Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation Discussions for the Kingdom of the Netherlands—Aruba[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]
The economy has performed strongly, while inflation has declined. In 2023 and 2024, real GDP growth is estimated at 8.9 percent and 7.6 percent, respectively, driven by private hotel investment and strong tourism. Stopover tourism growth moderated to 4.8 percent in September 2025 (year-to-date). Unemployment fell to 4.3 percent in 2024 (from an 8.0 percent average in 2000–19), aided by higher labor force participation. Headline (core) inflation fell sharply—from a peak of 7.7 (3.5) percent y/y in August 2022 to -0.4 (0.5) percent y/y in September 2025, reflecting lower international food and energy prices, base effects from changes in administered prices, and the relative strength of the US dollar through April.
Aruba’s GDP growth is expected to decelerate this year and converge to its estimated potential. Growth is projected to slow to about 4.0 percent in 2025 as tourism and hotel investments ease. Inflation is expected to gradually return to its steady state, rising from 1.0 percent in 2025 to 2.0 percent over the medium term, largely reflecting imported U.S. inflation. Fiscal balances are expected to comply with the fiscal rule and public debt is projected to decline, reaching 64.4 percent of GDP in 2025 and 50.4 percent by 2030. The current account is projected to remain in surplus, supported by tourism flows. International reserves are projected to remain adequate at around 12.5 months of total imports.
Risks to the outlook are tilted to the downside due to potential external shocks. These include geopolitical tensions, escalating trade measures, and prolonged uncertainty that could weigh on growth, disrupt supply chains, and raise import prices, and climate change threats from volatile and extreme weather events and sea level rise. Domestic risks include delays in public investment that could leave infrastructure bottlenecks unresolved.
Executive Board Assessment[4]
Aruba’s economy has shown a remarkable post-pandemic tourism-driven recovery but is set to slow. Growth is projected to slow to about 4.0 percent in 2025 as tourism and hotel investments ease, and to converge to its potential rate over time. Strong tourism demand is straining infrastructure, labor markets, and housing availability and affordability. If unaddressed, these structural bottlenecks may constrain medium-term growth. The external position remains substantially stronger than implied by fundamentals and desirable policies.
Continued adherence to the fiscal framework will reduce public debt towards its medium-term anchor (50 percent of GDP), while creating fiscal space to advance the government’s social and development objectives. Strengthening revenue mobilization, enhancing spending efficiency, and improving the targeting of public resources will reinforce fiscal surpluses and debt reduction, while enabling greater investment in priority areas such as infrastructure, education, health, social programs, and climate adaptation.
While the 2026 budget submitted to Parliament complies with the domestic Financial Supervision Law (LAft), it implies a slightly expansionary fiscal stance. To achieve a more neutral fiscal position, consistent with a closing output gap and to continuing reducing debt, additional savings are recommended, primarily from revenue windfalls, with streamlining spending as a fallback.
Strengthening the fiscal rule under the draft Kingdom Act (HOFA) will facilitate debt convergence toward the medium-term anchor. The draft HOFA introduces escape clause triggers and procedures, a correction mechanism, and the creation of a contingency reserve for fiscal shocks. The operational (primary balance) rule can be strengthened by expanding its coverage to initially the general government and later the broader public sector, including state-owned enterprises (SOEs). A 2035 target date to reach the debt anchor of 50 percent of GDP is advisable as it balances fiscal sustainability and flexibility. Strengthening the medium-term fiscal framework (MTFF), anchored by an established debt target, will enhance the effectiveness of the fiscal rule, bolster fiscal planning, and facilitate a comprehensive approach to fiscal management. Large upcoming debt repayments underscore the need for a prudent liability management strategy.
Clarification of the status, objectives, investment strategy, and governance of the proposed investment fund is essential. A multi-year investment agenda aligned with policy priorities and strengthened public investment management is recommended. Only multi-year projects should be included in the fund; shorter-term initiatives should follow the regular budget cycle. Coordination of the investment plan with SOEs is crucial to avoid resource competition and optimize timing.
Financial oversight and governance of SOEs need to be strengthened. A comprehensive reform—covering legal, administrative, institutional, and technical aspects—is essential to strengthen SOEs financial oversight and governance. The recent approval of the Participation and Dividend Policy is welcome. The planned adoption of the Corporate Governance Law will help to reduce fiscal risks.
Long-term fiscal risks related to social security and health insurance systems need to be tackled. Better use of preventive care can help contain healthcare costs. The ongoing formalization of the migrant population will increase social contribution revenues, helping to ease pressures on healthcare and social security systems. Parametric reforms (contribution and replacement rates and possibly raising the retirement age) could still be needed to preserve the actuarial balances.
The Central Bank of Aruba (CBA) should maintain its cautious and data-driven approach to liquidity management, especially given global uncertainty. In the current environment, the existing reserve requirement ratio (RRR) level appears consistent with supporting macroeconomic and financial stability. A further reduction is unwarranted in the current context given excess liquidity, and there are no signs of pressure in goods or credit markets to justify an increase. The CBA needs to stand ready to raise the RRR if pressures on reserves or a surge in domestic demand emerges.
