spending.
- Rating: Fitch upgraded Aruba’s long-term foreign debt rating from BB to BB+ in March 2023.
- Gross financing needs:
  - Gross financing needs in 2023 are 19.2 percent of GDP due to the October 2023 maturation of liquidity support loans from the Netherlands.
  - Baseline assumption: the Netherlands refinances the loan through a long-term (20 years) loan at below-market interest rates; alternative market financing would worsen debt dynamics.
- Debt projections (Baseline DSA):
  - Public debt (Percent of GDP): 2022: 90.7; 2023: 85.4; 2024: 82.7; 2025: 79.9; 2026: 77.1; 2027: 74.1; 2028: 71.0.
  - Change in public debt (percent of GDP): 2023: -11.1; 2024: -5.3; 2025: -2.7; 2026: -2.8; 2027: -2.9; 2028: -3.0.
  - Gross financing needs (GFN) (percent of GDP): 2022: 3.7; 2023: 19.2; 2024: 8.8; 2025: 8.9; 2026: 9.2; 2027: 12.7; 2028: 5.7.

### External sector and reserves
- Current account (selected):
  - swung from a deficit of 12.4 percent of GDP in 2020 to a surplus of 11.2 percent of GDP in 2022.
  - Current Account Balance (USD millions): 2021: 843; 2022: 942; projected 2023: 783; 2024: 503; 2025: 543.
  - Current Account (percent of GDP): 2021: -12.4; 2022: 11.2; projected 2023–2028: 7.5, 9.1, 8.9, 8.3, 7.8, 7.2 (note: 2023 baseline projection listed as 11.2 earlier in excerpt; retain those figures as presented).
- International reserves:
  - International reserves US$1.6 billion at end-2022.
  - Gross Official Reserves (Millions of U.S. Dollars): 2022: 1,534; projected 2023–2028: 1,564, 1,576, 1,674, 1,754, 1,828, 1,895, 1,980.
  - Coverage: 7.3 months of total imports and 124 percent of the IMF’s ARA metric at end-2022.
  - Projected reserves could build up to 145 percent of the IMF’s ARA metric by 2028.
- External debt:
  - External debt fell to 102.3 percent of GDP (down from 132.9 percent of GDP in 2021, 119.0 percent in 2022).
  - Projected external debt: 2023: 102.3; 2024: 85.9; 2025: 82.2; 2026: 78.7; 2027: 75.6; 2028: 72.7; 2028 baseline projection to fall to 70 percent of GDP by 2028 in outreach narratives.

### Monetary policy, liquidity, and banking sector
- Reserve requirements and liquidity:
  - CBA raised reserve requirement rate from 7 percent in August 2021 to 25.5 percent by December 2022 to maintain FX reserves, tighten liquidity, and lessen inflationary pressures.
  - Recommendation: lower reserve requirements to increase bank intermediation; supervisory caveat to ensure adequate bank liquidity.
- Monetary aggregates and money multiplier:
  - Net foreign assets of banking system (millions Afl): 2022: 2,885; projected 2023–2028: 3,112, 3,157, 3,349, 3,508, 3,655, 3,792, 3,962.
  - Broad Money (M2, millions Afl): 2022: 5,366; projected 2023–2028: 5,546, 5,856, 6,054, 6,249, 6,444, 6,645, 6,852.
  - Money multiplier fell to 2.1 in 2022; series: 2018: 2.9; 2019: 3.1; 2020: 2.8; 2021: 2.3; 2022: 2.2; projections 2023–2028: 2.2, 2.1, 2.1, 2.1, 2.1, 2.0.
- Banking system soundness:
  - Financial system assets at 214 percent of GDP in 2022.
  - Banking sector accounted for 52 percent of financial system assets in 2022.
  - Regulatory Tier I capital to risk-weighted assets: 2022: 28.6.
  - NPLs to gross loans: 2022: 4.7; NPLs fell to 3.2 percent of bank assets by 2023Q1 (alternate series noted).
  - Loans to deposits: 2022: 65.8.
  - ROA after taxes: 2022: 0.4; ROE after taxes: 2022: 2.3.
  - Real estate lending growing faster than other credit categories; ratio of large loans to capital rose in 2023Q1 indicating loan concentration.
- Policy recommendations for financial stability:
  - Strengthen financial oversight and develop macroprudential tools.
  - Close monitoring of underwriting standards; consider loan-to-value and debt service-to-income ratios.
  - Adopt more structured liquidity and solvency stress testing tied to macroeconomic scenarios.
  - Move quickly to adopt Basel II international standards.
  - CARTAC providing capacity development support.

### Outlook and risks
- Growth and inflation projections:
  - Real GDP growth projected at 2.3 percent in 2023.
  - Medium-term growth projected at about 1.1 percent (2024–2028 projections: 1.2, 1.2, 1.1, 1.1, 1.1).
  - Inflation projected to fall to 3.2 percent by end-2023; GDP deflator period averages projected 2023–2028: 3.2, 2.2, 2.0, 2.0, 2.0, 2.0.
  - Consumer Prices (period average) projected 2023–2028: 4.5, 2.3, 2.1, 2.0, 2.0, 2.0.
- Downside and global risks (Annex IV highlights):
  - Steeper-than-expected global slowdown (especially U.S.) could reduce tourist arrivals.
  - Climate change risks: rising sea levels and more volatile weather events.
  - Domestic risk: insufficient fiscal adjustment raising financing needs and slowing debt reduction.
  - Growth-at-risk model identifies vulnerabilities to shocks in tourism, financial conditions, U.S. growth, and global oil prices.
- Risk matrix (selected global risks and responses):
  - Intensification of regional conflict(s): Likelihood: High; Expected Impact: Medium. Policy Response: targeted fiscal support; diversify tourism; enhance financial surveillance.
  - Abrupt global slowdown or recession: Likelihood: Medium; Expected Impact: High. Policy Response: build buffers; diversify tourism markets.
  - Climate change risk: Likelihood: Medium; Expected Impact: Medium. Policy Response: comprehensive risk assessment; prioritize disaster-resistant infrastructure; build fiscal buffers and insurance.

### Fiscal policy recommendations and scenarios
- Overarching recommendation: use the recovery to implement fiscal reforms and strengthen competitiveness and growth.
- Medium-term fiscal target:
  - Government targets a fiscal surplus of 1.2 percent of GDP over the medium term.
  - Note: "The fiscal target is set in terms of the “financial” balance, defined as the overall fiscal balance minus net acquisition of financial assets which is at 1 percent of GDP. This corresponds to an overall balance of 1.2 percent of GDP."
- Key measures implemented/needed:
  - Recent tax measures for 2023 (effective January 1, 2023):
    - Turnover Tax (BBO) rate increased to 7 percent.
    - Personal income (wage) tax lowered by 2 percentage points for first two brackets; threshold increased by around 4 percent; social security payments taxed separately for married couples; reparatietoeslag increased by Afl. 45 per month.
    - Profit Tax reduced from 25 percent to 22 percent.
    - Tourist Tax increased from 9.5 percent to 12.5 percent.
    - Real Estate Transfer Tax: sale of shares in real estate companies subject to transfer tax.
  - Further measures recommended:
    - Introduce a broad-based value-added tax (VAT) to replace the current indirect tax system (the planned VAT in January 2023 was postponed due to inflation concerns).
    - Improve tax and customs administration (digitalization, penalties, risk-based audits); conduct TADAT diagnostic.
    - Contain the wage bill by eliminating various wage supplements when unwinding COVID-era salary cuts.
    - Rationalize goods and services spending via a Public Expenditure Review.
    - Streamline transfers to SOEs and improve SOE performance.
    - Strengthen social safety net with targeted temporary support mechanisms.
- Active policy scenario (impact and composition):
  - Immediate 2023 adjustment required: fiscal surplus would need to increase by 0.5 percent of GDP in 2023 through:
    - Increasing indirect tax compliance: 0.2 percent of GDP.
    - Reducing spending on goods and services: 0.2 percent of GDP.
  - Medium-term measures:
    - Rationalizing subsidies to households: 0.1 percent of GDP.
    - Enhancing social safety net and reducing transfers to SOEs: 0.2 percent of GDP.
  - Objective: bring debt below 70 percent of GDP by 2028 while allowing an increase in capital spending.
- Active scenario fiscal path (Total Revenue and Grants, Total Expenditure, Overall Balance, Total public debt; 2023–2028):
  - Total Revenue and Grants: 23.0 / 23.6 / 23.5 / 23.5 / 23.4 / 23.4
  - Total Expenditure: 21.8 / 22.3 / 22.3 / 22.2 / 22.2 / 22.2
  - Overall Balance: 1.2 / 1.2 / 1.2 / 1.2 / 1.2 / 1.2
  - Total public debt: 84.9 / 81.2 / 77.7 / 74.3 / 71.1 / 68.0
- Authorities’ projection and staff note:
  - Authorities projecting a 0.8 percent of GDP surplus in 2023; staff notes this is somewhat less than budget documents expected due to optimistic non-tax revenue forecasts.
  - Recommendation: develop a contingency plan to reduce spending if revenues underperform.
- Pension system:
  - Pension system expected to run deficits starting in around five to six years; reserves depleted by the mid-2030s in absence of further reforms.
  - Restoring actuarial balance will require a higher contribution rate and/or lower replacement rate.

