PHILIPSBURG / WILLEMSTAD — The Board of financial supervision of Curacao and Sint Maarten (Cft) stresses that while the growth of tourism brings economic opportunities to Curacao, it also exposes new challenges. The Cft recommends the Government to strive for an integral vision and clear direction regarding the desired development of tourism. That is the only way for tourism to contribute to prosperity and financial sustainability in the long term as well.
The development of tourism is an important driving force for the growth of Curacao’s economy. However, its persistent success also leads to an increasing pressure on the island’s financial capacity. Increasingly, public facilities and natural resources reach their limits. Examples thereof include airport capacity, increasing traffic congestion, the pressure on the housing market and the health of the coral reefs.
The Cft points out the fact that unchecked growth may eventually undermine Curacao’s appeal as a tourist destination. Therefore, further growth requires Government guidance, cooperation with the social partners and targeted investments, among others in infrastructure, waste management, energy and nature conservation.
Economic structure
The rise of tourism also alters the economic structure of the island. According to figures provided by the International Monetary Fund, employment increasingly shifts towards low-wage positions within tourism and informal activities, while formal employment is declining. This has consequences for tax revenue and the funding of social security.
There are opportunities for Curacao to increase the economic added value of tourism. The Cft emphasizes the importance of qualitative rather than quantitative growth of tourism. The focus must be on more formal employment, increased labor productivity, more local economic added value and a broader tax base. Targeted financial and fiscal incentives can support the desired development of tourism. In this manner, development of tourism can contribute to a sustainable and future-proof economy.
Budget for 2027 and subsequent years
Partly due to favorable economic circumstances, Curacao estimates substantial budget surpluses for the 2027-2030 time period. However, the economy remains vulnerable to shocks and financial risks. Furthermore, Curacao faces several financial challenges. For example, the solution for the financial situation of the Curaçao Medical Center is yet to be finalized. From a broader perspective, the structural financial sustainability of the healthcare and social security funds poses a significant challenge. Considering the collective tax burden on Curacao that is already high, it is important to implement reforms in healthcare and social security in order to safeguard financial sustainability.