Continued vigilance to financial system vulnerabilities and risks is essential. Close monitoring of real estate underwriting standards and formally introducing macro-prudential tools, such as loan-to-value and debt-service-to-income ratios would help to mitigate risks The CBA needs to continue enhancing its regulatory and supervisory frameworks. Leveraging sectoral balance sheet data is essential to identify macrofinancial linkages.
Continued efforts to strengthen compliance with financial integrity and international tax transparency frameworks are warranted. The authorities should continue enhancing the domestic legislative framework to further improve financial integrity and promptly begin preparation for the 2030 Caribbean Financial Action Task Force (CFATF) peer review. Given the coordination efforts required, the authorities need to promptly begin with the launch of the national risk assessment, which is crucial to continue improving the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework.
Boosting tourism's value added and accelerating economic diversification are critical for sustained growth. Staff supports the implementation of a High-Value-Low-Impact model with high shared value for the population. Given the limits to further tourism expansion, new growth engines are needed. The “Promising Sectors” initiative and plans to expand renewable energy offer viable paths toward diversification and resilience. Enhancing core infrastructure and improving the business climate remain critical to mobilizing private investment.
Increasing resilience to climate change is a priority. The authorities should continue their ongoing climate risk assessments and planned costing for adaptation. A targeted action plan is needed to prioritize resilient infrastructure improvement and nature-inclusive urban development, in particular in coastal areas. Integrating adaptation into macro-fiscal planning will help guide needed public investment.
Aruba faces challenges regarding data adequacy, especially timely national accounts dissemination. Capacity development will be crucial to enhance data collection, build lasting capacity at the Central Bureau of Statistics Aruba (CBS), and develop quarterly indicators and compile expenditure-based estimates.
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Aruba: Selected Economics Indicators, 2024-2026
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Basic Data, Social and Demographic Indicators
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Area (sq. km)
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180
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Literacy rate (percent, 2020)
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98.0
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Population (thousands, 2024)
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107.6
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Percent of population below age 15 (2024)
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17.0
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Population growth rate (2024)
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0.2
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Percent of population age 65+ (2024)
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17.0
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Nominal GDP (millions of U.S. dollars, 2024)
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4,285
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Life expectancy at birth (years, 2023)
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76.0
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GDP per capita (thousands of U.S. dollars, 2024)
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39.8
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Unemployment rate (percent, 2024)
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4.3
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Projection
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Projection
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2024
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2025
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2026
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(Percent change)
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Real Economy
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Real GDP1/
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7.6
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3.9
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2.0
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Real domestic demand
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7.2
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5.8
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1.8
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Consumption
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2.4
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3.9
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1.4
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Gross investment
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22.9
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11.0
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2.7
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Exports of goods and services
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9.5
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1.8
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1.8
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Imports of goods and services
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9.0
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4.3
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1.4
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GDP deflator
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2.8
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0.5
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1.3
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Consumer prices
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Period average
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1.7
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0.3
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1.4
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End-period
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0.3
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1.0
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1.9
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(Percent of GDP)
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Central Government Operations
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Revenues
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24.5
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23.5
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22.8
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Expenditures
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20.8
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21.8
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21.6
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Of which: capital
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0.4
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0.9
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0.7
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Overall balance
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3.7
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1.8
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1.2
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Primary Balance
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7.7
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5.5
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4.7
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Gross central government debt
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68.6
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64.4
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61.4
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Savings and Investment
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Gross investment
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25.0
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26.7
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27.1
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External saving
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-9.3
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-7.8
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-7.4
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Balance of Payments
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Current account balance
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9.3
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7.8
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7.4
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Oil
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-12.6
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-11.0
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-10.4
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Non-oil
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22.0
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18.8
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17.8
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FDI
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2.0
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3.2
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2.2
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Gross official reserves (millions of U.S. dollars)
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1,932
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2,266
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2,549
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Gross official reserves (months of next year's imports)
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7.9
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9.0
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9.8
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External debt
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83.7
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81.6
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79.7
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(Millions of Aruban florins, unless otherwise indicated)
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Monetary
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NFA of Banking System
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3,666
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4,316
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4,836
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NDA of Banking System
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1,651
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1,494
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1,517
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Credit to private sector (percent change)
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9.7
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8.4
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5.4
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Broad money
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5,360
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5,858
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6,404
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Deposits (percent change)
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8.1
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9.3
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9.3
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Memorandum Items
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Nominal GDP (millions of Aruban florins)
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7,670
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8,006
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8,273
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Nominal GDP (millions of U.S. dollars)
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4,285
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4,473
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4,622
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1/ Estimate for 2024 from the Central Bank of Aruba
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Sources: Aruban authorities and IMF staff estimates and projections.
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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 country'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 Article IV 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’s consent. The staff report will be published shortly on the https://www.imf.org/en/countries/abw page.
[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.
