Although deficits decline, Public debt continues to rise

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Willemstad/Philipsburg – “The governments of both Curaçao and Sint Maarten recorded a lower deficit on their current budget in 2021 compared to 2020,” Centrale Bank van Curaçao en Sint Maarten (CBCS) president Richard Doornbosch stated in the second Quarterly Bulletin of 2021.

“At the same time, the public debt-to-GDP ratio rose further in 2021 reaching 90% in Curaçao and 62% in Sint Maarten. For 2022 also a high budget deficit is projected for both countries, albeit lower than in 2021,” Doornbosch continued.

Given the deep economic crisis caused by the COVID-19 pandemic and its repercussions on the public finances, the Kingdom Council of Ministers approved that, like in 2020, Curaçao and Sint Maarten could deviate from Article 15 of the Kingdom Law Financial Supervision Curaçao and Sint Maarten. This article states that the current budget of the governments should be in balance.

“In both countries, the current budget deficit narrowed in 2021 compared to 2020 on the back of lower government expenditures, including COVID-19 related expenses, moderated by a decline in revenues, particularly tax revenues”, Doornbosch explained.

2-year loans
In both countries, the increase in the public debt-to-GDP ratio was driven by a rise in the foreign debt component. “Over the course of 2021, Curaçao and Sint Maarten continued to receive liquidity support in the form of 2-year loans from the Dutch State to compensate for the loss of government income due to the pandemic and provide fiscal support to the most affected groups in society. For Curaçao, the liquidity support amounted to NAf.244.0 million, while Sint Maarten received NAf.117.7 million”, Doornbosch pointed out.

According to Doornbosch, the public finances will remain worrisome in 2022 with the governments of both Curaçao and Sint Maarten expecting high deficits on their current budget, albeit lower than in 2021. Hence, both governments will depend on borrowing or liquidity support to cover their projected deficits. “At the same time, the liquidity support that the governments received amid the pandemic will have to be repaid in 2022. Given the current stance of the public finances, the governments will have to negotiate the refinancing of these loans with the Netherlands”, Doornbosch added.

The complete text of the Report of the President and the second Quarterly Bulletin of 2021 can be viewed on the CBCS website at www.centralbank.cw under the Publications section.