### Structural reforms, governance, climate resilience, and gender
- Structural reform priorities:
  - Ease of doing business: streamline business procedures via e-government; expand Business Policy Guidelines; improve digital payments infrastructure (CBA’s I-Pago).
  - Competition: launch and adequately resource Aruba Fair Trade Authority.
  - Labor market reforms: modernize labor laws to reduce hiring costs; introduce unemployment insurance; encourage female labor force participation.
  - Human capital: increase investment in training and education including STEM; allow skilled immigrant labor; collaborate with employers.
- Governance and anti-corruption:
  - CBA survey indicates widespread perception of corruption.
  - Recommendations: strengthen Integrity Bureau capacity; establish codes of conduct for public servants; robust whistleblower legislation; robust asset declaration systems; publish beneficial owner information for government contract bidders.
  - Authorities preparing legislation to strengthen investigative powers of Integrity Bureau; Code of Conduct for Ministers drafted; code for public employees in progress.
- Climate change resilience:
  - Aruba is flat with substantial assets near sea level; even modest sea level rise will greatly affect the economy.
  - Need for a concrete action plan under National Climate Resilience Council to prioritize infrastructure investments, identify financing sources, and integrate into the medium-term fiscal framework.
  - Progress: ongoing climate risk profile assessment; planned costing of adaptation needs; development of national climate resilience strategy.
  - Authorities aim to increase renewable energy share and reduce greenhouse gas emissions by at least 45 percent by 2030.
- Gender equity:
  - Female labor force participation has been only 60 percent since the mid-2000s.
  - Women have higher secondary enrollment rates than men but are under-represented in STEM and earn lower median wages.
  - Policy options: encourage STEM education for women; reduce second earner tax penalty; introduce an Earned Income Tax Credit; provide childcare support.
  - Aruba National Gender Policy released May 2022.

### AML/CFT, tax transparency, and international engagement
- Authorities reiterated commitment to enhancing AML/CFT and improving tax transparency and exchange of information.
- CFATF 4th round mutual evaluation (published July 2022) shows strong ratings relative to regional peers but further strengthening needed.
- Suggested actions:
  - Ensure proper implementation of preventative measures by central bank and other supervisors.
  - Improve supervision of non-profits and designated non-financial businesses and professions.
  - Establish a gaming authority for licensing and vetting management, shareholders, and ultimate beneficial owners.
  - Introduce regulatory framework for licensing virtual asset service providers.
  - Fully implement legal framework for collecting beneficial ownership information.
  - Strengthen law enforcement capacity to pursue money laundering and other financial crimes.
- Tax transparency: address deficiencies in automatic exchange of tax information noted by EU grey list; increase tax information sharing and resolve OECD standard implementation issues.

### Data adequacy, reporting, and statistical issues
- Data coverage and timeliness:
  - Monthly official reserve position published with a lag of one month (breakdown in holdings of gold and foreign exchange provided).
  - Aruba does not participate in QEDS; disseminates annual gross external debt by sector in Annual Statistical Digest.
  - Debt survey covers public and private sectors with currency denomination and amortization schedules.
- Participation in IMF systems: Aruba started participating in e-GDDS on August 16, 2017; no data ROSC conducted.
- Key reporting dates (Table of Common Indicators, as of June 8, 2023):
  - International Reserve Assets and Reserve Liabilities: Date of Latest Observation: 3/23; Date Received: 5/23; Frequency of Data: M.
  - Consumer Price Index: Date of Latest Observation: 2/23; Date Received: 2/23; Frequency of Data: M.
  - GDP/GNP: Date of Latest Observation: 2021; Date Received: 4/23; Frequency of Data: A.
  - Gross External Debt: Date of Latest Observation: 2022; Date Received: 5/23; Frequency of Data: A.
- Statistical gaps and improvements needed:
  - Imports and exports of goods and services do not match BOP statistics.
  - CPI improvements needed for treatment of Housing (renters and owners); lack of owner-occupied housing component.
  - Government finance statistics could better disaggregate residual expenditure and provide more details on tax arrears; quarterly data could be reported based on GFSM 2014.
  - Monetary and Financial Statistics: deviations from recommended methodology; Other Financial Corporations not reported.
  - Aruba does not report FSIs to IMF FSI website but CBA publishes quarterly bank FSIs and annual insurance and pension FSIs.

*Source: IMF staff report chapter on “Recent National Account Revisions.”*

### 1. Recent National Account Revisions ______________________________________________________________5

### 1. Recent National Account Revisions

### Context
- Aruba’s tourism-reliant economy rebounded from the pandemic as tourist arrivals rose above pre-pandemic levels by Q2 2022.
- Real GDP contracted by 24 percent in 2020 due to containment measures and border closures.
- The 2021 general election returned Prime Minister Evelyn Wever-Croes to office; next general election is in 2025.
- Principal policy tasks: restoring macroeconomic balance and increasing medium-term growth; invest in climate change adaptation.
- Authorities implemented tax measures in early 2023 to increase revenues while reducing the tax burden on labor income.
- Capital flow management measures and exchange restrictions imposed during COVID-19 were removed in September 2021.

### Recent Developments
- Real GDP growth:
  - 27.6 percent in 2021.
  - 7.3 percent in 2022.
- Output gap turned positive in 2022; unemployment fell to 6.6 percent by June 2022.
- National accounts revisions (Box 1):
  - Nominal GDP revised up by 2.3 percent for 2018 and 0.7 percent for 2019.
  - CBA unofficial GDP deflators produced a significant upward revision in the change of the GDP deflator (of almost 1.2 percentage points in 2018).
  - Resulting real output revisions: downwards by 7.1 percent for 2018 and 12.6 percent for 2019.
  - 2019 nominal GDP remains preliminary and subject to further revisions; capacity development to finalize and publish official GDP deflators is underway through CARTAC.
- Inflation:
  - Headline inflation peaked at 7.7 percent in August 2022 and fell to 4.9 percent in April 2023.
  - Food prices are 9.4 percent above the prior year (Annex II).
- Fiscal outcomes and public debt:
  - Fiscal deficit narrowed from 16.2 percent of GDP in 2020 to 0.5 percent of GDP in 2022.
  - Tourism rebound added almost 2 percent of GDP to tax revenues; end of pandemic measures saved 7 percent of GDP in spending.
  - Central government debt fell from 112.3 percent of GDP in 2020 to 90.7 percent of GDP at end-2022.
  - Fitch upgraded Aruba’s long-term foreign debt rating from BB to BB+ in March 2023.
- External sector:
  - Current account swung from a deficit of 12.4 percent of GDP in 2020 to a surplus of 11.2 percent of GDP in 2022.
  - International reserves US$1.6 billion at end-2022 (7.3 months of total imports and 124 percent of the IMF’s ARA metric).
  - External debt fell to 102.3 percent of GDP (down from 132.9 percent of GDP in 2020).
  - EBA-lite model indicators: current account gap of 6.6 percent in 2022 and a real effective exchange rate undervalued by 12.8 percent (Annex III).
- Monetary and credit conditions:
  - CBA raised reserve requirement rate from 7 percent in August 2021 to 25.5 percent by December 2022 to maintain FX reserves, tighten liquidity, and lessen inflationary pressures.
  - Systemic excess liquidity remained high; private credit grew slowly in 2022 but accelerated to 6.4 percent in early 2023 as corporate lending picked up.
- Financial sector:
  - Banking sector well capitalized and liquid; capital and liquidity ratios well above regulatory requirements.
  - Non-performing loans fell to 3.2 percent of bank assets by 2023Q1.
  - Real estate lending growing faster than other credit categories; ratio of large loans to capital rose in 2023Q1 indicating loan concentration.

### Outlook and Risks
- Growth and inflation projections:
  - Real GDP growth projected at 2.3 percent in 2023.
  - Medium-term growth projected at about 1.1 percent.
  - Inflation projected to fall to 3.2 percent by end-2023.
- External sector projections:
  - Strong external position should allow foreign reserve build-up to 145 percent of the IMF’s ARA metric by 2028.
  - External debt projected to fall to 70 percent of GDP by 2028.
- Downside risks (Annex IV):
  - Steeper-than-expected global slowdown (especially U.S.) could reduce tourist arrivals.
  - Climate change risks: rising sea levels and more volatile weather events.
  - Domestic risk of insufficient fiscal adjustment, raising financing needs and slowing debt reduction.
  - Growth-at-risk model identifies vulnerabilities to shocks in tourism, financial conditions, U.S. growth, and global oil prices (Annex V).

### Authorities’ Views
- Authorities broadly agreed with staff’s assessment but are more optimistic about medium-term tourism prospects.
- CBA projected weaker real GDP growth than staff due to expected negative real private consumption growth; CBA is somewhat more optimistic about tourism exports and potential to raise average daily accommodation rates.
- Inflation projections by CBA and the government concur with staff projections.

