Antillean guilder “increasingly vulnerable”

POSTED: 06/1/12 12:33 PM

St. Maarten – The Antillean Guilder is under pressure from external observers and analysts, who say that the currency is “increasingly vulnerable.”

The Economic Outlook of the web site latinamericamonitor.com wrote this week that the measures the Central Bank has taken to stop the loss of foreign currency are insufficient.

Central Bank President Dr. Emsley Tromp has repeatedly expressed his concern about the current account deficit. This deficit basically indicates that imports exceed exports.

The article in Economic Outlook, published by Business Monitor International, points out that “the weak position of the current account in combination with the risk of the splitting up of the Central Bank triggers serious questions.

“While we do not believe that a forced revaluation of the Antillean guilder is imminent, we are of the opinion that the currency has become increasingly vulnerable. Unless significant structural measures are taken to release the pressure on the current account, the two countries (St. Maarten and Curacao – ed.) will be confronted with painful adjustments in the long term.”

In its own economic outlook for 2012, the Central Bank noted that the current account deficit in 2011 would worsen, but that thereafter it would remain stable in 2012. The situation in 2011 is explained through the end of the debt relief program. This year, the Central Bank predicted a drop in the export of goods and services but that this decline will be mitigated by lower imports.

Oil imports, at least in dollars, will go down this year due to lower prices on the world market. Wholesalers and retailers are expected to import less, mainly because of a contraction in the tourism sector in Curacao and lower consumer spending. The latter in turn is due to the higher sales tax in Curacao.

 

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