No. 2022-013

CBCS leaves monetary policy stance unchanged
Willemstad/Philipsburg – The Centrale Bank van Curaçao en Sint Maarten (CBCS) will maintain its
current monetary policy stance given the present solid foreign exchange position and import
coverage in the monetary union. Nevertheless, the Monetary Policy Committee (MPC) of the CBCS
will continue to closely monitor the economic developments in the monetary union, in particular
the key indicators for monetary policy, and if necessary, adjust the monetary policy stance.
Since the second half of 2021, the economies of Curaçao and Sint Maarten are showing signs of
recovery driven primarily by a strong rebound of tourism activities. Against this background, the
CBCS currently projects that real GDP will expand by 6.1% in Curaçao and 14.3% in Sint Maarten
in 2022. The 2022 economic outlook has been revised downward for both countries compared
to the outlook presented in December 2021 as a higher than previously projected inflation will
curb disposable income and, hence, affect private consumption. The higher inflation reflects
primarily soaring international commodity prices and supply chain bottlenecks that are likely to
persist in 2022.
“At the same time, the foreign exchange position of the monetary union is solid. Since the end of
2019, gross official reserves (excluding gold) have been showing a steadily increasing trend despite
the deep economic contraction caused by the COVID-19 pandemic”, according to José Jardim,
CBCS Executive Director and Chairman of the MPC. The main reasons behind this trend are (1) the
liquidity support received from the Netherlands related to the pandemic; (2) the transfers from the
World Bank related to the reconstruction of Sint Maarten after Hurricane Irma; and (3) the loan
that the government of Curaçao received from the Dutch State for the controlled winding-up of
Girobank N.V. Currently, the import coverage stands at 7.1 months, which is well-above the norm
of 3 months. The exceptionally high import coverage reflects the high level of gross official
reserves and the still lower level of import of goods and services than before the COVID-19 crisis.
Meanwhile, the liquidity of the commercial banks has seen an increasing trend since the end of
2019 and shows no signs of declining in the near term. However, credit extension to the private
sector grew moderately in 2021 by an annual average of 1.3% owing entirely to the growth in
mortgage loans.
Against this background, the CBCS decided to maintain its current monetary policy stance. Hence,
the reserve requirement will remain at 19.00%, the lending rate at 1.0%, and the MPC will not
pursue absorbing more liquidity in the weekly auctions of Certificates of Deposit (CDs) among the
local commercial banks.

No. 2022-013

CBCS leaves monetary policy stance unchanged
Willemstad/Philipsburg – The Centrale Bank van Curaçao en Sint Maarten (CBCS) will maintain its
current monetary policy stance given the present solid foreign exchange position and import
coverage in the monetary union. Nevertheless, the Monetary Policy Committee (MPC) of the CBCS
will continue to closely monitor the economic developments in the monetary union, in particular
the key indicators for monetary policy, and if necessary, adjust the monetary policy stance.
Since the second half of 2021, the economies of Curaçao and Sint Maarten are showing signs of
recovery driven primarily by a strong rebound of tourism activities. Against this background, the
CBCS currently projects that real GDP will expand by 6.1% in Curaçao and 14.3% in Sint Maarten
in 2022. The 2022 economic outlook has been revised downward for both countries compared
to the outlook presented in December 2021 as a higher than previously projected inflation will
curb disposable income and, hence, affect private consumption. The higher inflation reflects
primarily soaring international commodity prices and supply chain bottlenecks that are likely to
persist in 2022.
“At the same time, the foreign exchange position of the monetary union is solid. Since the end of
2019, gross official reserves (excluding gold) have been showing a steadily increasing trend despite
the deep economic contraction caused by the COVID-19 pandemic”, according to José Jardim,
CBCS Executive Director and Chairman of the MPC. The main reasons behind this trend are (1) the
liquidity support received from the Netherlands related to the pandemic; (2) the transfers from the
World Bank related to the reconstruction of Sint Maarten after Hurricane Irma; and (3) the loan
that the government of Curaçao received from the Dutch State for the controlled winding-up of
Girobank N.V. Currently, the import coverage stands at 7.1 months, which is well-above the norm
of 3 months. The exceptionally high import coverage reflects the high level of gross official
reserves and the still lower level of import of goods and services than before the COVID-19 crisis.
Meanwhile, the liquidity of the commercial banks has seen an increasing trend since the end of
2019 and shows no signs of declining in the near term. However, credit extension to the private
sector grew moderately in 2021 by an annual average of 1.3% owing entirely to the growth in
mortgage loans.
Against this background, the CBCS decided to maintain its current monetary policy stance. Hence,
the reserve requirement will remain at 19.00%, the lending rate at 1.0%, and the MPC will not
pursue absorbing more liquidity in the weekly auctions of Certificates of Deposit (CDs) among the
local commercial banks.