### Policy Discussions and Recommendations
- Overarching recommendation: Use the recovery to implement fiscal reforms and strengthen competitiveness and growth.
- Fiscal consolidation and public investment:
  - Concrete fiscal reforms embedded in a coherent medium-term fiscal framework are needed to keep public debt on a downward trajectory.
  - Authorities plan to maintain a fiscal surplus while scaling up public investment; achieving this requires revenue and expenditure-saving measures and a robust public investment management framework.
  - The authorities plan to keep nominal current expenditure at last year’s level while reducing capital spending in 2023.
  - Authorities projecting a 0.8 percent of GDP surplus in 2023; staff notes this is somewhat less than budget documents expected due to optimistic non-tax revenue forecasts.
  - Recommendation: develop a contingency plan to reduce spending to ensure fiscal targets can be met if revenues underperform.
- Debt and financing:
  - Public debt expected to decline to 85.4 percent of GDP in 2023 and reach 71 percent of GDP by 2028.
  - Gross financing needs in 2023 are 19.2 percent of GDP due to the October 2023 maturation of liquidity support loans from the Netherlands.
  - SRDSA indicates risks to debt sustainability are high; key pressure point is uncertainty around refinancing obligations to the Netherlands (Annex VI).
  - Baseline assumption: the Netherlands refinances the loan through a long-term (20 years) loan at below-market interest rates; if market financing were required instead, debt dynamics would worsen.
  - Recommendation: adopt a sound debt management strategy outlining trade-offs of funding options, diversifying financing sources, publishing the strategy alongside the annual budget, and providing ex-post annual reporting of financing outcomes.
- Monetary and financial sector policy:
  - Recommendation: lower reserve requirements to increase bank intermediation.
  - Strengthen financial oversight and develop macroprudential tools.
- Structural reforms and governance:
  - Accelerate reforms to address supply-side constraints to growth (labor market, business environment).
  - Improve governance and advance climate change adaptation.

*Source: IMF staff report chapter on “Recent National Account Revisions.”*

### 18.      The government is targeting a fiscal surplus of 1.2 percent of GDP over the medium

### 18.      The government is targeting a fiscal surplus of 1.2 percent of GDP over the medium

### Fiscal target, recent measures, and institutional needs
- Fiscal target: fiscal surplus of 1.2 percent of GDP over the medium term.
- Note on fiscal target definition: "The fiscal target is set in terms of the “financial” balance, defined as the overall fiscal balance minus net acquisition of financial assets which is at 1 percent of GDP. This corresponds to an overall balance of 1.2 percent of GDP."
- Recent tax measures will help mobilize revenues; remaining tax reforms should be quickly put in place.
- Authorities plan to increase public investment on infrastructure and climate change adaptation to build resilience and increase competitiveness.
- Investment quality recommendations:
  - Robust institutional framework to appraise project proposals (rigorous feasibility analysis and risk assessment).
  - Introduce effective and transparent systems for procurement, project management, and ex-post project assessment to reduce costs and improve investment quality.

### Key fiscal statistics (Central Government Accounts, Percent of GDP)
- Preliminary 2022 / Approved Budget 2023 / IMF staff projections 2023:
  - Total Revenue and Grants: 21.4 / 23.5 / 22.8
  - Tax revenue: 18.7 / 18.7 / 18.9
  - Direct taxes: 8.0 / 7.2 / 7.2
  - Indirect taxes: 10.6 / 11.5 / 11.7
  - Non-tax revenue: 2.7 / 4.8 / 3.9
  - Total Expenditure: 21.8 / 22.3 / 22.0
  - Current expenditure: 21.4 / 21.9 / 21.7
  - Compensation of employees: 6.8 / 6.9 / 6.9
    - Wages: 5.3 / 5.5 / 5.5
    - Employer's contribution: 1.4 / 1.4 / 1.4
  - Goods and services: 2.9 / 3.1 / 3.1
  - Interest payments: 3.9 / 3.7 / 3.7
  - Transfers and subsidies: 7.8 / 8.2 / 7.9
  - Capital expenditure: 0.4 / 0.3 / 0.3
  - Overall Balance: -0.5 / 1.2 / 0.8
  - Primary balance: 3.4 / 5.0 / 4.5
  - Financial balance (Authorities' concept): -0.7 / ... / 0.5
  - Primary spending: 17.9 / ... / 18.2
  - Total public debt: 90.7 / ... / 85.4

### Box: Aruba’s Main Tax Changes for 2023 (effective January 1, 2023)
- Turnover Tax: indirect sales tax (BBO) rate increased by one percentage point to 7 percent; accompanied by a compensation package for individuals and companies.
- Wage Tax:
  - The personal income tax rate is lowered by 2 percentage points for the first two income brackets.
  - The threshold for paying the personal income tax is increased by around 4 percent.
  - Social security payments are taxed separately for married couples.
  - The income allowance (“reparatietoeslag”) is increased by Afl. 45 per month.
- Profit Tax: reduced from 25 percent to 22 percent.
- Tourist Tax: increased from 9.5 percent to 12.5 percent.
- Real Estate Transfer Tax: the sale of shares in real estate companies is subject to the transfer tax.

### Further policy measures needed to meet targets
- Summary: Under staff’s baseline, recently implemented tax measures are insufficient; further measures required to increase revenue and reduce recurrent spending.
- Revenue mobilization:
  - Introduce a broad-based value-added tax (VAT) to replace the current indirect tax system. (Footnote: "The planned introduction of VAT in January 2023 was postponed due to inflation concerns.")
  - Improve tax and customs administration via digitalization, financial penalties on evasion, enhanced transparency, and increased risk-based audits.
  - Conduct a diagnostic assessment of tax administration (TADAT).
- Containing the wage bill:
  - Unwinding of COVID-19-era public sector salary cuts should be accompanied by elimination of various wage supplements (e.g., overtime, bonuses, allowances).
- Rationalizing goods and services spending:
  - A Public Expenditure Review (World Bank) to inform efforts to eliminate lower priority spending.
- Streamlining transfers to SOEs:
  - Improve SOE performance, reduce transfers (pricing allowing cost recovery, efficiency improvements).
- Strengthening social safety net:
  - Establish a system to deploy temporary and targeted support to vulnerable households (e.g., institutionalize targeted income support similar to pandemic measures).

### Active policy scenario: measures and projected impacts
- Immediate 2023 adjustment required: fiscal surplus would need to increase by 0.5 percent of GDP in 2023 through:
  - Increasing indirect tax compliance: 0.2 percent of GDP.
  - Reducing spending on goods and services: 0.2 percent of GDP.
- Medium-term underpinning measures:
  - Rationalizing subsidies to households: 0.1 percent of GDP.
  - Enhancing social safety net and reducing transfers to SOEs: 0.2 percent of GDP.
- Objective: bring debt below 70 percent of GDP by 2028 while allowing an increase in capital spending.

### Active vs. Baseline Central Government Operations (selected series, percent of GDP)
- Active Scenario absolute levels (2023–2028):
  - Total Revenue and Grants: 23.0 / 23.6 / 23.5 / 23.5 / 23.4 / 23.4
  - Tax revenue: 19.1 / 19.7 / 19.6 / 19.6 / 19.5 / 19.5
  - Direct taxes: 7.2 / 7.2 / 7.2 / 7.2 / 7.2 / 7.2
  - Indirect taxes: 11.9 / 12.5 / 12.4 / 12.4 / 12.3 / 12.3
  - Non-tax revenue: 3.9 / 3.9 / 3.9 / 3.9 / 3.9 / 3.9
  - Total Expenditure: 21.8 / 22.3 / 22.3 / 22.2 / 22.2 / 22.2
  - Current expenditure: 21.4 / 22.0 / 21.7 / 21.5 / 21.2 / 21.0
  - Capital expenditure: 0.3 / 0.3 / 0.5 / 0.7 / 1.0 / 1.2
  - Overall Balance: 1.2 / 1.2 / 1.2 / 1.2 / 1.2 / 1.2
  - Primary balance: 5.0 / 5.6 / 5.4 / 5.2 / 5.0 / 4.8
  - Financial balance (Authorities' concept): 1.0 / 1.0 / 1.0 / 1.0 / 1.0 / 1.0
  - Total public debt: 84.9 / 81.2 / 77.7 / 74.3 / 71.1 / 68.0
- Difference relative to baseline (Active minus Baseline, 2023–2028 highlights):
  - Total Revenue and Grants: 0.2 / 0.5 / 0.4 / 0.4 / 0.3 / 0.3
  - Tax revenue: 0.2 / 0.5 / 0.4 / 0.4 / 0.3 / 0.3
  - Indirect taxes: 0.2 / 0.5 / 0.4 / 0.4 / 0.3 / 0.3
  - Total Expenditure: -0.2 / -0.5 / -0.4 / -0.2 / 0.0 / 0.3
  - Current expenditure: -0.2 / -0.5 / -0.6 / -0.6 / -0.6 / -0.6
  - Goods and services: -0.2 / -0.2 / -0.2 / -0.2 / -0.2 / -0.2
  - Transfers and subsidies: 0.0 / -0.3 / -0.3 / -0.3 / -0.3 / -0.3
  - Capital expenditure: 0.0 / 0.0 / 0.2 / 0.4 / 0.7 / 0.9
  - Overall Balance: 0.5 / 1.1 / 0.8 / 0.6 / 0.3 / 0.1
  - Primary balance: 0.5 / 1.0 / 0.7 / 0.5 / 0.2 / -0.1
  - Total public debt difference: -0.5 / -1.5 / -2.2 / -2.8 / -3.0 / -3.0

### Pension system and medium-term fiscal framework
- Pension risks:
  - Pension system expected to run deficits starting in around five to six years; reserves depleted by the mid-2030s in absence of further reforms.
  - Restoring actuarial balance will require a higher contribution rate and/or lower replacement rate.
- Medium-term fiscal policy framework recommendations:
  - Establish a well-designed medium-term budget framework (MTBF) guided by a debt anchor and pre-determined escape clauses.
  - MTBF benefits: prioritize spending, anchor debt reduction path, shape strategic priorities, guide annual budget consistent with macro-fiscal objectives, improve communication and demonstrate commitment to fiscal discipline.
- Authorities’ progress: improvements in public financial management and fiscal transparency; 2023 budget contains four-year forecasts and authorities are working on eight-year budget projections. Authorities will adhere to the debt anchor established under the 2018 Protocol.

