Report No. 2561-NA
Economic Memorandum
on the
Netherlands Antilles
September 24, 1979
Latin America and the Caribbean Regional Office
FOR OFFICIAL USE ONLY
Document of the World Bank
This document has a restricted dtstnbution and may be used by recipients
only in the pertormance of their official duties Its contents may not
otherwise be disclosed without Workf Bank authorization



CUTRRENCY EQUIVALENTS
Currency Unit:                           Netherlands Antilles Guilder
The Netherlands Antilles guilder was tied to the Dutch guilder
until 1971 at the rate of N.L.f 1.00 = N.A.f. 0.52. Since
1972, the Netherlands Antilles Guilder has been aligned with the
U.S. Dollar at rate of US$1 =NAf 1.80.
Since 1972:
N.A.f. 1.          =         US$0.556 or
U.S.$1.                      N.A.f. 1.80



FOR OFFICIAL USE ONLY
This report is based on the findings of an economic mission
to The Netherlands Antilles during 9 August - 25 August, 1978. The
mission consisted of: Joerg-Uwe Richter, Chief, Constance A. Bernard,
Fiscal Economist, and Nancy S. Enikeieff, Research Assistant.
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.






TABLE OF CONTENTS
Page No.
MAP
COUNTRY DATA
SUMMARY AND CONCLUSIONS ...... ..........................  i - viii
I.   Economic Developments, 1972-78 ................       ...1...... 
Introduction ....... .............................             1
Output .................................................. ..   1
Investment, Consumption and Savings ............       .       2
Prices, Wages and Employment ....................              2
Public Finances .................................              5
Money and Credit ......        .........................       6
The External Economy ...         .........................     6
II.   Economic Development Prospects and
Development Strategy, 1979-83 ........................              8
1. Growth Potential.                                                  8
2. Development Strategy    ..11
III.  Development Issues..... ..                                    ..    13
1.  Tnternational Competitiveness ... ................... ..  13
2. Improving Labor Productivity               ....13
3. Sectoral Issues                   .....14
Petroleum-Related Activites. .                                 14
Tourism                   ..... 17
Agriculture. . ..                                              19
Mining                     .....20
Manufacturing                 .....                            20
Construction. . ....    22
Transshipment and Offshore Financing             ..            23
IV. Financing Development               ...24
1. Private Sector Financing.                                         24
2. Public Sector Financing.                                           24
Current Expenditures    .                .25
Current Revenues. ...                    ........              26
Public Sector Savings.                                         27
Public Investment and its Financing          .......           27
External Aid............    30
Absorptive Capacity and Technical Assistance
Requirements   .                   .31
3.    Balance of Payments and External Debt ....          .......     3
ANNEX
STATISTICAL APPENDIX






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Page 1 of 2 pages
COUNTRY DATA - ThE NETHERLANDS ANTILLES
AREA2                      POPULATION                                                     DENSITg
993 km                   0.245 million (mid-1977)                                         247  per k2
Rate of Growth: 1.2%  (1972-77)                                    per km  of arable land
POPULATION CHARACTERISTICS (1977)                                      HEALTH  (1970)
Crude Birth Rate (per 1,000)                17                         Population per physician               1,502
Crude Death Rate (per 1,000)                  5                         Population pe. hospital bed             125
Infant Mortality (per 1,000 live births)  25
INCOME DISTRIBUTION (1972) -                                           DISTRIBUTION OF LAND OWNERSHIP
% of national income, higrest quintile        7.7                      % owned by top 10% of owners
lowest  quintile   50.4                        % owned by smallest 10% of owners
ACCESS TO PIPED WATER (1971)                                           ACCESS TO ELECTRICITY
% of population - urban)                                               % of population - urban) approx. 95%
- rural)   over 95%                                                     - rural)
NUTRITION (197n)                                                       EDUCATION (1971)
Calorie intake as % of requirements         ..                         Adult literacy rate  96%
Per capita protein intake                                              Primary school enrollment  99%
GNP PER CAPITA in 1977    US 2,693  bl
GROSS NATIONAL PRODUCT IN 1977                                         ANNUAL RATE OF GROWTH (7.. constant prices)
US $ Min.        %                                1973-76          1977
GNP at Market Pr' es            676.2        100.0                                 0.3            7.1
Gross Domestic Investment       100.2         14.8                              -14.7             1.0
Gross National Saving            54.0          8.0                               -9.5            11.5
Current Account Balance          46.2 I/       6.8                                 8.0 c/         4.9 c/
Exports of Goods, NFS           682,1 c/    100.9                                  4.6            5.8
Imports of Goods, NFS           656.3         97.0
OUTPUT, LABOR FORCE AND
PRODUCTIVITY
Value Added (1977)                   Labor Force  (1977)              V. A. Per Worker
US $ Mln.      %                      Mau& .       % _US $.                            %
Agriculture                     14.2       2.0                      0.8         1.1                 17,750        182.3
Petroleum Refining             109.0      14.8                      4.1         5.4                 26,585        273.1
Other Industry d/              259.5      35.4                    13.3         17.7                 19,511        200.4
Services                       350.4      47.8                    57.1         75.8                  6,137         63.0
Unallocated                      *         *_*__
Total/Average             733.1     100.0                    75.3       100.0                   9,735       100.0
GOVERNMENT FINANCE
Conepli±qlatec Pt,hli  Spe'tr                       General Government-
( NAf. Mrn.)  -      % of GDP                  ( NAf. Mln.)         % of GDP
1977          1 977    193-_76                  1977         1977    _973-76
Current Receipts                                                                      516.7           39.2    33.3
Current Expenditure                                              ..                   542.5           41.1    32.0
Current Surplus                      -22.4           -1.7       1.5                   -25.8           -1.9      1.3
Capital Expenditures                  86.6            6.6       6.0                    76.4            5.8      6.0
External Assistance (net)             56,5            4.3       4.1                    56.5            4.3      4.1
a/  Estimate based on monthly earnings.
-/  At 1977 market prices, calculated by the same conversion technique as the
1978 World Bank Atlas. All other conversions to US dollar in this table
are at the average exchange rate prevailing during the period covered.
c/  Adjusted because of  non-recurrent inventory movements of crude petroleum in 1976-77.
d/  Including mining and construction.
e/ Employment.
f/ Because of extensive revenue-sharing between Central and Island Governments,
figures for Central Government alone are not meaningful.
not available
not applicable
- zero or negligible



Page 2 of 2 pages
COUNTRY DATA - THE NETHERLANDS ANTILLES
MONEY  CREDIT and PRICES                         1970         1973         1974         1975         1976          1972    1978
(NAf.. millions  outstanding end-period)
Money and Quasi Money                         276.4       422.2        466.1         530.2        587.8        691.0    789.4
Bank Credit to Public Sector  (net)            26.1        29.8          1.4          37.4           7.2        59.8    132,2
Bank Credit to Private Sector                221.8        316.3        358.9         364.9        407.1        475.2    613.8
(Percentages or Index Numbers)
Money and Quasi Money as 7. of GDP            42.2         47.7         44.1          48.3         50.5         52. 4     50. 7
General Price Index (Dec. 1970 = IOC)        100.0        122.2        147.7         163.2        170.4        181.1     :98 7
Annual percentage changes in:
General Privm  Index V                         3.3          8.1         19.5          15.6          5.3          5-4S
Bank credit to Public Sector (net)             4.0        344.8  Quantum Decl.  Quantum Incr. -419.4           730.6    l21.0
Bank credit to Private Sector                 22.3         10.9         13.5           1.7         11.6         16.7      399,
BALANCE OF PAYMENTS                                                      MERCHANDISE EXPORTS  (1977)
1975     1976      1977    1978                                           US $ Mln
(Millions US $)
Exports of Goods, 1L NFS        470.3    545.4    737.7   320.8         Oil and oil products              2,552.9 9.    .
Imports of Goods, NFS           527.9    573.2    656.3   757 .7        Chemicals                            33.8      l.;
Resource Gap (Deficit = -)    -57.6    -27.8        81.4    62.         Electrical machinery )j              11.1
Interest Payments (net) 17 -o.;               0    -11.0   -1            All other commodities             _    .7
Other Factor Payments (net)      22.9    -55 R    -4589   -63.3               Total                       2,645.5      1.^c0
Transfers (net)                 --12.8    -11 G    -15.1   -16.8.
Balanae on Current Account       -        -  2            9 8          EXTERNAL DEBT, DECEMBER 31. 1977
PrivAte Canital (net)            50.8    103 6    -7.    -49S                                                       US $ 1M-
Govt. Capital Transfers (net)  16.4        17.Y      18.5    18.         P      D
Government Borrowing                                                     Public Debt, incl. guaranteed              245.9
Disbursement;                 12.3      18.2      5       14.5       Non-Guaranteed Private Debt
Amortization                  -4.1       4.1     -2.5    -8 2        Total outstanding & Disbursed
Subtotal                       a . 2   14.1      12.9      6.
DEBT SERVICE RATIO for 1977
Other items n.e.i                 7.9       1.9     21.2    -0.6
Increase in Reserves (+)         13.7     34.5       4.2   -53.4        Public Debt. incl. guaranteed                 2.1
Non-Guaranteed Private Debt
Gross Reserves (end year)         .                                      Total outstanding & Disbursed
Net Reserves   (end year)       109.9    144.4    148.6    95.;
RATE OF EXCHANGE                                                          IBRD/IDA LENDING   (Million  US $)
Through  - 1971                                                                                           IBRD         IDA
US $ 1.00   Ant.f.1.8858
NAf. 1.00 = US $0.5303                                            Outstanding & Disbursed                  -            -
Undisbursed
Since  -   1971                                                   Outstanding incl. Undisbursed            -            -
US $ 1.00 = Ant.f. 1.8000
NAf. 1.00 = US $ 0.5556
g/ Mid-year changes.
h/ Net of value of crude oil and products imports.
i/ Interest on public & publicly guaranteed debt.
j/ Re-exports.
not available
not applicable
- zero or negligible



SUMIARY AND CONCLUSIONS
i.        The Netherlands Antilles, which consists of the islands of Curacao,
Aruba and Bonaire off the coast of Venezuela and of three smaller islands
near Puerto Rico (St. Martin, Saba, St. Eustatius), has a land mass of
993 sq. km. and a population of just under 250,000. Population growth has
been low, i.e. 1.2% p.a. partly because of emigration to the Netherlands.
Per capita GNP, estimated at about US$2,700 in 1977, is among the highest
in developing countries and is relatively evenly distributed. Comparatively
high income levels have been sustained by petroleum refining and generous
levels of Dutch aid. The economy's comparative advantage is based on the
Antilles' location along international shipping routes and as a tourism center.
However, the narrow natural resource base and small population have seriously
restricted the scope for developing the domestic market and for ecoalomic
diversification. The economy is extremely open even by Caribbean standards
and vulnerable to international economic developments.
ii.       The worldwide economic recession in 1974-75 and the increase
in protection of U.S. based refineries afterwards had an adverse impact on
the economy, resulting in slower economic growth and increased unemployment.
Petroleum refining has declined by about 40% since 1973 whereas touJ-iqm'm nas
emerged as the leading growth sector of the ecornomy. Manufacturing is at an
early stage of development and the poor natural resource base renderr agri-
culture and mining insignificant. Following a contraction of GDP in 1974-75
estimated to have averaged 2.7% p.a., a recovery started in 1976 when tourism
resumed growth and increased public investment Brosted constructicn. GDP
growth accelerated to 4.8% in 1977 and an estimated 7.7% in 1978 as result of
a recuperation of non-petroleum private investment and further accelcration of
tourism growth. 1/ Petroleum-related investment has been declining sharply since
completion of several large projects in 1975.  Mainly as a consequence of weak
public finances, savings have been low and have fluctuated sharply. Gross
national savings were 7.4% of GDP in 1977 and about 9% of GDP in i978,
Consumption has been sustained in recent years by rising Governmen-: expendi-
ture on personnel and unemployment relief.
iii.      Domestic price increases, which are largely determined by iater-
national inflation and changes in the exchange rate, reached 19.5% in 1974
and 15.6% in 1975, eased to less than 5.5% p.a. in 1976-~77 but accelerated
again to 9.7% in 1978. Wage increases since 1974 have at least equalled
price inflation and in some years, have exceeded the latter in the private
sector. Wages in the Antilles are the highest among comparable Caribbean
countries. Wage increases were not matched by productivity growth, resulting
in declining profitability in a number of sectors. Unemployment has increased
as a result of slow economic growth, acceleration in growth of the labor
force and rapidly rising wages. Nationwide unemployment in 1977 was nearly
16% and amounted to 20% in Curacao where the bulk of the labor force and
labor force growth are concentrated. Skill shortages exist alongside high
unemployment. The problem is particularly serious in higher ranking positions
of the public sector since substantial salary differentials vis-a-vis the
private sector have caused many qualified civil servants to leave government
employment.
1/   IBRD estimate based on preliminary information.



