PHILIPSBURG-The Central Bank of Curaçao and Sint Maarten (CBCS) lowers the lending rate from 5.75 percent to 5.25 percent. This was announced by the CBCS on Monday morning.
The cut is the result of a strong financial position of the monetary union and the expectation that the US central bank will soon cut its interest rates.
José Jardim, economic director of the CBCS, explains that the current account deficit is expected to fall from 15.8 percent of GDP in 2023 to 13.9 percent in 2024. This is due to higher revenues from abroad and a growth in tourism, although total exports and imports remain the same.
In the first eight months of 2024, CBCS’ official reserves increased by 168.2 million guilders, thanks to transfers for the reconstruction of Sint Maarten and other international transfers. This has led to an improvement in import coverage, which now stands at 4.8 months, well above the three-month norm.
Despite the increase in reserves, the liquidity of commercial banks has decreased due to the withdrawal of dollar deposits and other financial changes. The CBCS says that they continue to offer attractive rates to maintain banks’ liquidity and support the strong foreign exchange position.
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