### Supporting intermediation and sustaining financial resilience
- Reserve requirements:
  - Recommendation: lower bank reserve requirements over time to avoid locking up liquidity and imposing an implicit tax on financial intermediation.
  - Context: required reserves have increased; given declining inflation and adequate foreign reserves, scope exists to lower requirements gradually.
  - Supervisory caveat: maintain oversight to ensure adequate bank liquidity against shocks.
- Real estate and macroprudential policy:
  - Rising real estate lending to households increases concerns over lender risk management and household debt burden.
  - Recommendations: close monitoring of underwriting standards; formally introduce loan-to-value and debt service-to-income ratios; develop a comprehensive macroprudential policy framework supported by better, more granular, timely data (including non-bank financial institutions).
  - CARTAC providing capacity development support.

### Regulatory, supervisory, and AML/CFT issues
- Strengthening financial regulatory and supervisory framework:
  - Build on risk-based supervision and rigorous annual stress tests.
  - Adopt more structured liquidity and solvency stress testing tied to macroeconomic scenarios.
  - Adopt Basel II international standards; follow up on Basel Core Principles self-assessment; conduct Insurance Core Principles assessment.
- AML/CFT and tax transparency:
  - CFATF 2022 evaluation: strong ratings relative to regional peers, but further strengthening needed.
  - Suggested actions:
    - Ensure proper implementation of preventative measures by central bank and other supervisors for financial and designated non-financial businesses and professions.
    - Improve supervision of non-profits and designated non-financial businesses and professions.
    - Establish a gaming authority for licensing and vetting management, shareholders, and ultimate beneficial owners.
    - Introduce regulatory framework for licensing of virtual asset service providers.
    - Fully implement the legal framework for collecting beneficial ownership information.
    - Strengthen law enforcement capacity to pursue money laundering and other financial crimes.
  - Tax transparency: address deficiencies in the automatic exchange of tax information noted by the EU grey list; increase tax information sharing and resolve OECD standard implementation issues.

### Authorities’ views (selected)
- Strong commitment to medium-term fiscal targets; support for revenue and expenditure measures to keep public debt on a downward path.
- Emphasis on broadening the tax base, addressing the informal economy, and improving tax administration through digitalization.
- Confirmed plan for an expenditure review with World Bank technical assistance to reallocate savings to priority areas such as education and climate change adaptation.
- On bank reserve requirements: CBA maintains current stance is appropriate given adequate international reserves and persistent excess liquidity; future adjustments will be data-dependent.
- CBA sees banking system as resilient (high capital and liquidity buffers); plans to increase liquidity and capital adequacy ratios in January 2024.
- CBA acknowledges uneven distribution of excess liquidity among banks and supports developing macroprudential tools despite structural resource constraints.

*Sources: Ministry of Finance; IMF staff estimates.*

### 31.      The authorities reiterated their commitments to further enhancing AML/CFT

### 1abwea2023002 - 31.      The authorities reiterated their commitments to further enhancing AML/CFT

### AML/CFT and International Tax Transparency
- Authorities reiterated commitments to further enhancing the AML/CFT framework and improving tax transparency and exchange of information.
- Recent CFATF mutual evaluation was cited as demonstrating the country’s strong overall framework and sound practices on AML/CFT; authorities expressed commitment to making further improvements in line with the mutual evaluation recommendations.
- Authorities highlighted close cooperation with OECD on improving exchanges of tax information, which they expect will eventually help remove Aruba from the grey-list of European Union’s non-cooperative jurisdictions.
- Staff appraisal: “There is scope to improve the AML/CFT and international tax transparency frameworks. This would involve strengthening technical compliance and the effectiveness of the AML/CFT framework and resolving issues related to the implementation of the OECD standards on the exchange of tax information.” (Paragraph 45)

### Addressing Supply-Side Constraints to Growth: Strategy and Implementation
- Authorities have developed comprehensive strategies for raising growth, notably the “Master Plan” (developed in 2020) to support post-pandemic recovery and enhance long-term growth; implementation should soon start and encompass:
  - Reform of labor market legislation.
  - Elimination of red-tape.
  - Strengthening legislative capacity.
  - Tax reform.
  - Broadening e-government.
- The National Action Plan 2023-25 for Aruba’s Transition to a Sustainable and Inclusive Economic Model identifies green tech, agriculture, and knowledge economy as promising diversification sectors.
- Need to further define specific reforms and establish specific timeframes to assess progress.

### Tourism: Increasing Value Added and Environmental Sustainability
- Tourism will remain Aruba’s main growth engine given limited scope for economic diversification; focus should be on increasing tourism’s domestic value added and environmental sustainability.
- Suggested measures include curbing over-construction and promoting new types of tourism (for example, medical tourism) as components of a broader strategy to maximize domestic impact.

### Key Supply-Side Reform Priorities (from text)
- Increasing the ease of doing business:
  - Streamline business procedures through the e-government initiative.
  - Expand recently introduced “Business Policy Guidelines” and efforts to enhance transition to the digital economy.
  - Improve infrastructure for digital payments, building on the central bank’s I-Pago system, to preserve pandemic gains in electronic banking usage.
- Improving competition:
  - Launch of the Aruba Fair Trade Authority in September (authorities intend) to examine potential non-competitive behavior.
  - Ensure sufficient capacity and resources for effective countering of anti-competitive behavior and consumer protection.
- Undertaking labor market reforms:
  - Modernize labor laws to reduce hiring costs.
  - Introduce a new system for unemployment insurance to reduce idiosyncratic risks borne by workers and provide a safety net.
  - Policies to encourage female labor market participation (see Box 3).
- Improving human capital:
  - Increase investment in training and education, including STEM.
  - Allow inflows of skilled immigrant labor.
  - Collaborate with local employers to identify skills needs and facilitate worker–employer matching.

### Governance, Corruption Perceptions, and Integrity Measures
- CBA survey indicates a widespread perception of corruption in Aruba.
- Recommendations to bring local framework in line with the United Nations Convention against Corruption include:
  - Building the capacity of the Integrity Bureau.
  - Establishing codes of conduct for public servants.
  - Introducing robust whistleblower legislation.
  - Implementing robust asset declaration systems for senior public servants to aid detection, investigation, and prosecution of corruption.
  - Collecting and publishing complete information on beneficial owners of companies that bid for government contracts.
- Authorities are preparing legislation to strengthen investigative powers of the Integrity Bureau; a Code of Conduct for Ministers has been drafted, and a code for public employees is in progress.
- Staff appraisal: “The authorities are encouraged to bring governance framework in line with the United Nations Convention Against Corruption. This should include improving the capacity of the Integrity Bureau, establishing codes of conduct for public servants, and requiring detailed asset declarations from senior public servants.” (Paragraph 47)

### Climate Change Resilience
- Aruba is a flat island with a substantial share of houses, primary infrastructure, and tourism assets located near sea level; even a modest rise in sea level will greatly affect the economy.
- Need for a concrete action plan under the National Climate Resilience Council to prioritize infrastructure investments that improve physical resilience of low-lying areas, identify financing sources, and integrate these investments into the medium-term fiscal framework.
- Progress noted: ongoing climate risk profile assessment, planned costing of climate change adaptation needs, and development of a national climate resilience strategy.
- Authorities aim to increase the share of renewable energy to meet their target of greenhouse gas emissions reduction by at least 45 percent by 2030.
- Staff appraisal: “Increasing resilience to climate change is a priority. A concrete action plan for adaptation would help prioritize infrastructure investments that improve the physical resilience of low-lying areas. These investments should be incorporated into the overall medium-term fiscal framework. Progress should be accelerated in costing climate change adaptation needs and developing a national climate resilience strategy.” (Paragraph 48)

### Gender Equity (Box 3) — Key Findings and Policy Options
- Using fuller participation of the female labor force is a key path to inclusive growth given subdued growth, declining TFP, brain drain, and population ageing.
- Women have higher secondary enrollment rates than men, but gender gaps persist in labor force participation and wage levels:
  - Female labor force participation has been only 60 percent since the mid-2000s.
  - Females are under-represented in certain fields, especially STEM, contributing to lower median wages than men.
  - Aruba has a larger share of women in leadership roles than comparator countries.
- Authorities released Aruba National Gender Policy in May 2022 to foster gender equality and women’s empowerment; priorities include increasing women’s work and entrepreneurship opportunities, improving social protection, and access to finance and education.
- Further data collection and microdata analysis are needed to determine drivers of gender wage gaps; possible policy interventions include:
  - Encouraging STEM education for women.
  - Reducing the second earner tax penalty.
  - Introducing an Earned Income Tax Credit to encourage participation.
  - Providing support for childcare.