- ii -
iv.       Public finances have been weak for the past several years as a
consequence of rapid increases in current expenditures of the Central and
Island Governments (averaging nearly 21% p.a. in 1975-78) associated with
substantial expansion of the public labor force. Current revenue growtll over
the same period was reasonably fast (i.e., about 15% p.a.) but remained well
below that of current expenditures. Also, revenue growth was mainly the
result of one-time measures such as higher taxes on the petroleum sector
and the shift to the pay-as-you earn system of income tax collection. Sound
fiscal management is hampered by inadequate budgetary control and lack of
cooperation between the Central Government and the Island Governments of
Aruba and Curacao. As a result, the revenue sharing agreement between these
Governments has been largely inoperative since 1976. The Island Governments
have not been forwarding revenues collected on behalf of the Central Govern-
ment, thus depriving the Central Government of a major source of income. The
Central and Island Governments combined had attained a current surplus of 3.4%
of GDP in 1976 when the change in income tax collection resulted in a revenue-
boost but lapsed into current deficits of 1.7%-1.8% of GDP in 1977-78. Fisc-p-
deficits have been largely financed througlh the domestic banking system,
primarily the Central Bank. Credit to the public sector has become the major-
source of monetary expansion, accounting for 62% of the increases in banking
system liabilities during the December 19715-December 1978 period.  The moneta:ry
authorities have therefore decided to enforce statutory limitations on Gove-
ment borrowing from the banking system.
v.        In an attempt to break the fiscal stalemate which has developed
over the revenue sharing system, the Government has proposed to increase the
proportion of tax revenues allocated to thie Island Governments. The Central
Government also took fiscal measures in early 1979 including increases in
indirect taxes and reductions in some personnel-related expenditures which
are expected to produce additional resourc,es of NAf 16 million in 1979,
equivalent to nearly 1% of GDP. The authorities are also studying guidelines
for more effective control of public expenditures. Public utility rates have
recently been increased and public enterprises are in the process of being
transformed from Island Government departmtents into semi-autonomous corpora-
tions. However, these measures will be largely offset by a reduction in
personal income taxes to compensate for inflation.
vi.       The erratic movement of the domestic economy has been paralleled
by a weak balance of payments. The 1973-74 petroleum price increases produced
windfall gains on product exports which, however, were subsequently dissipated
as crude prices increased faster than pricies for petroleum products. Reflect-
ing the narrow resource base, non-oil exports are small and have risen very
little. Increased imports to support domestic economic activity have resulted
in substantial trade deficits which were only partly compensated by earnings
from non-factor services, mainly tourism. Current account deficits averaging
18.5% of GDP were sustained in 1974-76 but substantial private and public
capital inflows more than compensated these deficits and allowed accumulation
of international reserves. Movements related to a draw-down of petroleum
inventories brought about a current account surplus in 1977 but in 1978,
rapidly growing imports again resulted in a current deficit equivalent to
3.3% of estimated GDP. Substantial outflows of private capital in 1978
weakened the capital balance. This was partly due to widening interest rate



- iii -
differentials which make financial investments in the Antilles less attrac-
tive. Public capital inflows declined as result of a slowdown in Government
investment. Foreign reserves declined by some US$53 million to US$95 mil-
lion by end-1978, equivalent to 1.7 months of non-oil merchandise imports.
Growth Prospects and Development Strategy
vii.      Over the next five years, economic growth averaging about 4%
p.a. appears to be attainable, compared to an annual average of less than
3% during the 1973-78 period. Provided that refinery output continues to
decline, by about 3% p.a. through 1983, the non-petroleum sectors of the
economy would have to grow by nearly 5.5% p.a. over the next five years tc
take up this slack. l/ Tourism and other export oriented services such as
transshipment and offshore financing appear to hold a promising grow-th
potential. The need to generate employment on a substantial scale to prevernt
unemployment from rising further makes it advisable to emphasize export-
oriented manufacturing development as well. In order to sustain a high2r
level of economic growth, a substantial increase in investment ic req.icred.
The share of investment in GDP is projected to rise from 12.4% to 16.3%
during 1978-83. Rapid investment growth compatible with a sound exterral
balance of the economy makes it necessary to co7atain domestic consump  on
through appropriate fiscal, monetary and incomes policies. A realistic
target would be to hold increases in overall consumption to 3.5% p.a. in
1979-83 and in public consumption, below 3% p.a. and to increase uatio:al
savings to 13.8% of GDP by 1983, up from 9.2% est;imated for 1978.
viii.     In order to attain faster economic growth, expansion of the produc-
tive potential and improvement of the competitive position of the economy
will be necessary. In the past, the Government's development strŽategy has
emphasized tourism and manufacturing as the most important sectors for
employment generation. It supported development of these accivities rhrough
fiscal incentives and investment in infrastructure.  Discouraged 'y the
limited success in attracting foreign investment in manutacturino, the
Government has recently shifted emphasis towardR activit`e- in vhbiceh tle
country has a clear comparative advantage, i.e., mainly transshJpsmeno and
offshore financial services which, however, do not create much employ-ment.
In the social sphere, the Government has aimed at improvirng living standards
of low income groups through public expenditure programs, low indirect taxes
and protective labor legislation. This strategy has not succeeded in develop-
ing a more viable economy. The effectiveness of development policies has been
further impaired by a sharpening conflict between the Central and Island
Governments. In order to prepare the Antilles for independence and encourage
greater cohesion among the islands, the Netherlands is supporting the prepara-
tion of a long-range plan for economic, social and political development to be
completed by end-1979. This plan, which is to serve as framework for future
1/   Preliminary evidence suggests that capacity utilization of the Exxon
refinery in Aruba was substantially increased during the first half of
1979. There is considerable uncertainty regarding supply and demand of
petroleum in the United States and the world market, which coulT  have a
significant impact on capacity utilization of Caribbean refineries. As
a consequence, it is difficult to determine whether the recent increased
throughput at the Aruba refinery is the beginning of a trenc. or s tem-
porary phenomenon.



-iv -
Dutch assistance to the Antilles, is based on the principle that an equitable
distribution of the benefits of economic development among the individual
islands is one of the key requirements for a viable federal structure of the
country.
ix.       A long-term solution of the unemp:Loyment problem requires that
the Government give high priority to creation of permanent jobs in directly
productive goods and services sectors. In view of the narrowness of the
domestic market, sustained stimulus to growth can only be provided through
exports. Foreign investment has an important part to play through transfer
of needed capital and technology. It is also important that cost and produc-
tivity levels in the Antilles be competitive with those prevailing in the rest
of the Caribbean. Future wage increases should be limited to productivity
growth. Stronger fiscal incentives to exports, training grants, increased
factory rentals at cost etc. combined with a scaling-down of incentives to
import-substituting industries could induce investment to shift to export-
intensive industries. The authorities may wish at some time in the future to
consider use of exchange rate policy as a tool of economic development should
other measures to increase competitiveness of the economy fail to bring about
the desired change. It should be noted, however, that given the "openness" of
the Antillean economy, such a tool would not: be effective unless accompanied
by strong complementary wage and price policies.  Increased emphasis should be
placed on developing high skill/high productivity activities in goods and ser-
vices sectors capable of sustaining high labor costs. Structural measures
aimed at increasing labor mobility and productivity will also be required for
reducing unemployment including a strengthened system of secondary education
and vocational training.
The Productive Sectors
x.        Measures to strengthen development of the directly productive
sectors should be concentrated on tourism and manufacturing. In tourism,
there is an immediate requirement for expansion of medium-priced hotels,
improved staff training and strengthened ancillary services. A nationwide
tourism development plan for identifying markets, further investment require-
ments and options for backward linkages should be devised as a matter of
priority. Joint promotion by the individual islands and improved inter-land
transport would help increase tourist flows both to and within the Antilles.
In manufacturing, high protection of import-substituting industries and
relatively cheap foreign exchange have resulted in a capital- and import-
intensive industrial structure, with a high degree of monopolization in
the small domestic market. For stimulating assembly and other export-
intensive activities, the Free Zones in Curacao and Aruba should be developed
into export processing zones. More persistent efforts to attract foreign
investors appear advisable. In addition to North America, promotion efforts
might initially be concentrated on Holland where due to the Antilles' legal
and political affinity to that country, interest to invest in the Antilles
is likely to exist but these efforts should be extended to other Western
European countries, Japan and South America. Through direct negotia-
tions, the Government could attempt to achieve a reduction in trade restric-
tions impeding Antillean exports. A nationwide Industrial Development



Corporation for project identification, promotion and industrial extension
would contribute to furthering industrial growth. Development of agriculture
requires substantial investment in irrigation, extension and marketing.
However, benefits would be limited in scope and are likely to accrue only
over the longer term. The small mineral sector would benefit from natural
resource surveys which would better define its development potential.
Construction, which is of particular importance for employment of unskilled,
could he stimulated through improved mortage financing especially for lower
and middle income housing. Growth of transshipment and offshore financing
activities could be assisted by further infrastructural improvements especially
in communications. Ways and means to further enhance the contribution of the
offshore financial sector to the economy might be explored but the extremely
competitive nature of this type of activities makes a cautious approach
advisable.
Financing Development
xi.       While substantial external financing is expected to be available
in the future, increased national savings are necessary to support higher
levels of investment. Mobilization of funds for productive investment in the
private sector will be greatly assisted by the establishment of a development
bank, planned for 1979, which would also contribute to improving project
preparation and increasing the absorptive capacity of the overall economy.
To assist in safeguarding the solidity of the new institution, the Central
Bank is expected to play a leading part in its establishment and supervision.
In addition, the Government could support private investment financing
through a guarantee fund, rediscount facilities with the Central Bank, and
selective relaxation of liquid asset requirements on loans for productive
purposes. Interest rates should be set at international levels to attract
longer-term deposits. Once attractive investment opportunities are created,
Antillean institutional investors could be encouraged to direct a larger
proportion of their funds towards financing domestic investment, thus reducing
the flow of savings abroad.
xii.      Growing public investment and substantially strengthened public
finances are required to support expansion of the private sector. The Central
Government is aware that a continuation of the deterioration in public finances
which took place in 1977-78 will weaken the balance of payments and impair
the long-term growth potential of the economy. A solution to the fiscal
problem requires first and foremost a sharp curtailment of current expenditure
growth. Planning and control of public expenditures should be considerably
strengthened. In estimating the country's future capital requirements, it
has been assumed that nominal increases in current expenditure in 1979-83
will not be much above 9% p.a., i.e. less than 1.5% p.a. in constant prices.
This implies that real increases in personnel-related expenditures be held at
about 2% p.a.; goods and services purchases be limited to requirements
for adequate functioning of public administration and maintenance of capital
stock; transfers to the private sector and smaller islands be reduced; and
public utility rates be set with a view to phasing out subsidies. Interest
on public debt is expected to increase in line with larger borrowing and
future investment will lead to higher current expenditures. On the revenue
side, a broadening of the tax base appears to be desirable to make the



