~ Tells of 'a disturbing development' ~
PHILIPSBURG--The Central Bank of Curaçao and St. Maarten (CBCS) has requested that commercial banks not increase their personal loan portfolios for a period of six months.
The deficit in the monetary union's balance of payments grew to NAf. 490.2 million in the third quarter of 2011. "A disturbing development," said CBCS President-Director Emsley Tromp in his quarterly report.
The main reason appears to be a decrease in net payments from abroad, primarily due to a delay in the disbursement of funds related to the debt-restructuring in the period July-September last year.
The ineffectiveness of credit restriction measures taken up to now is related to the high over-liquidity among commercial banks. Absorbing all this surplus money would lead to an unprecedented increase of the reserve requirement percentage, which CBCS considers undesirable in light of the impact on the income- generating capacity of the banks.
This negative development cannot be solved by fiscal-monetary measures alone, said Tromp.
"Although the so-called import coverage is still sufficient, the net foreign assets are going down quickly. A continuation of this development in combination with a possible import increase due to higher prices for oil and food on the international markets will shortly lead to import coverage of less than the agreed-on three months," he warned.
According to Tromp, the governments of Curaçao and St. Maarten must take structural fiscal measures as soon as possible to counter the negative trend on the current account of the balance of payments. The emphasis needs to be on improving the investment climate and the so-called export performance.
These steps must be supplemented by cost-cutting measures. "Through a combined effort to reduce the growth of imports and promote exports, we will be able to reverse a further worsening of the current account and maintain the stability of our currency," the Central Bank president wrote.
On the other hand, the net export of goods and services increased in the third quarter of last year. This was caused by higher international oil prices and more revenue from refining activities in Curaçao after the Isla refinery became operational again in 2011.
More income from bunkering, ship repair and transport contributed, while re-exports from Curaçao's Free Zone also increased considerably. Earnings from tourism were up as well, due to more cruise and stay-over visitors.
By contrast, St. Maarten actually registered a drop in the number of tourists over the same period, according to Tromp.
Mervyn King Oscars Niclas Alexandersson Mark Bright Robert Schumann Dorset
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