CBCS requests banks not to grant any extra personal loans

March 18, 2012

WILLEMSTAD — The Central Bank of Curaçao and St. Maarten (CBCS) has requested the commercial banks to contain the growth of personal loans for a period of six months.The deficit in the balance of payments of the monetary union Curaçao and St. Maarten has increased in the third quarter of 2011 to 490.2 million guilders. This is an alarming development, president of the CBCS Emsley Tromp, states in his commentary with the third quarter report of the banking institution. According to the bank president, the increased deficit is largely due to a decrease of net money transfers from abroad, mainly no transfer of monies owing to the debt reconstruction in the period July-September 2011. The current ineffectiveness of the credit-restriction measures taken by the CBCS is linked with the current surplus of liquidity with Curaçao commercial banks. Removing this surplus of liquidity would lead to an unprecedented rise of the percentage of reserve obligation. An undesired situation, according to the central bank, certainly considering the impact on the revenue-generated capacity of the Curaçao commercial banks.

Great pace

This negative development cannot be solved with measures in the tax monetary field alone, said Tromp. “Although the so-called import cover is still sufficient, the net foreign assets are decreasing rapidly. A continuation of this development in combination with a possible increase of import due to higher prices of oil and food on the international markets, will soon lead to an import cover below the agreed three months”, the bank president wrote in his report. According to Tromp, the governments of Curaçao and St. Maarten are to take structural tax measures very soon in order to turn the negative trend on the current account of the balance of payments. The bank president states the emphasis must lie on improving the climate for investment and improving the so-called export performances. These measures must be supplemented with cost-restrictive measures. “With a mutual effort to reduce the growth of import and to stimulate export, we’ll be able to stop a further downswing in the current account and maintain the stability of our currency”, said the bank president.

Growth of export

On the other side, the net export of goods and services increased in the third quarter last year, said Tromp. This growth was mainly due to higher international oil prices and higher revenues from refining activities on Curaçao after the Isla-refinery became operational again in 2011. Higher revenues from bunkering, ship repair and transport activities also contributed to the growth of export.

Furthermore, the export from goods via the free zone increased considerably in the third quarter of 2011 compared to the same period in 2010. Revenues from the tourism sector also increased in this period due to more ‘stay over’ and cruise tourists registered in this period on Curaçao. St. Maarten for that matter, registered a decrease in the number of stay over and cruise tourists in the third quarter, said the bank president.

 Source: Amigoe.com