- vi -
revenue system more elastic with regard to income and price changes. The
public finance projections of this report assume that over the 1979-83
period, revenue increases of at least 12.5% p.a. in current prices (1.1 times
GDP growth) are attained. While further study would have to be made before
the following measures could be introduced, revenue would be increased by:
(i) a reduction of allowances applied for personal income taxation; (ii)
improved collection of profits taxes; (iii) more realistic assessment and
taxation of real estate; (iv) increases in gasoline taxes and higher motor
vehicle taxes; (v) further increases in customs duties; (vi) introduction of a
moderate sales tax; (vii) raising fees for government services to more realis-
tic levels; and (viii) improving tax administration so as to reduce tax
evasion. 1/ Firm adherence to the tax sharing agreements between the Central
and Island Governments is needed for stabiLizing the fiscal position on both
levels of Government. On the basis of projected current revenue and expendi-
ture growth, a public sector current deficit is likely to persist in 1979 but
savings are projected to be generated afterwards and to gradually rise to
nearly 4% of GDP by 1983.
xiii.     Public capital expenditure in 1979-83 as envisaged by the Central
and Island Governments totals nearly NAf 760 million in current prices.
In constant prices, public capital expenditure would be about 45% above
its 1974-78 level. As in the past, over one-half of the planned total is for
basic infrastructure and another substantial share for social sectors espe-
cially housing. A reduced share has been allocated to education and training
which is not in accordance with the importance of this sector for a long-term
solution of the unemployment problem. In order for public investment to
correspond more closely to the development requirements of the economy on the
one hand and to the public sector's financial capacity, on the other, some
restructuring and streamlining of the capiltal expenditure program would appear
to be appropriate. Priority should be attached to (i) supporting productive
investment in manufacturing, tourism, and other export-oriented services;
(ii) further improvements in productive infrastructure especially energy and
communications; (iii) strengthening of secondary education and vocational
training; and (iv) improving the Government's statistical services and under-
taking surveys of natural resources and major productive sectors with a view
to improving the information base for project preparation and policy decision.
The relatively high income levels in the Antilles should make it possible for
a greater share of social infrastructure such as housing to be financed by the
beneficiaries themselves. Cost effectivenesss of public investment would be
enhanced by applying stricter feasibility tests for project evaluation and
through international procurement for projects financed through untied
capital aid.
xiv.      Based on the assumptions outlined above, the Mission projects
public sector capital expenditure in 1979-83 to total NAf 678 million in
current prices (US$377 million equivalent). Of this total, public savings
are expected to finance about 27% which, wlhile still limited, would be a
1/   Since this report was prepared, the Government has implemented a number
of these measures, including an increase in import duties, and an
increase in a number of excise and stamp taxes.



- vii -
substantial improvement over the 1974-78 share (8%). Domestic borrowing,
increasingly market borrowing, could be limited to finance somewhat less
than 7% of capital expenditure (26% in 1974-78) so that sufficient investment
resources are available to the private sector. As in the past, the bulk of
investment financing is expected to be provided from abroad. Soft loans and
grants from the Netherlands and EEC financed over 60% of public investment in
1974-78, generating substantial aid flows which averaged US$128 per capita
per year during that period. In the future, large amounts of aid from the
Netherlands and the EEC are in principle still available. The portion of
Dutch aid which is provided through grants is planned to be increased from
about 40% to 50%. However, there have been important modifications in the
Netherlands' aid policy including: (i) a shift to project-based financing
instead of the program-type allocations used in the past whose drawing
arrangements were more flexible; (ii) restrictions in financing infrastruc-
ture and tourism projects; and (iii) reductions in the contribution to
financing of large projects. Due to these changes, the share of concessionary
aid from the Netherlands is expected to decline to 53% of capital aid in
1979-83 compared to 89% in 1974-78. Suppliers' credits are projected to
provide over 24% of the public sector's gross external capital requirements in
1979-83. About US$40 million or 12% of requirements are left to be obtained
from hitherto unidentified sources, probably on conventional terms.
xv.       For mobilizing available capital aid, the Antilles' absorptive
capacity has to be substantially increased. Of the public sector's gross
external capital requirements projected to total US$325 million over 1979-83,
disbursements of only US$200 million can be expected for projects reasonably
well prepared at present for securing aid commitments. For meeting external
financing requirements in full, additional donors' commitments of about
US$190 million have to be obtained by 1981 at the latest if they are to
result in disbursements in 1982-83. Increased amounts of local counterpart
funds will be required to match available capital aid. The increased emphasis
on project financing makes a substantial strengthening of project preparation
and implementation necessary. In order to increase absorptive capacity and to
enhance the effectiveness of development policies, the Government requires
technical assistance for nationwide surveys of natural resources and major
productive sectors; development planning; tax reform, budget control, and
inter-governmental fiscal relations; and administration of public enterprises.
Balance of Payments and External Public Debt
xvi.      Increased long-term viability of the economy depends to a signifi-
cant degree on a lasting improvement in the balance of payments. Since there
are indications that external capital requirements beyond a certain magnitude
could only be met through hard-term borrowing, a strengthened current account
position is required. Growth of merchandise and non-factor service exports
should be brought into line with increases in imports. While faster economic
growth can be expected to result in an acceleration of import growth of
investment goods and intermediate products, import growth in 1979-83 should
not be much more than 13% p.a., 1.25 times GDP growth. Over the same period,
exports of goods and non-factor services are projected to grow by 12.6% p.a.,
reflecting primarily expansion of tourism and some increases in non-petroleum
merchandise exports. Petroleum product exports in volume terms are likely to



- viii -
decline further. Excluding the latter, projected export growth in 1979-83
would average 15.8% p.a. As factor payments abroad related to petroleum
refining are assumed to be below their 1978 level, the current account
deficit is projected to decline from 3.3% of GDP in 1978 to 2.5% by 1983.
Gross external capital requirements for financing the current account deficit,
amortization of external loans and re-establishing foreign exchange reserves
at 2.7 months of imports by 1983 are projected to total US$465 million for
the 1979-83 period. Loans and grants to the public sector would have to
provide 70% of capital requirements. It is assumed that non-petroleum sectors,
primarily tourism and manufacturing, will attract increasing amounts of direct
investment and other long-term private capital.
xvii.     The external public debt, which consists almost entirely of loans
from the Netherlands, amounted in 1977 to US$246 million, equivalent to
33.5% of GDP, and the service on it, to 2% of exports of goods and non-factor
services net of investment income abroad. Because of the estimated large
share of grants in future capital inflows, this debt is projected to increase
only moderately to US$370 million by 1983 and the debt service to 3% of net
exports. However, the scope for additional borrowing for accelerating
economic growth beyond levels envisaged in this Report is limited by con-
straints on absorptive capacity, uncertainties about the Government's
development policies, and weaknesses in public finances and the balance of
payments which are likely to prevail at least during the initial years of the
1979-83 period. Once policies conducive to enhanced economic viability
including improved project preparation and implementation are firmly imple-
mented and a lasting improvement in the fiscal and balance of payments
position is attained, the Antilles can be expected to rely increasingly on
external borrowing at harder terms.



- 1 -
I. ECONOMIC DEVELOPMENTS, 1972-78
Introduction
1.        The Netherlands Antilles, which consists of the islands of Curacao,
Aruba and Bonaire off the cost of Venezuela and three smaller islands
(St. Martin, Saba, and St. Eustatius) near Puerto Rico, has a land mass of
993 sq. km. and a population of just under 250,000. Population growth has
declined since 1950s and is now 1.2% p.a. There is minor emigration,
mainly to Holland. The economy has generated comparatively high incomes over
the past several decades. Per capita GNP, estimated at US$2,693 in 1977, is
among the highest in developing countries and is relatively evenly distributed.
Income levels have traditionally been sustained by petroleum refining and
generous levels of Dutch aid. The productive infrastructure is well developed
and social services are comprehensive. The economy's comparative advantage is
related to the Antilles' strategic location along international shipping routes
and as a tourism center. Consequently, the economy has traditionally been
based on large-scale petroleum refining and international services such as
transshipment and tourism. However, the narrow natural resource base and the
small population, which is dispersed over six islands, have severely limited
the scope for developing the domestic market and for economic diversification.
With exports and imports of goods and nonfactor services accounting for 86%
and 88%, respectively, of estimated GDP over the past five years, the economy
is extremely open even by Caribbean standards and vulnerable to international
economic developments, especially in petroleum and tourism which are its key
sectors.
Output 1/
2.        The worldwide economic recession in 1974-75 and the increase in
protection of U.S.-based refineries afterwards had an adverse impact on the
economy, resulting in slower output growth and increased unemployment.
Important structural changes have taken place since the early 1970s, with
oil refining losing its predominant position to tourism and the government
sector. Oil refining still provides the largest individual share to export
earnings and fiscal revenues (38% and 15.4%, respectively, in 1977) but a
sharp fall in exports to the U.S. caused by increased protection and lower
consumption growth in that principal market has substantially reduced the
importance of this sector to the economy. The share of refining in GDP is
estimated at less than 15% in 1977 compared to 25% in the late 1960s.
Starting in the early 1970s, tourism has replaced oil refining as the leading
growth sector, increasing its share in GDP in 1972-77 from 12.5% to 15.8%.
The incipient manufacturing sector still contributes less than 9% of GDP.
1/   There exist no recent national accounts except for data on net national
product by income for 1972-74. The mission has tried to estimate GDP
by origin and expenditure based on-partial indicators such as sectoral
volume and price movements, public sector expenditure, balance of
payments, and monetary data.



-2-
The poor natural resource base renders agriculture and mining insignificant.
The Government sector has grown fastest and accounts for the largest indivi-
dual share of GDP, i.e., 21% in 1977 compared to 16% in 1972.
3.        Following a contraction in GDP during 1974-75 estimated to have
averaged 2.7% p.a., a recovery started in 1976 when tourism resumed growth
and increased public investment boosted construction. The economy streng-
thened further in 1977 as the new Government's favorable attitude towards the
private sector resulted in improved investor confidence and a recuperation of
non-petroleum private investment and a further substantial expansion of
tourism took place, resulting in GDP growth of 4.8% in that year. These
factors of expansion continued into 1978 arLd together with a slight recovery
of petroleum product exports, brought about a further acceleration of GDP
growth estimated at about 7.7%.
Investment, Consumption and Savings
4.        Mainly related to developments in the oil refining sector, invest-
ment has fluctuated sharply in recent years. Petroleum-related private
investment contracted after completion of refining and oil transshipment
projects around 1975. Declining profitability and pessimistic expectaticns
about growth prospects have caused the refineries not to undertake investment
over and above that required for maintaining operations. Non-petroleum
private investment is relatively small. The decline in private investmert
was not compensated by the public sector as in 1977-78, the lack of projects
suitable for external financing slowed down. utilization of available capital
aid. Consumption has been sustained mainly by rapidly rising government
expenditure, including unemployment relief and other transfers to the private
sector. Private consumption fell as a share of GDP since 1975 as unemployment
increased and disposable incomes declined. Savings have been quite depressed
and subjected to sharp fluctuations throughout the 1972-78 period mainly as a
consequence of weak public finances.  Gross; national savings apparently fell
below 7% of GDP in 1976, recovered in 1977 to 7.4% of GDP and increased
further to 9.2% of estimated GDP in 1978. A large share of domestic savings
is transmitted abroad as profit remittances and private transfers. There
were substantial resource gaps in years of high investment (especially in
1974) which, however, declined in line with, slackening domestic demand and
turned into a resource surplus from 1976 onwards.
Prices, Wages and Employment
5.        Because of the openness of the economy, changes in domestic prices
are largely determined by international inflation and exchange rate movements.
Increases in domestic prices accelerated in 1974-75 to 19.5% and 15.6%,
respectively, under the impact of high international inflation and the
depreciation of the Antillean guilder, which is tied to the U.S. dollar,
vis-a-vis currencies of major Western European trading partners. Thereafter,
inflation eased considerably, amounting to less than 5.5% p.a. in 1976-77.
Increases have been lower for price-controlled services (e.g. public utilities,
transport, education and housing) but prices of other domestically produced
goods and services have risen faster than average. The U.S. dollar deprecia-
tion in 1978 again put upward pressures on import prices and inflation
accelerated to 9.7% in that year.