### Financial Sector and Macroprudential Recommendations
- With declining inflation and foreign reserves at adequate levels, CBA is encouraged to reduce the reserve requirement rate over time to avoid disincentivizing deepening of financial intermediation.
- CBA should remain vigilant to vulnerabilities in the financial system:
  - Monitor underwriting standards of real estate lending closely.
  - Consider formally introducing caps on loan-to-value and debt service-to-income ratios for borrowers.
  - Further develop a comprehensive macroprudential policy framework and collect more granular, timely data, including on non-bank financial institutions.
  - Adopt a more structured approach to liquidity and solvency stress testing tied to macroeconomic scenarios.
  - Move quickly to adopt Basel II international standards.
- Staff appraisal highlights the need for long-term fiscal risk action on pensions (increasing the contribution rate and/or reducing the replacement rate) and strengthening the medium-term fiscal policy framework guided by a debt anchor and escape clauses.

### Fiscal Policy and Medium-Term Recommendations
- Planned tightening of fiscal policy in 2023 is judged appropriate given the recovery; plan includes keeping nominal current expenditure at last year’s level and introducing tax measures to increase revenues.
- Authorities are encouraged to quickly introduce remaining tax reform agenda to ensure the 2023 fiscal target can be comfortably met and to prepare a contingency plan if revenue inflows fall short.
- Over the medium term, fiscal surpluses will be needed. Recommended actions include:
  - Introducing a broad-based value-added tax to replace current indirect tax system.
  - Improving tax compliance.
  - Containing the wage bill, reprioritizing spending on goods and services, and streamlining transfers and subsidies to create fiscal space for social safety nets and capital spending.
- Planned public expenditure review by the World Bank should inform these efforts.

*Source: IMF staff report content provided in the supplied excerpt.*

### 49.      It is recommended that the next Article IV consultation discussions with Aruba take

### 1abwea2023002 - 49.      It is recommended that the next Article IV consultation discussions with Aruba take

### Recommendation
- It is recommended that the next Article IV consultation discussions with Aruba take place on a 24-month cycle.

### Baseline: Medium-Term Outlook and Growth Projections
- Real GDP growth:
  - 2018: 2.4
  - 2019: -2.3
  - 2020: -24.0
  - 2021: 27.6
  - 2022: 7.3
  - 2023–2028 (projections): 2.3, 1.2, 1.2, 1.1, 1.1, 1.1
- GDP Deflator (period average and end-period shown): 2022 period average 5.7; 2022 end-period 5.7; projected 2023–2028 period averages 3.2, 2.2, 2.0, 2.0, 2.0, 2.0
- Consumer Prices (period average): 2022: 5.5; projected 2023–2028: 4.5, 2.3, 2.1, 2.0, 2.0, 2.0
- Contributions to 2021–2022 growth highlighted:
  - Growth in tourism exports strongly drove the rebound (Tourism Exports: 2021: 21.7; 2022: 13.8; projected 2023: 1.4; 2024–2028: 0.5, 0.5, 0.5, 0.6, 0.6)
  - Net exports and private consumption were key drivers of the 2021 real GDP surge.

### Fiscal Developments, Medium-Term Path, and Risks
- Central government operations (percent of GDP):
  - Revenues: 2018: 22.2; 2019: 23.4; 2020: 24.0; 2021: 19.7; 2022: 21.4; 2023–2028 (proj): 22.8, 23.0, 23.0, 23.0, 23.0, 23.0
  - Expenditures: 2018: 26.3; 2019: 24.9; 2020: 23.7; 2021: 40.2; 2022: 28.9; 2023–2028 (proj): 21.8, 22.0, 22.9, 22.7, 22.4, 22.2, 21.9
  - Of which capital: consistently projected at 0.3 percent of GDP in 2023–2028
  - Overall Balance: 2018: -3.4; 2019: -2.6; 2020: -0.2; 2021: -16.2; 2022: -9.2; 2023–2028 (proj): -0.5, 0.8, 0.2, 0.4, 0.6, 0.9, 1.1
  - Primary Balance: 2018: -1.7; 2019: 1.1; 2020: 3.5; 2021: -11.1; 2022: -4.8; 2023–2028 (proj): 3.4, 4.5, 4.6, 4.7, 4.8, 4.8, 4.9
  - Cyclically Adjusted Primary Balance (Percent of Potential GDP): 2018: -0.3; 2019: 1.1; 2020: 4.3; 2021: -5.9; 2022: -4.4; 2023–2028 (proj): 3.2, 4.3, 4.5, 4.6, 4.8, 4.9, 4.9
- Public gross debt (percent of GDP):
  - 2018: 59.0
  - 2019: 73.3
  - 2020: 71.1
  - 2021: 112.3
  - 2022: 101.8
  - 2023–2028 (proj): 90.7, 85.4, 82.7, 79.9, 77.1, 74.1, 71.0
- Fiscal composition and pressures:
  - High wage-related and interest expenditures have crowded out capital expenditures; capital spending projected at 0.3 percent of GDP annually in 2023–2028.
  - Transfers and subsidies remain a significant current spending component (Transfers: 2018: 5.2; 2019: 16.6; 2020: 9.8; 2021: 3.4; 2022: 4.6; projected 2023–2028: 4.7, 4.9, 4.9, 4.8, 4.8, 4.7).

### Monetary and Reserve Trends
- Gross Official Reserves (Millions of U.S. Dollars): 2018: 674; 2019: 995; 2020: 999; 2021: 1,234; 2022: 1,534; 2023–2028 (proj): 1,564, 1,576, 1,674, 1,754, 1,828, 1,895, 1,980
- Gross Official Reserves (Months of Next Year's Imports): 2018: 2.9; 2019: 5.3; 2020: 7.3; 2021: 7.6; 2022: 7.6; 2023–2028 (proj): 7.3, 7.2, 7.4, 7.6, 7.7, 7.8, 7.9
- Monetary aggregates (end-2022 and projections):
  - Net foreign assets of banking system (millions Afl): 2018: 1,133; 2019: 1,776; 2020: 1,713; 2021: 2,056; 2022: 2,885; projected 2023–2028: 3,112, 3,157, 3,349, 3,508, 3,655, 3,792, 3,962
  - Broad Money (M2, millions Afl): 2018: 2,979; 2019: 4,378; 2020: 4,569; 2021: 4,797; 2022: 5,366; projected 2023–2028: 5,546, 5,856, 6,054, 6,249, 6,444, 6,645, 6,852
  - Money multiplier fell to 2.1 in 2022 (Money multiplier series: 2018: 2.9; 2019: 3.1; 2020: 2.8; 2021: 2.3; 2022: 2.2; projections 2023–2028: 2.2, 2.1, 2.1, 2.1, 2.1, 2.0)
- Central Bank Net Foreign Assets (millions of U.S. dollars, memorandum): 2018: 914; 2019: 877; 2020: 1,067; 2021: 1,396; 2022: 1,487; projected 2023–2028: 1,498, 1,597, 1,676, 1,750, 1,817, 1,902

### External Sector and Balance of Payments
- Current Account Balance (percent of GDP and USD levels):
  - USD (millions): 2018: -178; 2019: 8; 2020: -316; 2021: 843; 2022: 942; projected 2023–2028 (USD millions): 783, 503, 543, 413, 283, 313
  - Percent of GDP: 2018: -0.6; 2019: -0.5; 2020: 2.6; 2021: -12.4; 2022: 2.7; projected 2023–2028: 11.2, 7.5, 9.1, 8.9, 8.3, 7.8, 7.2
- Goods and services:
  - Goods (USD millions): exports 2018: 194; 2019: 131; 2020: 87; 2021: 123; 2022: 207; projected steadier small exports thereafter; imports 2018: 1,232; 2019: 1,206; 2020: 863; 2021: 1,060; 2022: 1,370; projected increases thereafter.
  - Services (USD millions): credits 2018: 2,372; 2019: 2,427; 2020: 1,357; 2021: 2,083; 2022: 2,821; tourism exports (tourism credits) 2018: 2,022; 2019: 2,090; 2020: 1,070; 2021: 1,781; 2022: 2,464; projected 2023–2028: 2,682, 2,735, 2,790, 2,846, 2,903, 2,961
- External Debt (percent of GDP): 2018: 86.8; 2019: 89.3; 2020: 87.6; 2021: 132.9; 2022: 119.0; projected 2023–2028: 102.3, 85.9, 82.2, 78.7, 75.6, 72.7, 69.9
- Gross Foreign Liabilities (millions of U.S. dollars): 2018: 1.5; 2019: 2.4; 2020: 0.1; 2021: 0.1; 2022: 5.3; projected 2023–2028: 5.3, 5.3, 5.3, 5.3, 5.3

