Saturday, February 21, 2015
The economy is recovering from a double-dip recession caused by the global financial crisis and the shutdown of the oil refinery. These shocks have substantially increased public debt—over 80 percent of GDP in 2014—and eroded fiscal space. To address these fiscal challenges, the authorities have undertaken major entitlement reforms and are aiming to reach a small fiscal surplus in 2018. Without further measures, however, the pace of fiscal consolidation is expected to slow and public debt will continue to rise over the medium term. The authorities emphasized that their medium-term fiscal adjustment plan contains the necessary measures needed to meet their targets. Increasing labor market flexibility and reducing the costs of doing business would improve Aruba’s competitiveness and help its resilience to external shocks. The authorities’ growth pillar anchored around renewable energy offers promising potential.