Table 1: RESOURCES AND USES OF RESOURCES, 1974-78
Estimated
1974        1975        1976        1977        1978
-------------------1972 NAf millions…
Consumption                 735.2       739.6       678.6       722.2       754.2
Public                 (176.9)    (209.3)    (214.9)       (234.0)     (239.3)
Private                (558.3)    (530.3)      (463.7)     (488.2)     (514.9)
Investment                  321.1       144.3       118.0       119.2       116.9
Public                 ( 38.2)     ( 43.0)     ( 52.8)     ( 43.2)     ( 43.6)
Private                (282.9)     (101.3)     ( 65.2)    ( 76.0)    ( 73.3)
Resource Balance
(-Surplus)             214.1         76.3      -35.6       -30.7       -68.4
GDP (Market Prices)         842.2       807.6       832.1       872.1       939.5
Net Factor Payments
Abroad                  -31.2        22.0       -80.9       -67.7       -80.7
GNP (Market Prices)         811.0       829.6       751.2       804.4       858.8
Gross Domestic Savings    107.0          68.0       153.5       149.9       185.3
Gross National Savings       56.3        73.1        57.6        64.2        86.2
------------------ As Percent of GDP-------------
Consumption                  87.3        91.5        81.5        82.8        80.3
Public                  (21.0)      (25.9)      (25.8)      (26.8)      (25.4)
Private                 (66.3)      (65.6)      (55.7)      (56.0)      (54.9)
Investment                   38.1        17.9        14.2        13.7        12.4
Public                  ( 4.5)      ( 5.3)      ( 6.3)      ( 5.0)      ( 4.6)
Private                 (33.6)      (12.6)      ( 7.9)      ( 8.7)      ( 7.8)
Resource Balance
(-Surplus)              25.4          9.4       -4.3         -3.5        -7.3
Gross National Savings        6.7         9.0         6.9         7.4         9.2
Source: Table 2.4 of Statistical Appendix.



- 4 -
6.        Increases in wages since 1974 have at least equalled price infla-
tion and have exceeded the latter in some years in the private sector. This
has been because of wage indexation and increases in minimum wages in line
with inflation and strong bargaining by well-organized labor unions. The
only exception are salaries of higher-leveL government employees which are
not subject to full indexation and have therefore declined in real terms.
Wages are high by Caribbean standards exceeding those of some countries in the
Region by 40-50% for some occupations. In order to counterbalance pressure
on disposable incomes resulting from more effective income taxation (para
8), organized labor succeeded in raising fringe benefits as well. Fringe
benefits now amount to a substantial proportion of base pay (e.g., 80% in
oil refining). Preliminary estimates of output and employment suggest that
gains in real wages may not have been matched by productivity increases in
a number of important occupations. Final ,zonclusions on this matter, however,
require more information than that available to the mission. If further study
of this matter confirms the above preliminary conclusion, the Government may
wish to consider appropriate remedial measures.
Table 2: COMPARATIVE WAGE RATES AND INCREASES IN WAGE RATES,
NETHERLANDS ANTILLES AND OTHER CARIBBEAN
COUNTRIES, 1977
Trinidad
Netherlands Antilles          & Tobago   Barbados
Wage Rate      Change in 1975-77/        Wage Rate
(US$/week equiv.)       (% p.a.)      -   (US$/week equiv.)
Oil Refining             158.60              4.4             135.60      80.00
Ship Building            200.20              4.0             105.65       n.a.
Food Industries           83.85              2.1                ..       47.00
Bakeries                  77.65              2.9              39.70      48.00
Electronic
Assembly                 90.20              7.1              49.00
Other Industries          66.80              0.3              53.40
Construction              96.00              1.7                ..       50.00
Wholesale Trade           96.95              3.9                ..       44.00
Retail Trade              66.85              3.5                ..       30.00
Hotels                    89.65             --1.8               ..       35.00
Power Utilities          126.40              0.2                ..       70.50
/a   Deflated by consumer price index.
Source: Table 8.3 of Statistical Appendix.
7.        As result of slow economic growth, fast increases in the labor
force and rapidly rising wages, there has been rising unemployment since the
early 1970s.  The labor force increased at least by 2.5% p.a. in recent years
both because of a growing number of school leavers resulting from high
population growth in the 1950s and early 1960s and rising participation rates
among women. Nation-wide unemployment in 1977 was estimated at 16%, and at
20% in Curacao where two-thirds of the labor force and 75% of labor force



growth are concentrated. Private sector employment declined in petroleum
refining and manufacturing, remained nearly unchanged in construction and
increased slightly in tourism, trade and other services. In response to low
employment generation in the private sector, the Government increased sub-
stantially its own labor force, by nearly 8% p.a. in 1972-78, much of it in
low-productivity activities. Much of the increase in government employment
was enacted through temporary work programs whose participants have remained
permanently on the Government's payroll. On the other hand, there are
serious skill shortages, especially for managerial and administrative per-
sonnel but also for middle-level staff such as teachers, accountants,
nurses, experienced secretaries, maintenance technicians, and skilled con-
struction workers. Vacancies have often to be filled by expatriates.
Skill shortages are especially severe in the public sector as due to salary
differentials vis-a-vis the private sector of 40-60%, many higher level
staff have shifted from public into private employment or have emigrated.
Because of limited labor mobility among the Antillean islands, there exist
shortages for determined occupations in some islands (e.g., construction
workers in Curacao, hotel staff in Aruba and St. Martin) alongside unemploy-
ment in the same occupations in other islands.
Public Finances
8.        A key feature of the economy have been weak public finances.  This
has been largely the result of rapid increases in current expenditures
averaging nearly 21% p.a. in 1975-78 associated with fast growth of the
Government labor force and growing transfer payments to the private sector.
Over the same period, current revenue grew relatively fast, i.e. by about 15%
p.a. which, however, was well below increases in current expenditures.
Revenue growth resulted mainly from once-over measures such as increased
taxation on the petroleum sector in 1974 and 1976 and the shift to the
pay-as-you-earn system of personal income tax collection. Moreover, revenue
measures were almost instantly followed by new expenditure programs which
largely eliminated revenue gains. Thus, the Central Government and Island
Governments combined attained a current surplus of 3.4% of GDP in 1976 but
lapsed into current deficits of 1.7-1.8% of CGDP in 1977-78. 1/ Sound fiscal
management is hampered by inadequate budgetary control and by a lack of
cooperation between the Central and Island Governments which has led to the
breakdown of their revenue-sharing agreements. 2/ The Island Governments of
Curacao and Aruba, whose combined budgets exceed by far the Central Government
1/   The Central Government had to sustain current deficits since 1974.  The
Island Governments of Curacao and Aruba have attained surpluses which,
however, have been rapidly declining after 1976.
2/   The Central and Island Governments have certain independent sources
of tax revenues whose receipts they share. The Curacao and Aruba Govern-
ments are now obliged to transfer to the Central Government 25% of income
and profits tax revenues collected in their areas whereas the Central
Government is obliged to transfer to these Island Governments 50%
of revenues from import, excise and gasoline taxes in their respective
areas. The two Island Governments are also empowered to levy surcharges
on income and profits taxes of at most 30% and 15%, respectively.



-6-
budget, have not been forwarding tax revenues and social security dues
collected on behalf of the Central Government. Utilizing funds thus withheld,
the Island Governments have substantially increased current expenditures
whereas the Central Government, deprived of a major source of income,
had to rely on borrowing from the banking system for meeting its expenditure
commitments. The domestic banking system, primarily the Central Bank,
financed a substantial proportion of the overall fiscal deficit, i.e. some
51% in 1977 and 63% in 1978.
Money and Credit
9.        The weak fiscal position has adversely affected monetary develop-
ments. As the fiscal deficit was increasingly financed through the banking
system, the share of credit allocated to the public sector during 1974-77 has
risen from below 0.4% in 1974 to 11% in 1977 and nearly 18% in 1978. The
increase in credit to the General Government has become the major source of
monetary expansion, accounting for 62% of the increase in banking system
liabilities in the December 1976-December 1978 period. The Central Government
began to issue treasury bills in 1977 which shifted part of the deficit
financing from the Central Bank to the commercial banking system. There has
also been significant credit expansion to the private sector since 1976,
facilitating growth of consumption and of consumer goods imports. The
Central Bank has largely accommodated the credit requirements of the Govern-
ment, occasionally at the expense of credit to the private sector. The
monetary authorities aim primarily at preserving international reserves at
adequate levels and it is only with that aim in mind that they attempt
regulation of monetary expansion. In an effort to preserve international
reserves and to assure allocation of an adequate proportion of credit to the
private sector, the monetary authorities have decided to apply statutory
limitations on Government borrowing from the banking system, by introducing a
credit ceiling and tying further increases in credit to the public sector to
increases in fiscal revenues.
10.       Credit expansion has been facilitated by high liquidity in the bank-
ing system as there has been fast growth of financial savings in most recent
years except 1978 despite negative real int,erest rates and low economic
growth. Due to the lack of institutions for term financing of productive
investment, there have been no outlets for funds accumulated in the banking
system other than short-term credit. Commercial banks are reluctant to lend
at longer terms because of the short-term maturity structure of the bulk of
their liabilities. Reflecting the structure of the economy, the trade sector
accounts for nearly 60% of credit outstanding to private firms.
The External Economy
11.       The erratic movement of the domestic economy, especially the
deterioration in public finances, has been paralled by a weak balance of
payments. Little export growth occurred once the roll-over effect of the
1973-74 oil price increases on petroleum product prices had petered out by
mid-1974.  The 1973-74 petroleum price increases produced windfall gains



- 7 -
on petroleum product exports which were subsequently dissipated as increases
in crude prices in the following years were much higher than for petroleum
product exports. Reflecting the narrow resource base of the economy, non-
petroleum exports, mainly re-exports, are small, covering less than 20% of
nonpetroleum imports, and have increased very little. Increased imports to
support domestic economic activity have resulted in substantial ,rade deficits
which were only partly compensated by earnings from nonfactor services,
mainly tourism and transport. While exogenous factors such as Lhe inter-
national recession in 1974-75 and the decline in petroleum product exports
triggered the deterioration in the balance of payments, the authorities
did not adjust the economy to its changing external conditions. On the
contrary, rapidly increasing government current expenditures, through
increased imports, have put additional pressure on the balance of payments.
Only very recently--in March 1979--have fiscal measures been taken which
were partly designed to reduce import growth (para 51). Substantial current
account deficits averaging 18.5% of GDP were sustained during 1974-76.
Movements related to petroleum inventories 1/ resulted in a current account
surplus of some US$9 million in 1977 but excluding net petroleum exports, the
current account deficit amounted to nearly 45% of nonpetroleum GDP. In 1978,
a current account deficit of some US$28 million or 3.3% of GDP reemerged
despite an improved goods and nonfactor services balance as investment income
payments abroad were above the levels of previous years.
12.        Substantial capital inflows, which financed a large proportion
of investment, offset current account deficits in most years and allowed
accumulation of international reserves during 1974-77. However, in 1978,
there were outflows of private capital of nearly US$50 million, in part for
purchase of higher-yielding foreign securities whereas disbursements of
foreign loans and capital grants to the public sector fell off as result of
a slowdown in government investment. Foreign exchange reserves therefore
declined by some US$53 million to about US$95 million, equivalent to only
1.7 months of non-oil merchandise imports. Due to the decline in the
external value of the Antillean guilder as result of the U.S. dollar de-
preciation, costs of imports have risen in spite of diversion of imports
away from nondollar sources. Also, the service on external debt, which
is entirely denominated in Dutch guilders, has risen in terms of local
currency, 2/ imposing an additional burden on the balance of payments.
1/   The refining companies purchased substantial volumes of crude in 1976
in anticipation of international price increases and reduced crude
purchases in the following year.
2/   The external value of the Antillean guilder declined from 1976 until
mid-1978 by about 10% on a trade-weighted basis and by 17.5% vis-a-vis
the Dutch guilder.