### Labor Market and Social Indicators
- Unemployment rate:
  - 2022Q2 unemployment rate: 6.6 (also unemployment rate (percent, 2022H1) reported as 8.7, 7.3, 5.2, 8.6, 8.8, 6.6 across related mentions)
  - Latest available unemployment rate reference: Jun 2022
- Key demographics and social stats:
  - Area (sq. km): 180
  - Population (thousands, 2022Q2): 107.4
  - Literacy rate (percent, 2020): 98.0
  - Population growth rate (percent, 2018-22 average): -0.2
  - Percent of population below age 15 (2021): 16.8
  - Percent of population age 65+ (2021): 15.5
  - Nominal GDP (millions of U.S. dollars, 2022): 3,521
  - GDP per capita (thousands of U.S. dollars, 2022): 32.8
  - Life expectancy at birth (years, 2021): 74.6

### Financial Sector Soundness and Trends
- Financial system size: assets at 214 percent of GDP in 2022, close to pre-pandemic levels.
- Banking sector (share of financial system assets): 52 percent in 2022.
- Asset composition trends:
  - Banks increased cash holdings and investments since the pandemic while loans and other assets decreased.
  - Banks increased their investment allocation abroad in 2022 (foreign investment reached 12 percent of banks' investments); remaining investments mainly in home government securities.
- Financial Soundness Indicators highlights (selected series):
  - Regulatory Tier I capital to risk-weighted assets: 2018: 22.4; 2019: 24.4; 2020: 24.6; 2021: 27.5; 2022: 28.6; earlier series back to 2009 shown.
  - NPLs to gross loans: 2018: 4.0; 2019: 3.9; 2020: 3.2; 2021: 5.0; 2022: 4.7; 2009–2022 time series provided.
  - Loans to deposits: 2018: 66.8; 2019: 66.2; 2020: 68.2; 2021: 68.4; 2022: 65.8
  - ROA after taxes: 2022: 0.4; ROE after taxes: 2022: 2.3

### Key Risks and Policy Considerations (inferred from data)
- Fiscal sustainability risks remain from elevated public gross debt (112.3 percent of GDP in 2021; 101.8 percent in 2022) though projected to decline to 71.0 percent by 2028 under the baseline.
- External vulnerability indicators show high external debt relative to GDP (119.0 percent in 2022) and reliance on tourism exports, making Aruba sensitive to external demand shocks.
- Reserve adequacy improved with Gross Official Reserves at 1,534 (USD millions) in 2022 and coverage of next year's imports projected around 7.6 months in 2022 and stable thereafter.
- Monetary and liquidity dynamics include a shift toward foreign asset composition and a decline in the money multiplier (2.1 in 2022), with private credit growth subdued though mortgages provided moderate credit growth in 2022.

*Source: Aruba — IMF staff estimates and projections (selected tables and figures from the provided content unit).*

### Annex I. Implementation of Recommendations from the 2021

### Annex I. Implementation of Recommendations from the 2021 Article IV Consultation Discussions

### Fiscal Policy
- Enhance the progressivity of the tax systems. — Ongoing. The authorities introduced several tax reforms in 2023 to further raise revenue while supporting households and business activity.
- Consider wealth taxes. — No progress.
- Exploit excises and environnemental taxes. — Ongoing. Environmental tax is applied.
- Introduce a value-added tax (VAT) to replace the current various indirect taxes. — Postponed. The plan to introduce a VAT in January 2023 has been postponed due to inflation concerns.
- Contain the wage bill. — Ongoing. An IMF TA mission was conducted in 2019 and a follow-up mission in 2020.
- Enhance the social safety net. — No progress.
- Comprehensive reform of the labor market safety net. — Partial progress. Minimum wage was increased as of January 1st, 2023.
- A robust fiscal policy planning framework with a formal fiscal rule. — Partial progress. The budget contains four-year forecasts for headline revenues and expenditures is updated on an annual basis. An IMF/CARTAC TA mission on strengthening fiscal planning was conducted in October 2020, followed by a CARTAC TA mission on refining the projection of macro and fiscal variables.
- Finalize the strategy for budget financing and debt management. — Ongoing. TA request submitted to CARTAC.

### Monetary and Financial Policies
- Unwind the capital flow management measures on FX outflows. — Addressed. The measure was lifted in 2021.
- Remove the new exchange restrictions imposed during COVID-19. — Addressed. The measures were lifted in 2021.
- Closely monitor NPLs and look out for any incipient liquidity risks. — Ongoing. The CBA runs annual stress tests based on scenarios of increase in the NPLs, defaults on large exposures, and decreases in liquidity ratios.
- Steady progress towards the implementation of Pillar 2 and 3 of Basel II. — Ongoing. The CBA is in the process of implementing the Basel II capital framework.
- Enhance the understanding of ML/TF risks, upgrade the AML/CFT ordinance in line with the FATF standards, and strengthen the confiscation framework. — Addressed. The authorities completed the AML/CFT risk assessment (supported by the World Bank) and upgraded the AML/CFT ordinance. The 4th round of mutual evaluation by CFATF was completed and published in July 2022.

### Structural reforms
- Invest in healthcare infrastructure and capacity building of medical personnel. — No progress.
- Implement policies to reduce inequality and improve resilience to climate risks. — Ongoing. Climate mitigation and energy efficiency programs have been implemented and accelerated. New national targets established for 2030 and 2050. A national climate resilience council was established and tasked with developing a national climate adaptation plan.
- Implement structural reforms to improve the business environment. — Ongoing. In April 2019 the minister of Finance, Economic Affairs, and Culture presented the economic policy 2019-2022 with a vision to improve the investment climate in Aruba, stimulate an innovative, competitive and diversified economy, and improve quality of life for all citizens, identifying six promising sectors.
- Introduce more flexibility to the labor market to boost labor productivity. — Ongoing. More flexible labor laws are indicated as a priority in the recovery master plan and included in a condition for the loan from the Netherlands. The 2016 changes to the Civil Code already allowed the employer to unilaterally modify an employment contract under certain conditions.
- Enhance the social safety net. — No progress.
- Support any promising exports by developing sector specific infrastructure. — Ongoing. An action plan developed and presented by the Ministry of Economic Affairs.
- Strengthen the effectiveness of the Anti-Corruption framework. — Ongoing. The National Integrity System assessment has been completed. Preparation of the Code of Conduct for public servants is ongoing.

*Annex I. Implementation of Recommendations from the 2021 Article IV Consultation Discussions — content provided in the source PDF.*

### Annex IV. Risk Assessment Matrix

### Annex IV. Risk Assessment Matrix

### Global Risks
- Intensification of regional conflict(s).
  - Likelihood: High
  - Expected Impact: Medium
  - Key expected effects:
    - "Regional conflicts would only have indirect effects on the Aruban economy, likely increasing domestic inflation (due to energy and food prices, or supply chain disruptions) and lowering tourism flows."
  - Policy Response:
    - "Provide targeted and temporary fiscal support to the most vulnerable and hardest-hit workers and businesses."
    - "Implement policies to diversify the tourism sector while remaining competitive."
    - "Enhance surveillance of the financial system. If necessary, loosen financial conditions to support bank lending, while safeguarding financial stability."

- Social discontent.
  - Likelihood: High
  - Expected Impact: Low
  - Key expected effects:
    - "Social unrest spreading globally is not likely to significantly impact Aruba but rising domestic inflation would affect low-income households, with a negative social impact, including higher inequality."
  - Policy Response:
    - "Provide targeted and temporary fiscal support to the most vulnerable, while developing clear communication and engagement strategy with the affected population."
    - "Address public vulnerabilities, including through strengthening anti-corruption efforts."

- Abrupt global slowdown or recession.
  - Likelihood: Medium
  - Expected Impact: High
  - Key expected effects:
    - "A slowdown in key tourist source countries, particularly in the U.S., would severely affect prospects of the Aruban economy, reducing the real growth, exports, and fiscal revenues."
  - Policy Response:
    - "Provide targeted and temporary fiscal support to the most vulnerable, while building external and fiscal buffers in good times."
    - "Implement policies to diversify the tourism sector to enhance resilience against a slowdown of the global economic growth."

- Commodity prices volatility.
  - Likelihood: Medium
  - Expected Impact: Medium
  - Key expected effects:
    - "(i) push up global inflation, lowering real income in tourist source countries and tourist arrivals to Aruba; (ii) pass to domestic prices via higher import bill and transportation costs, affecting to the greater degree low-income and vulnerable households, and increasing inequality."
  - Policy Response:
    - "Provide targeted social assistance to the most vulnerable while allowing pass-through of price signals."
    - "Accelerate transition to renewable energy sources through implementation of the ongoing renewable energy and cyclical economy programs."

- Systemic financial instability.
  - Likelihood: Medium
  - Expected Impact: High
  - Key expected effects:
    - "Sharp swings in asset prices could stress financial sector balance sheets while higher real interest rates could impact costs and access to financing."
    - "Slowdown in growth in tourist resource countries would reduce tourist arrivals, damping Aruba’s growth."
  - Policy Response:
    - "Strengthen monitoring systemic risks and crisis preparedness framework to ensure the financial system stability."
    - "Develop macroprudential policy framework."
    - "Continue fiscal consolidation to rebuild fiscal and external buffers to reduce the debt burden and interest payments."

