Tuesday, Jul 23rd

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Editorial - Mixed messages

The latest word from the Central Bank of Curaçao and St. Maarten (CBCS) does not give rise to optimism particularly where Curaçao’s economy is concerned (see related story). For the third consecutive year a decline was registered in 2014 and it isn’t until 2016 that a small growth is foreseen.

This also has relevance for St. Maarten, which saw a 1.5-per-cent increase of its gross domestic product (GDP) but is part of a monetary union including shared currency with Curaçao. Although the union’s official foreign exchange reserves increased sharply following the dismantling of the Netherlands Antilles per 10-10-10, this was mainly due to bond issues to which the Dutch Government subscribed as part of the accompanying debt relief.

If a correction were made in that sense the import coverage actually would have been 3.5 rather than 3.9 months. This is still well above the three-month standard, but indicates that improvement of the joint balance of payments did not occur based on overall economic performance.

Meanwhile, the debts of the two countries have gone up considerably since the new constitutional relations took effect. While still quite low compared to others in the region, care must be taken that the burden does not become untenable again, as was the case with the former Antilles.

Under the circumstances it’s a bit strange that Curaçao’s Finance Minister José Jardim says a study on the functioning of the monetary union was de-prioritised, because that country had indicated its desire to have its own Central Bank in the long run. After all, one would think the latter is all the more reason to properly chart the drawbacks of the current arrangement.

The member of the Asjes cabinet mentions in the same breath that without more coordination between the two monetary partners in other areas than public finances the foundation of the union is in danger of eroding. However, he does not see this happening where economic development is concerned.

Rather than sending out these mixed messages, those politically responsible in the two countries should either commit to continuing together and do what is necessary to make it work, or approach the Netherlands on breaking the agreements made in this regard to opt for dollarisation instead. The people of both islands deserve clear, unambiguous policies concerning the immediate future to also know where they stand.