- 8 -
II. ECONOMIC DEVELOPMENT PROSPECTS AND DEVELOPMENT
STRATEGY, 1979-83
1. Growth Potential
13.       Taking due account of the limited resource endowment and institu-
tional obstacles to growth, GDP growth of 4% p.a. in 1979-83 appears to
be attainable. This compares to GDP growth averaging less than 3% p.a.
during 1973-78. Development of petroleum refining will be largely determined
by import requirements for petroleum products in the US. In view of the
likely future demand in that market, furth,er declines in refining in the order
of 3% p.a. through 1983 may well occur (para 30). 1/ To take up this slack, the
nonpetroleum economy would have to grow by nearly 5.5% p.a. over the next five
years. This highlights the need for restriucturing the economy and emphasizing
sectors with a significant growth and employment potential. One of the most
important sectors is this respect is tourism which in turn stimulates expan-
sion in transport, trade, construction, and public utilities.  The Antilles'
established position as international transit and financial center holds
significant potential for further expansion of transshipment and offshore
financing. There should also be scope for further development of manufactur-
ing, including ship repair, a sector which is of particular importance for
generation of productive employment on a larger scale. Some increase in
agricultural and mining output should also be attainable.
14.       The envisaged growth of GDP requires a substantial increase in
investment of the public as well as the private sectors of the economy.
Especially private investment would have to grow from its depressed levels
in 1977-78 for which increased foreign investment in export-oriented goods
and services sectors will be important. Tlhe share of investment in GDP is
projected to rise from 12.4% to 16.3% over the 1979-83 period. In order
to obtain faster investment growth compatible with a sound external balance of
the economy, management of domestic demand should aim at holding increases in
consumption below GDP growth. As a realistic target for the 1979-83 period,
increases in overall consumption should not exceed 3.5% p.a. and that of
public consumption should be held below 3% p.a. This would permit national
savings to recuperate and to reach 13.8% of GDP by 1983, up from 9.2% esti-
mated for 1978.
1/   Preliminary evidence suggests that capacity utilization of the Exxon
refinery in Aruba was substantially increased during the first half of
1979. There is considerable uncertainty regarding supply and demand of
petroleum in the United States and the world market, which could have a
significant impact on capacity utilization of Caribbean refineries. As
a consequence, it is difficu-1t to determine whether the recent increased
throughput at the Aruba refinery is the beginning of a trend or a tem-
porary phenomenon.



15.       The nature and magnitude of unemployment in the Antilles defies a
rapid solution. Based on present age structure of the population and female
participation trends, labor force growth through 1983 is projected to be well
over 3% p.a., adding about 3,000 persons per year to the labor forc-, before
declining again to some 2% p.a. by the late 1980s. Unemployment can therefore
only be reduced if economic growth is accelerated. Assuming labor productivity
growth of about 2% p.a. and a growth pattern similar to that in previous
years, GDP would have to increase by 5.5% p.a. during 1978-83 just to prevent
unemployment from rising further, and by 6.7% p.a. if unemployment were to be
reduced to the levels prevailing through the early 1970s. On the other hand,
if growth of tourism and manufacturing could be accelerated to 8% p.a.
increasing employment in services in its wake, unemployment might be reduced
below 12% by 1983.



- 10 -
Table 3:  PROJECTED RESOURCES AND IJSE OF RESOURCES, 1979-83
Estimated
1978        1979        1980        1981        1982        1983
1972 NAf millions--------------
Consumption                 754.2       787.6       813.7       840.1       866.7       895.8
Public                 (239.3)     (247.0)     (254.2)     (261.6)     (268.5)     (276.3)
Private                (514.9)     (540.6)     (559.5)     (578.5)     (598.2)     (619.5)
Investment                  116.9       123.5       141.9       153.8       168.9       186.2
Public                 ( 43.6)    ( 45.5)      ( 51.4)     ( 58.6)     ( 63.2)     ( 68.2)
Private                ( 73.3)     ( 78.0)     ( 90.5)    ( 95.2)    (105.7)       (118.0)
Resource Balance
(-Surplus)             -68.4       -66.6       -55.4       -53.8       -58.4        -60.5
GDP (Market Prices)         939.5       977.7    1,011.0    1,047.7    1,094.0    1,142.5
Net Factor Payments
Abroad                 -80.7       -77.8        -78.4       -76.9       -76.8      -73.7
GNP (Market Prices)         858.8       899.9       932.6       970.8    1,017.2    1,068.8
Gross Domestic Savings    185.3         190.1       197.3       207.6       227.3       246.7
Gross National Savings       86.2        94.5       100.3       112.5       134.4       158.0
---------------------As Percent of GDP----------------------
Consumption                  80.3        80.6        80.5        80.2        79.2        78.4
Public                  (25.4)      (25.3)      (25.1)      (25.0)      (24.5)      (24.2)
Private                 (54.9)      (55.3)      (55.4)      (55.2)      (54.7)      (54.2)
Investment                   12.4        12.6        14.0        14.7        15.4        16.3
Public                  ( 4.6)      ( 4.7)      ( 5.1)      ( 5.6)      ( 5.8)      ( 6.0)
Private                 ( 7.8)      ( 7.9)      ( 8.9)      ( 9.1)      ( 9.6)      (10.3)
Resource Balance
(-Surplus)              -7.3        -6.8        -5 .5       -5.1         -5.3        -5.3
Gross National Savings        9.2         9.7         9.9        10.7         12.3        13.8
Source: Table 2.4 of Statistical Appendix.



I- 1 -
2. Development Strategy
16.       With the objective of diversifying the structure of the e-ornomy
and increasing productive employment, the Government's strategy in the
past was based primarily on development of tourism and manufacturing. To
support these activities, the Government offered fiscal incentives to private
investors and undertook considerable investment in physical infrastructure as
well as some investment in productive sectors. Discouraged by the limited
success in attracting foreign investment in manufacturing, the Government has
recently shifted emphasis towards sectors in which the country has a clear
comparative advantage, mainly transshipment and off-shore financial services
which, however, do not create much employment. Through low taxes on off-shore
companies the Government has tried to attract foreign financial and trading
enterprises which broadened the tax base and created some, though minor
employment. In the social sphere, the Government has aimed at improving
living standards of lower income groups through public expenditure programs,
low indirect taxes, introducing legal safeguards for preserving real incomes
of the employed and increasing relief work for the unemployed. Government
revenues from the petroleum sector and substantial capital aid from the
Netherlands provided the financial resources required for implementation of
these programs.
17.       While this strategy succeeded in securing relatively high incomes,
it has not succeeded in developing a more viable economy. With the slowdown
of the international economy in the mid-1970s and the decline in petroleum
refining in the Antilles, the limits of this strategy to appropriately deal
with the development problems of the economy have become evident. The Govern-
ment's employment policies have been a case in point. Government efforts thus
far have focussed on alleviating the unemployment problem in the short term
through relief work programs and labor legislation restricting dismissals in
the private sector. These measures have introduced distortions into the labor
market which might make a long-term solution more difficult. Unemployed
reportedly turn down available private employment in preference to Government
jobs. The existence of the dismissal law has tended to discourage private
firms from hiring additional labor. A Government-appointed committee recently
recommended to strengthen administration and financing of unemployment relief
programs including introduction of a new wage tax. This issue should be
approached with caution, however, as additional wage levies could stimulate
mechanization and act as further disincentive to expanding private sector
employment.
18.       A lack of cooperation between the Central and Island Governments
has impaired the effectiveness of development policies. Important powers
including collection of major taxes and execution of the bulk of public
investment have been assigned to the increasingly independent Island Govern-
ments of Curacao and Aruba, resulting in costly public administration and
duplication of facilities, over and above those dictated by the geographic



- 12 -
dispersion of the islands. Strong secessionist pressures have
developed in Aruba, and a breakdown of the F7ederation would further weaken
the viability of the Antillean economy. To encourage greater cohesion among
the islands and prepare the Antilles for independence, the Netherlands is
supporting the preparation of a long-range plan for economic, social and
political development which is planned to be completed by end-1979. The
plan, which is to serve as framework for future Dutch assistance, is based on
the principle that an equitable distribution of the benefits of economic
development among the islands of the Antilles is one of the key requirements
for a viable federal structure of the country.
19.       Sustained economic growth and a long-term solution to the unemploy-
ment problem hinge on a comprehensive and well-coordinated development
strategy. Such a strategy would require policy modifications conducive to
more rational allocation of resources throughout the economy and structural
measures contributing to higher efficiency of the economic system. As its
essential elements, *his strategy should comprise measures to: (i) increase
the competitiveness of the leading sectors of the economy; (ii) enhance
productive capacity of the economy through higher labor productivity and
increased investment in sectors where the economy has a comparative advantage;
and (iii) allocation of public investment primarily towards supporting
directly productive goods and services sectors.  In order to attain higher
efficiency, some distortions in the economic structure and constraints on
productive sectors of the economy have to be removed, as outlined below.



- 13 -
III. DEVELOPMENT ISSUES
1. International Competitiveness
20.       Production costs in the Antilles appear to be high compared to
other Caribbean economies. Especially labor costs exceed those in other
countries in the Region by 40-60% and for some skill categories (e.g., ship
repair), are close to labor costs in developed countries. High wages may have
hampered growth of tourism and manufacturing and have stifled development of
agriculture, thus impeding the Government's objective of economic diversi-
fication. Further wage increases should be held at productivity growth as
upper limit, and some improvement in company profits should be allowed to take
place. Modifications of the system of automatic wage indexation also appear
advisable to slow down the advance of wage costs. Cooperation by the labor
unions is essential for this strategy to succeed.
21.       In addition, specific measures are advisable for improving the
competitive position of export intensive sectors. These measures could
include: (i) fiscal incentives through export credits, training grants,
increased factory rentals at cost, etc., which could be financed through
higher import duties and/or external capital aid; and (ii) investment credits
on attractive terms. This should be combined with a scaling down and gradual
phasing-out of incentives to import substituting industries which could
contribute to shifting investment more towards export intensive sectors.
The authorities may wish at some time in the future to consider use of ex-
change rate policy as a tool of economic development should other measures
to increase competitiveness of the economy fail to bring about the desired
change. It should be noted, however, that given the "openness" of the
Antillean economy, such a tool would not be effective unless accompanied
by strong complementary wage and price policies.
2. Improving Labor Productivity
22.       Future expansion of the largely service-oriented Antillean economy
depends on the availability of well-trained labor. As an important element
of the development strategy, Government policies should therefore focus on
developing high skill/high productivity activities which can sustain high
wage levels. With the exception of some highly qualified occupations, e.g.
oil refining and ship repair, skill levels of the bulk of the labor force are
not very high, which in part is a reflection of the educational system.
Probably not more than 25-30% of entrants into the labor force receive some
instruction relevant to job requirements. Secondary education is divided
into an academically oriented stream leading to higher education (HAVO-VWO),
a lower stream (MAVO; ETAO) preparing for junior technical colleges, and
lower vocational education (LTS; EHO) for the bulk of the 12-16 year olds,
with virtually no mobility between the individual streams. Vocational
instruction is provided only to relatively young age groups (12-15 year olds)
and is therefore not very effective. Vocational training programs undertaken



