WILLEMSTAD — The International Monetary Fund (IMF) has given Curaçao a positive review for its ongoing economic recovery following the COVID-19 pandemic. In its recently published Staff Report, the IMF notes that the country’s real GDP grew by 4.2% in 2023, driven by strong tourism, investments in the oil terminal, and improved air connectivity. However, the Fund warns that without deeper reforms, the island’s long-term growth remains vulnerable.
According to the IMF, Curaçao’s public finances have improved considerably, with a primary surplus of 0.5% of GDP in 2023. The government’s wage bill was reduced due to temporary pandemic-related measures, and revenue collection has improved. Public debt declined to 76% of GDP in 2023, but it is projected to increase again as COVID-related loans to the Netherlands come due in 2026.
Despite this progress, the IMF stresses that “additional policy measures are needed to reduce the fiscal deficit and put debt on a downward path.” Curaçao has been urged to implement a broad reform package to address long-standing structural issues such as weak productivity, a rigid labor market, and barriers to private sector growth.
Inflation remains high but is easing, dropping from 8.4% in 2022 to 4.2% in 2023. Monetary policy has remained tight, with the central bank increasing reserve requirements to counter inflation and reduce excess liquidity.
The IMF highlights the need to enhance public investment management, strengthen anti-money laundering efforts, and improve the business environment. It also calls for modernizing the tax system and phasing out distortionary subsidies and tax incentives.
The report is part of the IMF’s annual Article IV consultation with Curaçao and Sint Maarten. It recognizes that the economic outlook is favorable in the short term, especially if tourism remains robust, but warns that external shocks or delays in structural reforms could undermine future growth.
As Curaçao prepares to negotiate the restructuring of its COVID-19 debt with the Netherlands, the IMF’s recommendations will likely play a key role in guiding fiscal policy and reform efforts in the coming years.