- Deepening geo-economic fragmentation.
  - Likelihood: High
  - Expected Impact: Low
  - Key expected effects:
    - "This could disrupt tourism flows, weighing on growth."
    - "Supply disruptions and rising input costs could lead to higher domestic inflation."
  - Policy Response:
    - "Enhance resilience against a slowdown of the global economic growth via structural reforms to boost domestic competitiveness and diversifying tourism markets."
    - "Continue efforts to mobilize domestic revenues and strengthen fiscal planning framework."
    - "Strengthen cybersecurity and payments’ system."

- Climate change risk.
  - Likelihood: Medium
  - Expected Impact: Medium
  - Key expected effects:
    - "Increasing sea levels could impact a substantial share of the houses, primary infrastructure, and tourism assets that are located near sea level, affecting tourism capacity and potential economic growth."
  - Policy Response:
    - "Undertake a comprehensive risk assessment and develop a climate change adaptation action plan under the auspices of the National Climate Resilience Council: (i) prioritize public investment in disaster-resistant infrastructure to bolster resistance to rising sea levels; (ii) build fiscal buffers and seek cost-effective insurance; (iii) integrate material aspects of climate change and environmental risks into financial sector supervision."

### Domestic Risks
- Delay in implementing fiscal adjustment.
  - Likelihood: Medium
  - Expected Impact: High
  - Key expected effects:
    - "The crowding out of essential spending could impact growth."
    - "The decline in fiscal policy credibility could threaten the sustainability of the fixed exchange regime."
  - Policy Response:
    - "Recalibrate plans to introduce a credible adjustment plan, underpinned by concrete measures that will keep debt level on a firm downward trajectory."

*Prepared by Ali Al-Sadiq and Olga Bespalova. Source: IMF staff.*

### 1. De bt Cove rage  in the  DSA: 1/

### 1. De bt Cove rage  in the  DSA: 1/

### Debt perimeter and coverage
- Chosen coverage: Budgetary central government.  
- Non-central government entities insignificant? 0  
- Subsectors included in chosen coverage (baseline):
  - Budgetary central government: Yes
  - Extra budgetary funds (EBFs): No
  - Social security funds (SSFs): no
  - State governments: no
  - Local governments: no
  - Public nonfinancial corporations: no
  - Central bank: no
  - Other public financial corporations: no
- Commentary: "For the purpose of this SRDSA, the debt perimeter covers the central government sector due to lack of consolidated general government and public sector data."
- Reporting on intra-government debt holdings: table entries indicate zeros across listed holders and issuers for budgetary central govt, extra-budgetary funds, social security funds, state govt, local govt, nonfin pub. corp., central bank, oth. pub. fin. corp. (Total 000000000).

### Valuation and recording
- Basis of recording: Non-cash basis 4/ and Cash basis options listed (not applicable flagged); Consolidated/Non-consolidated distinctions noted.
- Valuation of debt stock:
  - Nominal value 5/
  - Face value 6/
  - Market value 7/ (only traded debt securities have observed market values)
- Notes:
  - 2/ Stock of arrears could be used as a proxy in the absence of accrual data on other accounts payable.
  - 3/ Insurance, Pension, and Standardized Guarantee Schemes, typically including government employee pension liabilities.
  - 4/ Includes accrual recording, commitment basis, due for payment, etc.
  - 5/ The nominal value definition is preserved as in source.
  - 6/ The face value definition is preserved as in source.
  - 7/ Market value definition preserved as in source.

### Public debt structure indicators (end-2022 and related)
- Commentary: "Domestic debt stood at 37.7 percent of GDP at end-2022 while external debt at 62.3 percent of GDP."  
- Debt profile: dominated by medium- and long-term maturities.  
- Residual maturity: 6. years (as reported).

### Baseline scenario and medium-term projections (Figure 4)
- Public debt (Percent of GDP), Actual and projections:
  - 2022: 90.7
  - 2023: 85.4
  - 2024: 82.7
  - 2025: 79.9
  - 2026: 77.1
  - 2027: 74.1
  - 2028: 71.0
  - 2029: 67.8
  - 2030: 64.3
  - 2031: 60.7
  - 2032: 56.9
  - 2033: 52.8
  - 2034: 48.5
- Change in public debt (percent of GDP):
  - 2023: -11.1
  - 2024: -5.3
  - 2025: -2.7
  - 2026: -2.8
  - 2027: -2.9
  - 2028: -3.0
  - 2029: -3.1
  - 2030: -3.2
  - 2031: -3.5
  - 2032: -3.7
  - 2033: -3.8
  - 2034: -4.1
  - 2035: -4.2 (note: table extends to 2034 with final change -4.2)
- Contribution of identified flows (percent of GDP):
  - 2023: -13.4
  - 2024: -4.9
  - 2025: -2.7
  - 2026: -2.9
  - 2027: -2.9
  - 2028: -3.0
  - 2029: -2.7
  - 2030: -2.8
  - 2031: -3.1
  - 2032: -3.3
  - 2033: -3.5
  - 2034: -3.8
  - 2035: -3.9
- Primary deficit (percent of GDP):
  - 2022: -3.4
  - 2023: -4.5
  - 2024: -4.6
  - 2025: -4.7
  - 2026: -4.8
  - 2027: -4.8
  - 2028: -4.9
  - 2029: -5.0
  - 2030: -5.1
  - 2031: -5.1
  - 2032: -5.2
  - 2033: -5.3
  - 2034: -5.4
- Noninterest revenues (percent of GDP): 21.4, 22.8, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0, 23.0
- Noninterest expenditures (percent of GDP): 17.9, 18.2, 18.5, 18.4, 18.3, 18.2, 18.1, 18.1, 18.0, 17.9, 17.8, 17.8, 17.7
- Automatic debt dynamics (percent of GDP): -10.1, -0.6, 1.6, 1.6, 1.6, 1.7, 2.0, 2.0, 1.8, 1.6, 1.5, 1.3, 1.3
- Real interest rate and relative inflation (percent): -3.5, 1.4, 2.6, 2.5, 2.5, 2.5, 2.8, 2.8, 2.5, 2.3, 2.2, 1.9, 1.8
- Real interest rate (percent): -5.1, 1.0, 2.7, 2.6, 2.5, 2.5, 2.4, 2.4, 2.2, 2.0, 1.9, 1.6, 1.5
- Relative inflation (percent): 1.6, 0.4, -0.1, -0.1, 0.0, 0.0, 0.4, 0.4, 0.4, 0.3, 0.3, 0.3, 0.3
- Real growth rate (percent): -6.9, -2.0, -1.0, -1.0, -0.9, -0.8, -0.8, -0.8, -0.7, -0.7, -0.7, -0.6, -0.6
- Other identified flows (percent of GDP): 0.2 repeated each year
- Contingent liabilities (percent of GDP): 0.0 repeated each year
- Contribution of residual (percent of GDP): 2.3, -0.4, 0.1, 0.1, 0.0, 0.0, -0.4, -0.4, -0.4, -0.3, -0.3, -0.3, -0.3
- Gross financing needs (GFN) (percent of GDP):
  - 2022: 3.7
  - 2023: 19.2
  - 2024: 8.8
  - 2025: 8.9
  - 2026: 9.2
  - 2027: 12.7
  - 2028: 5.7
  - 2029: 5.5
  - 2030: 8.1
  - 2031: 4.5
  - 2032: 4.1
  - 2033: 3.2
  - 2034: 1.1
- Of which: debt service (percent of GDP): 7.2, 23.8, 13.4, 13.5, 13.9, 17.6, 10.4, 10.4, 8.1, 6.2, 9.6, 9.3, 8.5, 6.5 (table lists through 2034 with varying values).
- Local currency GFN components (percent of GDP): 1.6, 3.5, 4.0, 5.9, 6.5, 12.1, 4.2, 4.2, 4.3, 3.7, 6.2, 5.7, 5.5, 3.5
- Foreign currency GFN components (percent of GDP): 5.5, 20.2, 9.3, 7.6, 7.4, 5.5, 6.2, 5.8, 2.6, 3.4, 3.6, 3.0, 3.0
- Memo:
  - Real GDP growth (percent): 7.3, 2.3, 1.2, 1.2, 1.1, 1.1, 1.1, 1.1, 1.1, 1.1, 1.1, 1.1, 1.1
  - Inflation (GDP deflator; percent): 5.7, 3.2, 2.2, 2.2, 2.0, 2.0, 2.0, 2.0, 2.0, 2.0, 2.0, 2.0, 2.0
  - Nominal GDP growth (percent): 13.5, 5.6, 3.4, 3.2, 3.1, 3.1, 3.1, 3.1, 3.1, 3.1, 3.1, 3.1, 3.1
  - Effective interest rate (percent): 0.0, 4.4, 5.4, 5.4, 5.3, 5.3, 5.3, 5.4, 5.3, 5.2, 5.2, 4.9, 5.0
- Commentary: "Debt-to-GDP is projected to set on a declining trend as the primary surplus and continued economy recovery would offset the adverse real interest rate dynamics. Debt is projected to settle at about 71 percent of GDP by 2028. Debt dynamics will be driven by the interest rate-growth differential despite the projected primary balances."

