Kingdom of the Netherlands-Aruba: 2010 Article IV Consultation Discussions-Staff Report; Informational Annex; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Kingdom of the Netherlands-Aruba
IMF Staff Country Reports, October 29, 2010
Source details
- Canonical URL
- Kingdom of the Netherlands-Aruba: 2010 Article IV Consultation Discussions-Staff Report; Informational Annex; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Kingdom of the Netherlands-Aruba
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Bibliographic details
- Published: October 29, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455208302.002
Overview
- Aruba has an open economy with a history of stability-oriented macroeconomic policies.
- Adverse external shocks have led to a decline in tourism and disruption of oil refinery operations.
- Serious fiscal challenges need to be addressed and a fiscal adjustment program is needed to safeguard the sustainability of the public finances.
- Expenditure cuts and the central bank’s switch from a credit ceiling to an unremunerated reserves requirement as key policy tool is commended.
- The new monetary policy framework will likely increase the challenges to prudential regulation and supervision.
Key Findings
- Decline in tourism and disruption of oil refinery operations are identified as adverse external shocks affecting Aruba.
- Public finances face serious fiscal challenges that require a fiscal adjustment program to safeguard sustainability.
- Policy actions commended: expenditure cuts and the central bank’s switch from a credit ceiling to an unremunerated reserves requirement.
- Monetary framework change is expected to increase challenges for prudential regulation and supervision.
Policy Recommendations and Assessment
- Implement a fiscal adjustment program to address serious fiscal challenges and safeguard public finance sustainability.
- Maintain or continue with expenditure cuts as part of fiscal consolidation.
- Monitor and strengthen prudential regulation and supervision in light of the central bank’s switch to an unremunerated reserves requirement as the key policy tool.
Subject Areas and Keywords
- Subject: Banking, Commercial banks, Economic sectors, External debt, Financial institutions, Loans, Pensions, Public debt, Tourism
- Keywords: Aruba, Caribbean, Commercial banks, CR, discussion, Global, IMF staff representative, ISCR, letters to Aruba's commercial banks, Loans, market share, Netherlands, policy stance, staff appraisal, Tourism