Kingdom of the Netherlands-Aruba: Technical Assistance Report; Options for a New Rules-Based Fiscal Framework
Technical Assistance Reports, March 28, 2025
Source details
- Canonical URL
- Kingdom of the Netherlands-Aruba: Technical Assistance Report; Options for a New Rules-Based Fiscal Framework
Other formats
Bibliographic details
- Published: March 28, 2025
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798229006194.019
Mission details and scope
- TA mission on Fiscal Rules conducted from October 31 to November 12, 2024.
- Subject areas: Budget planning and preparation; Expenditure; Fiscal policy; Fiscal rules; Fiscal stance; Public debt; Public financial management (PFM).
- Keywords listed: Aruba; Aruba negotiation committee; Aruban authorities; Budget planning and preparation; Capacity Development; Caribbean; Debt-to-GDP ratio evolution; expenditure rule; Fiscal Council; Fiscal Policy; Fiscal Rules; Fiscal stance; Forecasting and Other Model Applications.; Global; IMF team; Technical Assistance.
Historical debt evolution and challenge
- Debt surge following the 2008 Global Financial Crisis to "over 70 percent of GDP."
- COVID-19 pandemic pushed debt to "112.3 percent" in 2020.
- Aruba aims to reduce public debt to "50 percent of GDP by 2040" through fiscal tightening and revised fiscal rules.
- Economic context: heavy reliance on tourism, making public debt management crucial for Aruba.
Key findings
- Public debt management is crucial given Aruba's economic reliance on tourism.
- Historical shocks (2008 Global Financial Crisis and COVID-19) led to large increases in debt levels.
- Current debt trajectory requires policy adjustments to restore fiscal sustainability and resilience.
Main recommendations and policy options
- Simplify fiscal rules.
- Implement a Medium-Term Fiscal Framework (MTFF).
- Enhance institutional capacity for effective fiscal management, including strengthening forecasting and public financial management practices.
- Use fiscal tightening as part of the strategy to reach the 50 percent of GDP debt target by 2040.
Implementation and institutional emphasis
- Strengthen institutional capacity to support the MTFF and enforcement of simplified fiscal rules.
- Improve forecasting and modeling capabilities to underpin fiscal planning and the fiscal stance.
- Consider institutional arrangements such as a Fiscal Council (as referenced among keywords) to support rule adherence and transparency.
Publication and document metadata
- Pages: 60
- Volume: 2025
- Issue: 030
- Series: Technical Assistance Report No. 2025/030
- DOI: https://doi.org/10.5089/9798229006194.019
- Stock No: TAREA2025030
- ISBN: 9798229006194
- ISSN: 3005-4575
- Publication date on landing page: March 28, 2025
International Monetary Fund. Fiscal Affairs Dept. "Kingdom of the Netherlands-Aruba: Technical Assistance Report; Options for a New Rules-Based Fiscal Framework", Technical Assistance Reports 2025, 030 (2025).
Content in this bundle
- tarea2025030-print-pdf