Economic Assessment of the Netherlands Antilles

The Netherlands Antilles has faced significant economic challenges in recent years. Despite a prolonged recession from 1997 to 2000, which saw real GDP decline by about 12%, the economy showed signs of recovery starting from 2001.

Economic Performance

Key Points

• The Netherlands Antilles experienced a prolonged recession from 1997 to 2000.
• Real GDP declined by approximately 12% during this period.
• Starting from 2001, the economy began to show signs of recovery.
• Estimated growth rates for 2001-02 were positive, with further growth projected for 2003.

Public Finances

Deterioration and Challenges

The report notes that public finances have deteriorated sharply, with a general government deficit increasing to 5½ percent of GDP in 2001. This has been attributed to falling revenue collection and increased interest expenditure.

External Accounts

Improvement Despite Challenges

Despite the economic challenges, the external accounts have improved over 2002. The current account deficit stood at an estimated 4¾ percent of GDP, slightly below the average since 1995, boosted by increased tourism inflows and growth in the Curaçao economy.

Financial Sector Supervision

Strong Framework and Regulation

The report praises the Netherlands Antilles for having a well-developed and functioning legal and regulatory framework for financial sector supervision. The Bank of the Netherlands Antilles (BNA) is responsible for supervising onshore and offshore financial institutions, following strict bank licensing policies and adhering to international standards.

AML Policies

Strengthening Efforts

The report notes that the Netherlands Antilles have made efforts to strengthen their AML policies and practices, including implementing the OECD’s commitment to eliminate harmful tax practices. The authorities have also taken steps to combat money laundering and terrorist financing, such as requiring company service providers to apply Know Your Customer (KYC) rules.

Business Environment

Increasing Disclosure Requirements

Traditionally, the business environment in the Netherlands Antilles has operated under a regime of relatively little disclosure. However, recent years have seen increased international efforts to combat drug trafficking and money laundering, anti-terrorism efforts, and greater awareness of the importance of better quality financial sector supervision. As a result, there is a growing recognition that more disclosure is needed to comply with international standards.

Overall, the report provides an in-depth assessment of the Netherlands Antilles’ economic performance, financial system, and regulatory framework, highlighting both challenges and opportunities for improvement.