- 14 -
by the oil refineries and the ship repair company are of high standards. The
Curacao and Aruba Island Governments provide short-term training in manual
trades for school leavers. Graduates from these courses have been quite
successful in finding permanent jobs. However, not more than 80-100 persons
are trained per year and budgetary allocations for these courses amount to a
fraction of what is spent by the Island Governments on relief jobs. Junior
technical colleges do not appear to fully meet labor market requirements as
their graduates tend to be overtrained to fill positions for technicians and
other medium-level jobs yet are not qualified enough for positions of higher
responsibility.
23.       In order to make general education respond better to manpower
requirements of the economy in process of Structural change, the Government
might consider the suitability of curriculum reform with the aim to integrate
subjects with relevance to the labor market into the secondary education
system. Instruction should be given in subjects related to (a) commerce
and tourism; (b) industry, with special emphasis on materials technology,
mechanics, electricity and electronics inc:Luding communications; and (c)
agriculture including horticulture and fisheries. Secondary education
should provide a firm basis from where its graduates can be taken to profes-
sional competence by the receiving institution. Vocational training by
island government centers should be further improved and expanded by in-
cluding courses for skill upgrading and retraining. Through Government
grants, private firms could be induced to establish and expand training
programs. Vocational training should prepare for a spectrum of occupations
and concentrate on a few basic subjects, enabling labor to quickly retrain
and shift to related occupations if structural changes in the economy make
this necessary.
24.       Labor productivity would also be improved by increased labor
mobility. Institutional barriers to proper functioning of the labor market
should therefore be removed or reduced. In particular, the Dismissal Law
should be applied as flexible as possible. Labor mobility could also be
enhanced by a country-wide government employment service and by providing
resettling grants to workers ready to move to islands where jobs are available
(e.g., St. Martin). Emigration to Holland and also Venezuela as aimed at by
the Government could provide some outlet for surplus labor. However, in the
past mainly qualified manpower left whom the economy can ill-afford to lose.
In negotiations with potential recipient countries for Antillean emigrants,
the Government should therefore aim at finding outlets for surplus skills
with no prospect of employment in near future (e.g., in oil refinery main-
tenance) and for semi-and unskilled.
3. Sectoral Issues
Petroleum-Related Activities
25.       Petroleum refining has been the mainstay of the economy since
World War I. It accounted in 1977 for about 15% of GDP, 38% of exports of
goods and non-factor services and 15.4% of fiscal revenues. The refineries



- 15 -
in Curacao and Aruba are among the largest in the Caribbean and have tradi-
tionally processed Venezuelan crude for exports to the U.S. East Cost, their
principal market. Fuel oil has accounted for about one-half of petroleum
product exports in value terms and nearly 60% in volume terms in recent
years. Substantial modernization investment for treating high-sulp.nur
crude was undertaken before 1974. Since then, refining declined steeply
because of changes in U.S. policies associated with the crude entitlement
program 1/ which resulted in increased protection of refineries in the U.S.
and the U.S. Virgin Islands and eliminated the competitive edge in terms
of lower operating and transport costs of Caribbean export refineries.
The Antilles' refineries throughout declined during 1973-78 from 350 million
bbls to about 230 million bbls and the share of exports to the U.S. fell from
70% to 46% over the same period. Only about 60% of capacity is presently
compared to nearly 100% in 1973, and the work force has been reduced.
The companies reported substantial losses during 1975-77 caused by low
capacity utilization and unfavorable prices. The Curacao refinery, which
operates with a relatively higher degree of flexibility, has undertaken some
custom refining for crude-exporting countries which are short of refining
capacity. However, these temporary markets cannot provide a basis for long-
term development as they will be closed once the countries in question build
up refining capacities. Because of their substantial size, the Antilles'
refineries depend on access to a large individual market which only the US
can provide. (Exports to Western Europe, where there is also surplus refining
capacity, do not appear to be feasible). The Government therefore has been
in direct contact with the U.S. authorities with the aim of having regulations
changed in favor of the Antilles' refining industry.
26.       Prospects for refining in Antilles essentially depend on energy-
related developments in the U.S., first and foremost (i) the degree to
which the U.S. succeeds in reducing imports of fuel oil; (ii) the expansion
of U.S. domestic refineries and their adaptation to treating heavy and
high-sulphur crudes; and (iii) the emergence of competing export refineries
oriented towards the U.S. market. These developments are dominated by the
slow-down in energy consumption growth as conservation is gathering momentum.
In future, substitution through intensified coal use in power generation and
among large-scale industrial users and availability of natural gas is likely
to restrict fuel oil demand more than that of other petroleum products. With
fuel oil demand projected by the U.S. Department of Energy to increase by just
1/   The "entitlement program" was set up to preserve the competitiveness
of refineries depending largely on imported crude by equalizing crude
costs between refineries having access to (price controlled) domestic
crude and those who have not. This is done through "entitlements" to
domestic crude which those refineries processing a relatively high
proportion of the same have to sell to refineries operating with a lower
proportion of domestic crude. The cost advantage conveyed to U.S.
refineries through the entitlements program vis-a-vis the Antilles'
refineries at one stage amounted to U.S.$2.30/bbl of crude processed,
equivalent to about 16% of production and transportation costs. While
this advantage was later reduced to one-half, proposals before U.S.
Congress aim at re-establishing entitlements to their full amount
starting July 1, 1979.



- 16 -
over 1% p.a. in 1979-85 whereas U.S. refining capacity is likely to expand
by 2.6% p.a. over the same period 1/, importL requirements would decline. The
decision of the U.S. Government in early 1979 to deregulate crude oil prices
by 1981 and move prices for domestically produced crude to international
levels would deprive domestic refineries of their main advantage over their
foreign competitors but some form of protection for the U.S. refining industry
is likely to continue. The Caribbean export- refineries could increase shipments
to the U.S. only if some refining capacity in the U.S. were to be closed down.
The Antilles' refineries could probably improve their position somewhat by
increasing gasoline and medium distillate runs for which markets are likely
to be stronger and more diversified. This would require substantial invest-
ment in secondary processing which under the uncertain global outlook for the
industry and the rather unflexible tax regime in the Antilles, the refineries
might not be prepared to undertake. Finally, some crude exporting countries
are increasing exports of petroleum products and are insisting that their
customers purchase products together with crude.  Once this trend gathers
momentum, export refineries in countries without indigenous crude base such
as the Antilles will be put in a very difficult position.2/
27.       Prospects for oil refining in the Antilles are therefore not
favorable and further output declines might well occur throughout the
1979-83 period. Through modifying the tax regime for oil refining with the
aim to keep taxation as flexible as possible, the Government could induce the
refining companies to continue operations c:Lose to present levels and possibly,
increase output of products with better market prospects.
28.       Crude oil transhipment has developed fast since the mid-1970s
but its contribution to the economy is stil:L small.  Only one of the three
transshipment companies pays taxes amounting to about 3% of general govern-
ment revenue and employment totals less than 400 persons. Storage and
loading facilities of nearly 2 million bbls/d representing investment of
possibly U.S. $250 million have been set up in Curacao, Aruba and Bonaire.
Utilizing the Antilles' excellent deepwater harbors, crude brought in by very
large crude carriers (vlcc) from the Eastern Femisphere is transloaded into
smaller vessels for transport to the U.S., thus minimizing overall transport
costs 3/. Competing schemes are ship-to-ship lightering on the open sea and
1/   Since the bulk of refinery expansion is planned to be in hydro-skimming,
fuel oil production capacity is likely to increase at a larger rate than
indicated by overall expansion.
2/   As a more recent development, negotiat:Lons are in progress between the
refining companies, the Antilles Government and Venezuela regarding
equity participation of the latter in the Antilles refineries. The
Antilles Government is also interested in obtaining a nominal participa-
tion. While Venezuela's participation would provide the refining industry
with a secure source of crude oil and strengthen its financial base, it
could not dissipate the uncertain market outlook.
3/   The stipulation of the Jones Act that crude and oil products landed in
the U.S. have to be transported by U.S., flag carriers, and the lack of
capacity in U.S. ports to accommodate vlccs, would otherwise result in
appreciably higher transport costs.



- 17 -
ports planned on the Gulf Coast for accommodating vlcc-type vessels. WGhile
lightering might be restricted because of environmental considerations, the
superport projects in the U.S. (of which LOOP is the most advanced) could
represent a more serious competition to the Antillean terminals es.e ially if
crude volumes transported to that country increase little. However, bec-ause
of high transport costs of U.S. flag carriers, the Antillean terminals might
still be competitive for transshipment to destinations other than in the
vicinity of the Gulf coast. Some further expansion is therefore 1lanned.
29.       There is growing interest in hydrocarbon exploration off-shore the
Antillean islands. While exploration on the Saba Banks has beern abandoned
for the time being, interest has shifted to the area between Aruba and
Venezuela (where extensions of the Lake Maracaibo oil deposits are believed
to exist) especially after delineation of the maritime boundary w-7ith Venezuela
in 1978. The Government is actively looking for private companies to enter
into hydrocarbon search and has prepared the legal framework for explor7ition
and production by foreign companies. It envisages exploration under Tisk
contracts and in case of commercial discoveries, productior-sharing agree-
ments would be concluded, with the foreign companies bearirg the full invest-
ment required for field development. A National Hydrocarbon Authority ror
supervising exploration and participation in productive ventures is in the
process of being formed. For preparation, implementation and supervision of
any hydrocarbon exploration on a larger scale, the Government would need
substantial technical assistance. Also, institutional arrangements between
the Central and Island Governments with regard to their participation in
hydrocarbon ventures need to be tightened. The outcome of hydrocarbon
exploration is highly speculative. New and expensive technologies for
exploration in substantial water depths are required. However, should
exploration lead to commercial discoveries of crude oil or natural gas, a
considerable stimulus for the economy could be expected.
Tourism
30.       Tourism has grown at a fast and steady pace since the 1960s,
with only a temporary interruption during the 1974-75 international recession
which coincided with increases in transport costs. The increase in numbers
of visitors during 1972-77 averaged nearly 8% p.a., which is above the
average for the Caribbean. Tourism in 1977 accounted for 16% of estimated
GDP, 11% of employment and 28% of goods and nonfactor service exports.
Tourism also creates significant additional employment in ancillary services,
especially retail trade. As a source of foreign exchange, the tourist sector
is second only to oil refining.  However, because of large import requirements,
the net contribution of the sector to the balance of payments is much smaller,
probably only 40-50% of gross earnings. Tourism is concentrated in Aruba,
Curacao and St. Martin, with Bonaire receiving fewer visitors. It differs
somewhat from the rest of the Caribbean because of the larger share of
visitors from South America and Europe. Resort tourism originating mainly in
the U.S. has prevailed in Aruba and St..Martin. The relatively longer average
stay of resort tourists has secured high occupancy rates in both islands,
generally above 75%. Curacao's duty-free retail trade has attracted a
rapidly growing number of shopping tourists from Venezuela since around 1975.



