Outward-looking approach needed Collaboration within the Kingdom and the region essential to strengthen resilience
- Published in Soualiga Newsday Latest News
SINT MAARTEN/CURACAO - The economies of Curaçao and Sint Maarten are closely aligned facing similar external challenges, including shifting global trade dynamics, geopolitical tension, and severe climate events.
“Given their small scale and high degree of openness it is essential for the countries to plan strategically and engage proactively to mitigate potential threats while capitalizing on emerging opportunities”, according to the Centrale Bank van Curaçao en Sint Maarten (CBCS) president Richard Doornbosch in the December 2024 Economic Bulletin.
“In this regard, an outward-looking approach, emphasizing collaboration within the Kingdom and with regional peers, is crucial to addressing these dynamics effectively”.
Collaboration within the Kingdom
According to Doornbosch, an area where such an outward-looking approach could be applied is when addressing the risks associated with extreme weather events caused by climate change.
“Within the Kingdom, Curaçao and Sint Maarten could benefit from Dutch technical assistance in creating tailored climate adaptation strategies that consider their unique vulnerabilities. In addition, due to their constitutional status as non-sovereign territories, Curaçao and Sint Maarten have limited access to international climate financing mechanisms. Hence, the Netherlands could also use its influence to advocate for their inclusion in global climate funding frameworks through direct access accreditation”, Doornbosch argued.
Besides climate adaptation strategies, collaboration within the Kingdom could ensure a swift recovery in the event of a natural disaster.
“This includes considering a tailored framework in the context of the Kingdom Law Financial Supervision Curaçao and Sint Maarten for conditional debt relief during extreme crises to free up crucial financial resources for immediate repair work and reconstruction of the most crucial infrastructure”, he added.
Collaboration within the region
There are also opportunities to enhance the resilience of Curaçao and Sint Maarten to external shocks through regional collaboration. According to Doornbosch, the recent associate membership of Curaçao in CARICOM is very welcome, and Sint Maarten has also expressed interest in becoming an associate member in the future.
The experience within CARICOM shows that trade between the CARICOM member states tends to be limited due to low trade complementarity and logistical barriers. Similarly, trade flows between Curaçao and Sint Maarten and CARICOM are relatively low.
“Although associate membership within CARICOM may not significantly increase trade flows with regional peers, it offers Curaçao and Sint Maarten a valuable platform for regional collaboration, particularly in addressing climate adaptation, disaster resilience, and public health challenges. In addition, enhanced cooperation can help pool resources, leverage regional expertise, and secure better terms in global negotiations”, he explained.
Doornbosch warned, however, that capitalizing solely on Kingdom ties and regional cooperation is not enough to reduce vulnerability to external shocks. “Both Curaçao and Sint Maarten need a concerted policy of building solid fiscal buffers through budgetary savings during favorable economic periods, coupled with prudent financial management practices to self-finance at least part of the recovery during times of economic distress.
In addition, the countries should diversify trade relationships beyond traditional partners like the U.S. and the Netherlands”, he recommended.
The complete text of the December 2024 Economic Bulletin is available on the CBCS website at https://www.centralbank.cw/publications/economic-bulletins/2024.