WILLEMSTAD, PHILIPSBURG - For the first time since the COVID-19 pandemic, the economies of Curaçao and Sint Maarten have exceeded their pre-pandemic performance levels, according to the Central Bank of Curaçao and Sint Maarten (CBCS). The recovery has been driven largely by significant growth in the tourism sector, which has boosted foreign exchange earnings.
“The economies of the monetary union have surpassed their pre-pandemic levels, thanks to considerable improvements in the tourism sector's ability to generate foreign currency,” the CBCS announced.
Monetary Policy Adjustments to Support Recovery
To sustain this recovery, the CBCS is easing its monetary policy. Key measures include a reduction in the mandatory reserve requirement for commercial banks—from 19% to 18.5%—and a cut in the lending rate, or discount rate, to 4.75%.
“This easing is supported by a stable foreign exchange position and adequate import coverage within the monetary union,” said José Jardim, the CBCS’s Financial and Economic Director.
Impact of U.S. Federal Reserve Decisions
The CBCS’s decision aligns with expectations of further interest rate cuts by the U.S. Federal Reserve (Fed). Given that the Antillean guilder is pegged to the U.S. dollar, changes in the Fed’s policy directly impact the monetary union of Curaçao and Sint Maarten.
“Due to the likelihood of another Fed funds rate cut, we anticipate a gradual decline in international money market rates, which justifies our policy adjustment,” Jardim explained.
Cautious Optimism Amid Global Uncertainty
While the economic outlook appears positive, the CBCS remains cautious. “We continue to closely monitor domestic and international economic developments, with a particular focus on key monetary policy indicators,” the CBCS stated. The bank added that it remains prepared to make further adjustments should uncertainties persist.
The CBCS’s proactive measures, coupled with robust economic performance, underscore a period of resilience and growth for Curaçao and Sint Maarten as they navigate a post-pandemic global economy.