- 18 -
Hotel capacity expanded fast in Aruba and St. Martin, whereas little growth
occurred in Curacao and Bonaire. Cruise tourism has been concentrated in
Curacao and to a lesser extent, Aruba. It expanded less than stay-over
tourism and average spending by cruise tourists has declined.
31.       There appears to be a good potential for further expansion of
tourism in the Antilles. New airlinks to the Mid-Western U.S. and expanding
group travel from Europe will open new markets. Tourism potential should be
particularly promising for Bonaire where little development has tiken place
thus far. However, a slow-down of economic growth in the U.S. expected in
1979-80 would result in lower demand growth than attained in 1977-78. Over
the medium to longer term, demand for Caribbean vacations in North America
and Europe depends on factors such as population and income growth, vacation
days, allocation of personal expenditure to travel, and comparative airfares.
32.       Despite fast increases in the number of tourists in recent years,
the hotel sector notably in Curacao is facing serious financial difficulties.
This has been the result of high operating costs and an unfavorable financial
structure. Due to legal obstacles to dismissals (para. 17), there is over-
staffing at lower levels, as indicated by a relatively high employment
per room ratio (above 1.5 on average). Wage levels are considerably higher
than for hotel staff in other Caribbean countries. Substantial debt financing
in past years, mostly through conventional loans from Holland, has resulted
in high financial charges aggravated by the recent depreciation of the
Antilles' vis-a-vis the Dutch guilder. Since the competitive nature of
Caribbean tourism has prevented higher costs being passed on in prices, a
number of hotels in Curacao have incurred losses and margins are low in other
tourist destinations in the Antilles. The Island Government of Curacao had
to provide emergency loans and took over some hotels whose closure was
imminent. Most larger hotels in the Antilles are managed by international
hotel chains which provide little investment of their own but insist on
management fees even in the absence of profits. This has occasionally
blunted management's interest in running efficient operations.
33.       The Government has promoted tourism development through fiscal
incentives for hotel investment including exemption from income taxes and
customs duties, through hotel investment of its own, and through lower
minimum wages for hotel workers compared to other occupations. In its
future investment program the Government aims at assisting the tourism sector
through airport projects and some hotel development. However, there are as
yet no Government policies providing for orderly expansion of hotel capacity,
training of qualified staff and developing inter-sectoral linkages. Tourism
affairs are handled by the Island Governments which conceive of each other
as competitors, thus duplicating efforts and expenditures to the detriment
of establishing the Antilles as a whole as a tourism center.
34.       The long-term viability of tourism in the Antilles depends on the
success in reducing costs and increasing efficiency and product quality
relative to other Caribbean tourist destinations. Mobilization of the growth
potential for tourism requires that expansion in hotel capacity takes place



- 19 -
within the next several years and structural constraints such as lack of quali-
fied staff and infrastructure bottlenecks including insufficiernt air transport
are overcome. In its policy for tourism, the Government should aim at
maximizing the sector's benefits to the economy in terms of output and
employment growth, foreign exchange earnings, and fiscal revenues. A more
comprehensive approach to sector development is therefore required. Training
of qualified staff especially at the middle and higher level should be
expanded. In addition to upgrading the hotel schools in Curacao and Aruba, a
scholarship program for studying hotel management abroad could be instituted.
A tourism development plan should be devised based on studies of major
markets, which would indicate required hotel investment by type, skilled
manpower requirements, and promotion needs. The optimum mix of hotels for
tapping the broadest possible tourism demand should be identified. The
specific potential and requirements for tourism development of the individual
islands should be more clearly established. Aruba and St. Martin are best
suited for further developing resource tourism which would help increase
earnings and better insulate the sector from economic conditions in mejor
markets. Curacao seems to require more middle-priced hotels for charters and
shopping tourists which is under consideration by the authorities. A nation-
wide physical plan would help reconcile future land use for tourism with
those of other economic sectors and with the goal of preserving the islands'
natural assets.
35.       Increased private investment could release the Government from
tourism-related expenditures. Private local ownership in hotels and other
tourism establishments could be promoted through special credit programs
and pooling arrangements for purchases, bookings, etc. Future tourism plan-
ning and development should be undertaken jointly by the islands and the
Central Government. Joint promotion stressing the Antilles' variety, a
centralized booking system and improved inter-island transport could help
increase tourist flows both to and within the Antilles. Statistics on tourism
should be made more relevant to policy decisions by including information on
expenditure patterns of tourists, hotel finances and purchases of supplies by
hotels.
Agriculture
36.       Agriculture plays a negligible role in the economy.  It is limited
to a few higher-value horticultural products and some fishing. Its develop-
ment has been hampered by poor natural resource endowment, especially poor
soils and scarcity of water. At prevailing wages in the economy, little
agricultural labor is available despite high unemployment. The restricted
potential and high costs relative to other producers in the Region have
rendered agriculture largely noncompetitive and little output growth has
occurred. There is a modest potential for replacing fresh food imports,
especially fruit and vegetables, poultry and pork, and for exporting aloe
and jojuba (i.e., indigenous plants rich in vegetable oils used in cosmetics).
In the past, agriculture was largely absent in the Government's development
strategy. Agricultural affairs are handled by the Island Governments,
with no Central Government participation. The Island Governments are now
stepping up agricultural development schemes, supported by capital and



- 20 -
technical aid from Holland. A vegetable production project in Aruba consists
of a government-run central station providing equipment and technical aid
including marketing assistance and plots lesased to individual farmers.
Credit is available up to NAf 5,000 per loan at zero interest and a maximum
amortization period of ten years. Projects for hog raising and coastal
fishing are being prepared in Curacao. A project for cultivation of aloe and
jojuba and grain production is under preparation in Bonaire. Nevertheless,
even moderate agricultural development requires sizable investment in irriga-
tion and soil conservation, marketing and esxtension services, research
and training institutions and agricultural credit systems whose benefits
accrue only over the longer term.
Mining
37.       There is some mining of nonmetallic minerals, i.e. phosphate
in Curacao and solar salt in Bonaire. Both operations are entirely
export-destined and operate with a reasonable degree of efficiency. Despite
relatively favorable international market prospects, neither producer has
expansion plans as phosphate deposits are assumed to be nearing exhaustion
and land available for salt condensation is limited. However, limestone
mining could give the sector a new impetus if production of cement in the
Antilles were to prove feasible (para. 43). A mineral survey comprising all
Antillean islands would allow to better assess the development potential of
the sector. Modernization of mineral legislation, supporting public invest-
ment and special credit facilities could contribute to fostering mineral
development.
Manufacturing
38.       Manufacturing is still at an early stage of development, accounting
in 1977 for less than 9% of GDP and 7.6% of the employed labor force.
With the exception of ship repair in Curacao, which is the biggest and most
efficient industrial activity, production iLs concentrated in consumer goods
and simple intermediate goods especially those having natural protection
through high freight costs. Requirements f-or imported inputs are large
whereas industrial output satisfies only a small proportion of domestic
demand and very few goods produced in the Antilles are exported. Industrial
growth has been seriously hampered by high wage costs, the very small domestic
market which limits the scope for import substitution, and the lack of
indigenous raw materials which restrict backward linkages. High wage costs
have affected the growth of assembly industries which preferred to locate in
lower-wage countries of the Region. 1/ The lack of trained industrial labor,
managerial weaknesses and problems in organizing production and distribution
have impeded operational efficiency. Shortages of long-term credit might also
have been a constraint to expansion of new and smaller firms.
I/   Two electronic assembly plants discontinued operations once they lost
preferential access to the EEC, their main market, as their production
did not meet the EEC's rule of origin.



- 21 -
39.       With the objective of employment generation and economic diver-
sification, the Government has emphasized industrial development since the
early 1960s. It has offered fiscal incentives to industrial investors
including 10-year income tax holidays, import duty exemptions for capital
goods and industrial inputs, and import protection through tariffs and
quantitative restrictions. In order to protect investors against domestic
competition, the Government prevented in some cases the establishment of new
firms in existing industries. Substantial public investment in free zones
and other productive infrastructure was designed to attract foreign firms.
40.       As a result of tax exemptions, negative real interest rates and
relatively cheap foreign exchange, a capital-and import-intensive industrial
structure has emerged, with high monopolization and generally low operational
efficiency. 1/ After a spate of industrial investment until the late 1960s,
little investment has taken place since then as labor umrest occurred and
increases in wage costs started to accelerate. Industrial employment has
declined since 1972 and very few linkages to the rest of the economy have
been developed.
41.       The smallness of the domestic market makes it imperative that
further industrialization be export-led. As indiscriminate assistance to
import substitution tends to penalize exports by encouraging inefficient
production and raising the local cost structure, industrial incentives should
in future be made more strictly dependent on minimum efficiency levels and
should be scaled down for firms producing entirely for the domestic market.
Import substitution industries should be gradually exposed to international
competition. On the other hand, the Government may wish to direct industrial
incentives more strongly towards export promotion (para. 22). Export markets
should be systematically explored and through direct negotiations with
foreign Governments, a reduction in trade barriers such as the EEC rule of
origin should be attempted. More persistent efforts to attract foreign
investors appear advisable. The political and legal affinity of the kntilles
to Holland could provide the basis for attracting investors, especially in the
light of fast increases in labor costs in the latter country. Promotion
should be extended to the rest of Western Europe and to Japan, in addition to
North America. A nationwide Industrial Development Corporation for identifica-
tion of investment opportunities in the individual islands, market research,
promotion and industrial extension could contribute considerably to further
industrial growth.
42.       The Antilles' natural constraints limit future industrial develop-
ment to activities where economies of scale are less important. In the light
of high wage costs in the Antilles, development of higher productivity/higher
technology industries for both domestic and export production should be
emphasized. For export-oriented industrial development, assembly production
of higher priced products (e.g., optical instruments) could provide favorable
prospects. While there is strong international competition, the freight
advantage resulting from the proximity of large markets in North America and
1/   As an indicator of low efficiency, nominal tariff protection for domestic-
ally produced industrial goods is close to 100%, equivalent to effective
protection of probably as high as 250%.



- 22 --
Venezuela and good external communications put the Antilles in a favorable
position for establishing export-processing zones. For expanding transit
operations in the Curacao and Aruba Free Zones into industrial processing,
present regulations which do not permit manufacturing in these zones should
be changed. Such measures are under active consideration by both Island
Governments. Production destined to the tourism sector such as handicrafts
and products required by hotels could find a growing market. Some additional
consumer goods industries for the domestic market including garments, workwear,
shoes, etc. might become feasible. Skills developed in ship repair could be
utilized in a small craft yard whose feasibility is being studied by the
Government, and in foundry operations catering to existing industries.
Cement production based on limestone deposits in the major islands might
become feasible if regional export markets were to be secured for achieving
minimum economic scale.
Construction
43.       The construction sector is potentially an important source of
employment for unskilled labor. However, the sector at present is still
weak as small firms prevail lacking the expertise and financial capacity
to undertake larger-sized projects, which are usually carried out by foreign
contractors. Construction has sharply fluctuated in recent years, mainly
because of erratic public investment. Private construction has been adversely
affected by cost increases, lack of mortgage financing, and rent controls.
Construction costs are high -- presently exceeding US$35/sq.ft. for residen-
tial construction -- and have increased by nearly 25% p.a. during 1976-78.
There is currently unemployment among construction workers in Aruba following
completion of some major hotels. In contrast, construction labor is scarce
in Curacao because workers who were absorbed in previous periods of slug-
gishness by the Island Government's housing agency are reluctant to move
back into -- more unstable -- private employment.
44.       The expansion of public investment planned over the next several
years (para. 58) is expected to result in a renewed up-turn of construction.
Further growth of the sector will depend in large measure on residential
construction. Public housing programs in Curacao and Aruba (and to a lesser
extent, in Bonaire and the Windward Islands) might offer 400-500 jobs over
the next five years or so, equivalent to about 15% of the annual increase in
the labor force. Private construction could be stimulated through improved
mortgage financing for lower and middle income housing, the lifting of rent
controls and possibly, increased property taxes on unutilized urban land.
Labor-intensive construction methods could be promulgated to the extent that
this does not lead to additional increases in construction costs. The
development of a local building materials industry would generate addi-
tional employment and save foreign exchange. A program of restoration of
historic buildings would provide opportunities for developing specialized
skills which could also find employment abroad. Expanded training in the
island governments' vocational programs and courses for site supervisors,
engineers and architects at technical colleges could contribute to allevia-
ting skill shortages. Foreign contractors participating in public sector
projects should be encouraged to train local labor and eventually, enter
into partnership with local firms.



