## IMF Staff Concludes Staff Visit to Curaçao and Sint Maarten

_IMF News, July 13, 2020_

## Source details

**Canonical URL:** [IMF Staff Concludes Staff Visit to Curaçao and Sint Maarten](https://www.imf.org/en/news/articles/2020/07/13/pr20256-curacao-and-sint-maarten-imf-staff-concludes-staff-visit)

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## Bibliographic details
- Published: July 13, 2020

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### Economic impact and immediate findings
- COVID-19 pandemic is inflicting major economic damage in both Curaçao and Sint Maarten.
- Real GDP is projected to drop by 23 percent in Curaçao and 25 percent in Sint Maarten.
- The shock is amplified by pre-existing vulnerabilities:
  - Curaçao: protracted recession and challenges with reviving the refinery.
  - Sint Maarten: incomplete recovery from the 2017 hurricanes.
- Major impact across fiscal revenue, social security systems, and balance sheets in all sectors.
- Mass-layoffs have so far been avoided due to employment support measures, but there are indications of job losses.
- Border closures since mid-March followed by full lockdowns have prevented spread of the virus but produced significant blows to tourism sectors.

### Outlook and projections
- Despite phased re-opening of borders since mid-June, tourism is likely to recover only gradually due to both supply and demand factors.
- GDP would reach its 2019 levels only by 2023 in both countries.
- The growth outlook is subject to significant uncertainty and risks.

### Fiscal response, financing, and debt considerations
- COVID-19 response packages in both Curaçao and Sint Maarten focus on:
  - supporting employment and affected businesses,
  - ensuring public health,
  - protecting vulnerable groups.
- Fiscal support measures will be needed for longer than originally planned and could be needed through at least the end of this year.
- Continued support would lead to a sizeable increase in fiscal deficit and public debt in the short term.
- The unavoidable increase in debt would be justified provided that the authorities put in place measures to put the debt firmly on a downward path as the crisis abates.
- If additional financing is available, deferred measures that should be implemented include:
  - supporting social security systems,
  - supporting small and medium enterprises (SMEs),
  - reaching out to the most vulnerable.
- The pace of fiscal consolidation during the acute period of the crisis should be as gradual as feasible to minimize adverse impact on growth.

### Structural reforms and policy recommendations
- Additional financing should be accompanied by a strong commitment to deep structural reforms that were urgently needed before the shocks.
- Priority should be given to measures improving long-term fiscal outcomes and minimizing fiscal risks, such as the recently implemented public sector pension reform in St. Maarten.
- Broad-based supply side reforms focusing on the business climate and labor markets are critical for adapting to the new normal.
- Reforms should be:
  - properly sequenced,
  - supported with sufficient human and financial resources,
  - based on sound data,
  - designed to produce a lasting result.
- Strong local ownership of the reforms will be vital for successful implementation.
- Major improvements in data availability and quality are needed to inform policymaking.

### Mission details and statement
- An IMF team, led by Mr. Dmitriy Kovtun, conducted a virtual staff visit to Curaçao and Sint Maarten during June 10-July 8.
- The mission will not result in a Board discussion.
- Excerpt of Mr. Kovtun’s statement included assessment of lockdowns, economic shocks, and policy guidance, and thanked counterparts for open and fruitful discussions.

*IMF Staff Concludes Staff Visit to Curaçao and Sint Maarten*

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## References

- [Kingdom of the Netherlands-Curaçao and the IMF](http://www.imf.org/external/country/CUW/index.htm)
- [Kingdom of the Netherlands-Sint Maarten and the IMF](http://www.imf.org/external/country/SXM/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2020/07/13/pr20256-curacao-and-sint-maarten-imf-staff-concludes-staff-visit_