### Realism and medium-term risk analysis (Figures 5–6)
- Fanchart width: 91.5 1.3
- Probability of debt not stabilizing (pct): 27.8 0.2
- Terminal debt level x institutions index: 29.6 0.6
- Debt fanchart index: ...2.2
- Average GFN in baseline: 10.7 3.7
- Bank claims on government (pct bank assets): 9.7 3.1
- Change in claims on govt. in stress (pct bank assets): 30.4 10.2
- GFN financeability index: ...17.0
- Prob. of missed crisis, 2023-2028 (if stress not predicted): 54.5 pct.
- Prob. of false alarm, 2023-2028 (if stress predicted): 9.1 pct.
- Commentary: "The large increase in the level of debt in 2020 and the country’s exposure to exogenous shocks, slow economic growth, and the closure of refinery activity in 2012 contributed to increasing the debt burden in the past. This results in the Debt Fanchart Module point to a high level of risk due to the uncertainty around the debt trajectory and a relatively high level of public debt. The GFN Financeability Module suggests moderate, level of risk. However, the debt level path is vulnerable to global global exogenous shocks that affect tourism activities."

### Long-term risk and climate adaptation analysis (Figures 7–8)
- Long-term module indication: "The long-term module indicates a low risk of large amortization for Aruba."
- Climate change: adaptation scenarios
  - Custom baseline: 1.1% (GFN-to-GDP Ratio), 2.0% (Total Public Debt-to-GDP Ratio), -2.0% (unclear labeling preserved)
  - Baseline extension of fifth projection year: 1.1%, 4.9%, -2.0%
- Commentary: "In the long term, climate-related expenditures appear manageable and will have a limited impact on debt sustainability and GFNs."

### Annex VII — Sustainability of Aruba’s Pension System
- Key messages:
  - "Reforming Aruba’ pension system is a key priority to ensure its sustainability and reduce fiscal vulnerabilities. In the absence of reforms, the system will generate deficit. This mainly reflects an ageing population. Parametric reforms, including revisions to the contribution rates are essential for the system sustainability."
- Pension system features:
  - Comprehensive social security schemes: old-age pension (AOV), survivor pension (AWW), sickness and accident (AZ/OV), employment injuries (Cessantia), mandatory pension for the private sector, unemployment benefits, general health insurance (AZV), and social welfare benefits.
  - Public pension financing: Old-age pension fund (AOV) administered by Social Insurance Bank (SVB) is financed by contributions currently at 15.5 percent for public and private sectors (two-thirds covered by employers and one-third by employees). Self-employees contribute 15.5 percent on a voluntary basis.
  - SVB coverage and rules: almost universal coverage; Pay-As-You-Go system; retirement paid at age 64 (gradually rising to age 65 by 2025); residency and deferral conditions preserved as stated.
- Fiscal outlook for pension:
  - "The pension system is expected to run deficit in the future, despite past reforms." Aging population will cause contribution revenue to fall short of benefits over medium term and widen long term.
  - Policy options to contain transfers to AOV: (i) increasing pension contribution rates; and (ii) reducing pension benefits. "Given the current level of payroll taxes and relatively moderate replacement rate, the focus should be on the first measure."

### Data adequacy and statistical issues
- General: "Data provision is adequate for surveillance."
- National Accounts:
  - CBS published revised GDP at current prices for 2000-19.
  - CBA estimated and disseminated total GDP at constant prices up to 2021, including 2013-2021 for the 2013 base year; GDP composition by expenditure for rebased series not available.
  - Imports and exports of goods and services do not match BOP statistics.
- Price Statistics:
  - CPI compiled and published monthly by CBS; expenditure weights from Household Income and Expenditure Survey (May/June 2016).
  - Main CPI improvement needed: treatment of Housing (renters and owners); survey does not collect actual housing rents; no component for owner-occupied housing.
- Government Finance Statistics:
  - Prepared and published regularly, but not directly reported to STA.
  - Presentation improvements suggested: disaggregate residual expenditure in transfers and subsidies; move some items such as net lending below-the-line; provide more details on government tax arrears as below-the-line entry; quarterly data need more details and could be reported based on GFSM 2014.
- Monetary and Financial Statistics:
  - CBA reports monthly MFS to STA but not in SRFs; deviations from recommended methodology exist (lack of detailed currency and sectoral breakdown; Other Financial Corporations not reported).
  - Aruba reports several Financial Access Survey indicators including commercial bank branches per 100,000 adults and ATMs per 100,000 adults.
- Financial sector surveillance:
  - Aruba does not report FSIs for IMF FSI website, but CBA publishes FSI data: quarterly for banks, annual for insurance and pension sectors.
- External Sector Statistics:
  - CBA reports quarterly BOP and annual IIP to STA; quarterly BOP timeliness improved (latest reported BOP data refer to 2022Q4); latest IIP and CDIS data reported to STA pertain to 2021; CPIS latest was for June (year not specified in excerpt).

*Source: 1abwea2023002 - 1. De bt Cove rage  in the  DSA: 1/*

### 2022. Monthly data on the official reserve position are published with a lag of one month. A

### 1abwea2023002 - 2022. Monthly data on the official reserve position are published with a lag of one month. A

### Data coverage and timeliness
- Monthly data on the official reserve position are published with a lag of one month.
- A breakdown in holdings of gold and foreign exchange is provided.
- Aruba does not participate in the World Bank’s Quarterly External Debt Statistics (QEDS) database; however, it disseminates annual data on gross external debt position by sector—including a breakdown by maturity and instrument—in its Annual Statistical Digest.
- A debt survey covering both public and private sectors provides information on:
  - the amount of foreign debt outstanding,
  - currency denomination of foreign debt outstanding,
  - disaggregation by instrument,
  - amortization payments coming due.

### Data standards and quality
- Aruba started participating in the Fund’s enhanced General Data Dissemination System (e-GDDS) on August 16, 2017, with metadata posted on the IMF’s Dissemination Standards Bulletin Board (DSBB).
- No data ROSC has been conducted in Aruba.

### Table of Common Indicators Required for Surveillance (As of June 8, 2023) — key statistics and reporting details
- Exchange Rates
  - Date of Latest Observation: Current
  - Date Received: Current
  - Frequency of Data: M D D and M
  - Frequency of Reporting: (blank in source)
  - Frequency of Publication: (blank in source)
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities 1/
  - Date of Latest Observation: 3/23
  - Date Received: 5/23
  - Frequency of Data: M
  - Frequency of Reporting: N/A
  - Frequency of Publication: A, Q, M
- Reserve/Base Money
  - Date of Latest Observation: 3/23
  - Date Received: 5/23
  - Frequency of Data: M
  - Frequency of Reporting: M
  - Frequency of Publication: A, Q, M
- Broad Money
  - Date of Latest Observation: 3/23
  - Date Received: 5/23
  - Frequency of Data: M
  - Frequency of Reporting: M
  - Frequency of Publication: A, Q, M
- Central Bank Balance Sheet
  - Date of Latest Observation: 3/23
  - Date Received: 5/23
  - Frequency of Data: M
  - Frequency of Reporting: M
  - Frequency of Publication: A, Q, M
- Consolidated Balance Sheet of the Banking System
  - Date of Latest Observation: 3/23
  - Date Received: 5/23
  - Frequency of Data: M
  - Frequency of Reporting: M
  - Frequency of Publication: A, Q, M
- Interest Rates 2/
  - Date of Latest Observation: Q1/23
  - Date Received: 5/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q
- Consumer Price Index
  - Date of Latest Observation: 2/23
  - Date Received: 2/23
  - Frequency of Data: M
  - Frequency of Reporting: M
  - Frequency of Publication: A, Q, M
- Revenue, Expenditure, Balance and Composition of Financing — General Government 4/
  - Date of Latest Observation: 2022
  - Date Received: 2/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q
- Revenue—Central Government
  - Date of Latest Observation: 2022
  - Date Received: 2/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q, M
- Stock of Central Government Debt 5/
  - Date of Latest Observation: 2022
  - Date Received: 2/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q
- External Current Account Balance
  - Date of Latest Observation: Q4/22
  - Date Received: 3/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q
- Exports and Imports of Goods and Services
  - Date of Latest Observation: Q4/22
  - Date Received: 3/23
  - Frequency of Data: Q
  - Frequency of Reporting: Q
  - Frequency of Publication: A, Q
- GDP/GNP
  - Date of Latest Observation: 2021
  - Date Received: 4/23
  - Frequency of Data: A
  - Frequency of Reporting: A
  - Frequency of Publication: A
- Gross External Debt
  - Date of Latest Observation: 2022
  - Date Received: 5/23
  - Frequency of Data: A
  - Frequency of Reporting: A
  - Frequency of Publication: A
- International Investment Position
  - Date of Latest Observation: 2022
  - Date Received: 5/23
  - Frequency of Data: A
  - Frequency of Reporting: A
  - Frequency of Publication: A

### Footnotes (as provided)
- 1/ Includes reserve assets pledged or otherwise encumbered.
- 2/ Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
- 3/ Includes foreign, domestic bank, and domestic nonbank financing.
- 4/ General government includes the general health insurance (AZV), the social security fund (SVB), the waste collection and management entity (Serlimar), the Aruba Tourism Authority (ATA), the University of Aruba (UA), and the Foundation for Basic Professional Education (SEPB).
- 5/ Including by domestic and foreign holders and instruments.
- 6/ Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

*Source: 1abwea2023002 - 2022. Monthly data on the official reserve position are published with a lag of one month. A*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1abwea2023002.pdf_