Tromp misses a sense of urgency

May 24, 2011 12:34 PM

According to President of the Central Bank of Curaçao and St. Maarten (CBCS) Emsley Tromp, there appears to be no sense of urgency to tackle the rising deficit on the current account of the balance of payments and other urgent matters.

Tromp stated this as guest speaker during the annual L.B. Smith lunch of the Curaçao Business Community Association VBC, in the Flamboyant Room of Breezes Hotel.

"It seems as if we ourselves no longer believe we can create a climate that supports a sustainable growth and pushes back unemployment and social exclusion. For this, we need a credible policy mix and such a mix will not materialise through intimidation, threats or exclusion of people.

"It requires a broad involvement and investment in the future, with a sustainable infrastructure as priority for education, public health and social support, focusing on the further development and growth of the Curaçao youth."

The increasing deficit on the current account of the balance of payments, where the expenditures for imports are higher than the revenues from exported goods and services, is one of the biggest challenges for Curaçao, according to Tromp.

"Compared to 2009, the deficit increased in 2010 due to higher international oil prices, among other reasons, while revenues decreased due to lower sales by companies in the Free Zone, among other factors. The latter has to do with the devaluation of the Bolivar and stricter foreign exchange control by the Venezuelan authorities.

"The prolonged closing down of the refinery also led to fewer revenues, although these were somewhat compensated for by more revenues from bunker activities and from the tourism industry. However, the influx of funds for the debt restructuring by the Netherlands and by surpluses on the capital account actually financed the deficit," said the Central Bank president.

"That's the only reason why the balance of payments shows surpluses. However, the situation of increasing deficits on the current account is unsustainable in the medium term."

Another challenge Tromp mentioned is the weak economic growth in the past years, due to a lack of resilience in the Curaçao economy to counterbalance the impact of foreign blows, among other things.

"Interim figures show an estimated economic growth of 0.2 per cent in 2010 and that after a decline of 0.5 per cent in 2009. An analysis of the growth and inflation figures of Curaçao during the period 2005-2011 shows an average economic growth of hardly one per cent, with an inflation peak in 2008 due to higher international prices for oil and food."

The weak growth is not so much due to the international, financial-economic crisis, explained Tromp. "Thanks to the debt-restructuring and the socio-economic initiatives that were part of the constitutional reforms, the impact of the crisis on Curaçao was very modest, certainly compared to most of the countries in the region."

As far as the CBCS president is concerned, the Curaçao economy must become more resilient in counterbalancing foreign blows. "However, this is only possible with the right internal policy choices."

Change involves uncertainty, the bank president stated. "However, change and uncertainty could also offer opportunities and hope. Whether Curaçao makes use of these opportunities depends on the question to what extent we could exceed political and other differences as a society, in creating a strategy that leads to more prosperity for more people."

"For the greater part, the former achievements are the mainstay of current Curaçao society. However, everything that had made Curaçao famous in the past has become unsettled, due to the swift changes throughout the world. More than ever, we urgently need to discuss our current challenges."

23 May 2011