CBCS requires IMF assistance

WILLEMSTAD - According to the International Monetary Fund (IMF), the significant current account deficit of Curaçao's balance of payments is a major vulnerability and requires urgent attention. This deficit amounts to almost 30 percent,

"This deficit, together with the excess liquidity of the banking system, poses risks to the reserves of monetary union. Those reserves decreased between December 2018 and mid-May from 3.8 to 3.5 months of projected imports of goods and services."

The Central Bank of Curaçao and Sint Maarten (CBCS) is now considering which measures to take in relation to the situation of excess liquidity and has requested technical assistance from the IMF.

Adjustment of the government budget can help to reduce the current account deficit, although a more sustainable solution requires structural reform to boost exports. The IMF therefore calls for concrete steps in this regard.

"It is of great importance to continue the economic restructuring in order to stimulate potential growth and exports," said the IMF experts. Annoying regulations and bureaucracy, including lengthy procedures to obtain the necessary permits, must be addressed.

Plans from the government to simplify and speed up administrative procedures for economic permits and work permits should be implemented without delay, the IMF continues.

The authoritative institute also considers the obstacles and costs involved in terminating employment contracts; these are bad for the mobility of employees and prevent the creation of new jobs.

The intentions of the government to promote "flexicurity" - a combination of labor market flexibility and adequate worker protection - can be a step in the right direction, according to the IMF.

Mismatches on the labor market, where training does not meet the needs of companies, must be eliminated as much as possible through retraining and further training, improvement in the (vocational) education programs.

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