WILLEMSTAD – Credit growth in Curaçao and Sint Maarten is increasing rapidly, driven primarily by a surge in mortgage lending. According to the International Monetary Fund (IMF), the growth in the monetary union is among the highest in the Caribbean. 

Risks of Overheating Housing Market 

The IMF warns that the rapid increase in mortgages could lead to an overheating of the housing market and vulnerabilities for households. In Curaçao, additional credit is being directed toward the construction of residential and vacation homes, contributing to this growth. In contrast, mortgage growth in Sint Maarten has slowed somewhat, partly due to delays in construction projects. 

Focus on Tourism-Related Loans 

The financial sector on the islands is heavily focused on tourism, with banks providing loans to projects directly or indirectly related to the sector. Although banks are generally well-capitalized, the IMF remains cautious about rising risks, especially given that some market data is limited or unavailable. 

IMF Recommendations 

The IMF recommends considering measures such as limits on mortgage growth or on the loan-to-income or loan-to-value ratios. These steps could help identify and address potential issues early, ensuring that financial stability is maintained in the face of growing risks in the housing market.