Curaçao faces a financial-monetary difficult year

January 10, 2012 5:33 AM

While the Central Bank of Curaçao and St. Maarten (CBCS) expects less revenues on foreign currency from export in the New Year (compared to 2011), they expect the import of merchandise by the wholesale and retail sector to drop due to a decline of the tourism sector and to lower consumer spending.

Expectations are that the import cover with foreign currency will remain within the adequate margin of 3½ months in 2012, according to the Central Bank in a press report, presenting a financial-monetary outlook for the New Year.

Drop in purchasing power
 
The lower import of foreign currency will mainly be due to a decline of the oil-import, caused by lower international fuel prices. There will be less import as a direct consequence of an expected drop in purchasing power considering the sales tax increase per January 1st 2012.
 
According to the banking institution, various external and internal developments will keep the balance of payments of Curaçao and St. Maarten in balance. On the one hand, less foreign currency will be spent on import. On the other hand, several international and national developments will generate less foreign currency, according to the CBCS.
 
The improvement of the balance of payments is slightly related to higher interest revenues on international investments, in particular the interest on bonds issued by the previous government of the Netherlands Antilles. Also due to the fact that dividend and interest payments to foreign investors, who invested in bonds from the government, will decrease further in 2012, according to the banking institution.

Expired bonds

In practice, the fact that the Dutch government had taken over all remaining debts of the government of the Netherlands Antilles in 2010, means local institutional investors now have a claim against the Dutch government, according to the CBCS. A considerable number of these bonds, worth approximately 350 million euros, will expire in 2012. However, considering the uncertainty on the international financial markets, the CBCS assumes the vast majority of these bonds will not be reinvested abroad.

(Source: National Newspaper Amigoe)

3 January 2012