- 23 -
Transshipment and Offshore Financing
45.       Due to their advantageous geographic position, low taxes as result
of tax treaties with the Netherlands and the U.S., 1/ the absence of foreign
exchange restrictions, and political stability, the Antilles has become
a preferred location for transshipment and offshore financing. The Govern-
ment attaches priority to further expansion of entrepot and offshore ser-
vices. Transshipment has grown because of the cost savings which temporary
storage -- and removal in small quantities -- of merchandise provides to
Latin American importers (e.g., lower financial costs because of lower prior
import deposits). Demand for location in the Curacao and Aruba Free Zones is
brisk even though nominal taxes are levied whereas operations in the much
larger free zone in Panama are tax-free. The Curacao and Aruba Free Zones
are in the process of being expanded and their transformation into export
processing zones in being considered (para. 43). However, before additional
extensions are undertaken, their feasibility should be analyzed in the light
of competing schemes in the Region. The scope for further expansion will
depend on efforts to improve organization and management of the free zones,
intensified promotion and outward-looking foreign trade relationships.
For further expansion of transshipment, the Government has decided to
containerize the Curacao and Aruba ports as part of its investment program.
Containerization appears necessary to increase efficiency of cargo handling,
secure continued service to the Antilles by major shipping lines and to allow
greater participation in transshipment to Venezuela and other countries.
46.       An estimated 6,000 offshore financial institutions are registered
in the Antilles, about 60% of which might be active and profit-generating.
Offshore companies account for over 10% of general government current
revenue but their contribution to output and employment growth has been
small as their staff consists mainly of highly qualified expatriates. Very
few local purchases are made. The increase in the number of establishments
over the next few years is expected to be as high as 15-20% p.a. but this
growth might be somewhat affected if plans to allow offshore banking in New
York City materialize. In order to preserve reputable standards of financial
institutions located in the Antilles, close auditing will also in the future
be advisable which might make it necessary for the Government to expand its
expertise in this field. The potential provided by international finance
institutions for training nationals could be more fully utilized. Beyond
that, the extremely competitive nature of offshore financing makes a cautious
approach recommendable.
1/   Offshore financial transactions (i.e., exclusively carried out with
nonresidents) in the Antilles are liable to a 2.4-3% profits tax.
As result of the tax treaty with the Netherlands, there is no with-
holding tax on dividends paid to an Antilles parent company. The
tax treaty between the U.S. and the Netherlands, which also covers
the Antilles, conveys advantages for income received from interest
and royalties. Finally, the absence of capital gains taxes favors
companies undertaking real estate investment abroad.



- 24 --
IV. FINANCING DEVELOPMENT
1. Private Sector Financing
47.       Whereas substantial external financing is expected to be available
in the future, increased national savings are necessary to support higher
levels of investment. In recent years, financial savings of the private
sector with the banking system and other financial intermediaries have
increased significantly but because of the absence of a domestic capital
market and comparatively low interest rates, financial institutions have
invested the larger share of their funds abroad. Little term credit has been
made available from local sources for financing private investment especially
to smaller and newly established firms.
48.       For term financing to play a more active role, sound domestic
investment opportunities will be needed. Once investment opportunities
become available, financial institutions will need encouragement through the
Government to move into private investment financing. Term lending by
commercial banks could be facilitated through a guarantee fund and/or redis-
count facilities with the Central Bank. Selective relaxation of liquid asset
requirements (e.g., with regard to term and savings deposits) could also
increase the availability of funds. The establishment of a development bank
planned for 1979 and to be geared towards projects in manufacturing, tourism,
commerce and agriculture, will contribute considerably to channeling financial
resources into productive investment, improving project preparation, and thus,
to increasing the absorptive capacity of the economy for external funds. The
development bank's project preparation unit could also lend its services to
commercial banks prepared to enter into project financing. To assist in
safeguarding the solidity of the new institution, the Central Bank is expected
to play a leading part in its establishment and supervision. Issue of mortgage
bonds as already undertaken in Aruba could tap resources of individual savers
for financing private construction.  While mortgage financing tends to be
restricted primarily to middle- and higher income housing, it seems appropriate
for the Government to devise schemes for channeling private financing into
lower income housing as well.
49.       Once appropriate instruments for domestic financing of private as
well as public sector capital requirements are established, statutory require-
ments which oblige institutional investors including government pension funds
to invest a substantial proportion of their funds abroad could be lowered.
These institutions could then be encouraged to repatriate some of their
funds, provided that domestic savings instruments are competitive with those
abroad in terms of risk and interest earnings.
2. Public Sector Financing
50.       For supporting private sector expansion, growing public invest-
ment and strengthened public finances are required. Public savings should
make a meaningful contribution to financing government investment. The



- 25 -
Central Government is aware of the need for more disciplined public
finances for attaining a lasting improvement of the balance of payments
and enhancing the viability of the economy. However, since it controls only
about 25% of current revenue and some 30% of current expenditure of the
government sector, its impact is limited. In reaction to the deterioration
in the fiscal and balance of payments position which occurred in 1978,
the Central Government took measures in early 1979 including increases in
import duties, excises and non-tax revenues and restrictions in personnel-
related expenditures which are expected to produce additional resources
of NAf 16 million, equivalent to about 1% of GDP. In an attempt to break the
fiscal stalemate resulting from the breakdown of the revenue sharing system
(para. 8), the Central Government is proposing to increase the proportion of
revenues allocated to the Island Governments which the latter have accepted
in principle. 1/ With the aim of controlling public expenditures more
effectively, the Central Government is also studying the possibility of
introducing expenditure guidelines for its own agencies as well as the
Island Governments. On the island level, public utility rates have been
substantially increased. Utilities and public housing agencies are in the
process of being changed from government departments into semi-autonomous
public corporations with the aim to be developed into financially viable
institutions and at a later stage, surplus labor in these entities is
to be released. On the other hand, the Central Government has decided to
reduce personal income tax rates in 1979, retroactive in 1978, in view of the
fact that nominal rather than real income growth shifted many taxpayers into
higher brackets.  The reduction in personal income taxes will partly pre-
empt the revenue gain associated with the fiscal measures taken in early
1979.
Current Expenditures
51.       A solution of the fiscal problem requires first and foremost
a sharp curtailment in current expenditure growth. For this purpose, plan-
ning and control of public expenditures should be considerably strengthened.
In estimating the country's future capital requirements, it has been assumed
that nominal increases in current expenditure in 1979-83 will not be much
above 9% p.a., i.e. less than 1.5% p.a. in constant prices. This implies
that real increases in personnel-related outlays be held at about 2% p.a.,
which should include improved remuneration for higher level civil servants.
Purchases of goods and services should be limited to requirements for
adequate functioning of public administration and maintenance of the capital
stock. There is scope for reducing transfers to the private sector and
smaller islands. Especially St. Martin could in due course become financially
self-sustaining if it were to develop its tourism-based revenue potential.
Subsidies to public utilities should be gradually phased out as tariffs
are set at more appropriate levels. On the other hand, interest payments are
likely to increase in line with increased borrowing and hardening of loan
terms (para. 63) and future investment will have implications on current
expenditures as well.
1/   According to the Central Government's proposal, the Island Governments'
share in income and profits taxes would be increased from 65% to 75%
and in other taxes, from 45% to 50%.



- 26 -
Current Revenues
52.       For attaining adequate growth of current revenues, the revenue
base has to be broadened and the tax system be made more elastic with regard
to income and price changes. Over the 1979-83 period, revenue increases
of at least 12.5% in current prices (1.1 times GDP growth) are required for
attaining a sustainable fiscal position in the medium to long term. Because
of the narrow economic base, the scope for higher revenue might primarily
depend on output and income growth and increases in tax rates. Nevertheless,
while further study would have to be made before the following measures could
be introduced, revenue would be increased by: (i) increasing personal
income taxation through reducing personal allowances; 1/ (ii) improved collec-
tion of profits taxes; (iii) more realistic assessment of land taxes, account-
ing more fully for the increase in land values; (iv) establishing gasoline
taxes at least at their pre-1974 level 2/ and higher motor vehicle taxes which
could contribute to energy conservation; (v) increases in customs duties
especially for consumer durables and luxury goods; (vi) introduction of a
moderate sales tax; (vii) raising fees for government services to more realis-
tic levels and more stringent collection of these fees; and (viii) improving
tax administration so as to reduce tax evasion. 3/ The Government has been
reluctant to increase taxation on consumption which it considers inflationary
and potentially harmful to tourism. The average incidence of customs duties
on imports in 1977-78 was just around 4%. As there are high mark-ups for
imported goods, the commercial sector would probably be in a position to
absorb part of increased consumption taxes.
53.       In addition to broadening the revenue base, firm adherence to the
tax sharing agreements between the Central and Island Governments is needed
for stabilizing the fiscal position on both levels of Government. The
authorities might also wish to consider further improvements in the tax
sharing agreements. In order to introduce more flexibility for meeting
legitimate revenue requirements of the Island Governments, some inter-island
variation in tax rates (e.g., for excises and other consumption taxes) could
be permitted. To make the system of revenue sharing workable, prudent
expenditure policies on part of the participating Governments are as much
required as appropriate sharing of receipts.
54.       Together with the revenue measures taken in early 1979, new taxes
and increased tax rates as indicated above are projected to generate addi-
tional revenue equivalent to 2.5% of GDP during the 1979-83 period. The
1/   The top rate of personal income tax is 57.8% levied on an annual income
of 100,000 NAf. The total number of taxpayers amounts to less than
50,000.
2/   Gasoline taxes were substantially reduced in 1974 to cushion the impact
of the international oil price increases on the domestic consumer.
3/   Since this report was prepared, the Government has implemented a number
of these measures, including an increase in import duties, and an
increase in a number of excise and stamp taxes.



- 27 -
share of General Govermment current revenue in GDP would slightly increase to
38.4% by 1983, up from an estimated 37.6% in 1978. Revenues from the non-
petroleum sector alone would increase from 37.5% of estimated nonpetroleum
GDP in 1978 to 40.5% by 1983. While these taxation levels are necessary to
attain a lasting improvement of public finances in the light of high and
rigid expenditure levels, they might approach limits of fiscal burden which
the private sector is prepared to accept. For keeping future revenue needs
in check, firm controls over non-essential Government expenditures are an
important requirement.
Public Sector Savings
55.       A public sector current deficit equivalent to 2.5% of GDP (2.7%
for the General Government alone) is likely to occur in 1979 despite recent
fiscal measures, primarily because of the effect of reduced personal income
taxes on revenue growth. Provided that the proposed revenue measures are
taken by 1980 at the latest, current expenditure controls are firmly enacted
and the newly established public enterprises are put on a sound financial
footing, gradually growing public savings are projected to be generated from
1980 onwards, reaching 3.7% of GDP for the General Government and 3.9% of
GDP for the overall public sector, respectively, by 1983.
Public Investment and its Financing
56.       Capital expenditure of the public sector was maintained at about
4.5-6% of estimated GDP over 1974-78. Well over 60% of capital expenditure 1/
have been financed from abroad, essentially through grants and concessionary
loans from the Netherlands (within the framework of five-year aid programs)
and the EEC. In many cases, foreign financing covered 100% of project
costs. Paucity in project preparation after termination of the most recent
five-year aid program in 1976 slowed down capital expenditure in 1977-78.
The Government is in the process of preparing a new five-year investment
program for submission to the Netherlands to be completed by 1980. In the
meantime, the authorities are submitting requests for project financing to
the Netherlands and the ECC on an ad hoc basis.
57.       Based on projects under consideration by the Central and Island
Governments including financial investment related to the establishment of
the development bank, public capital expenditure as envisaged by the Govern-
ment totals nearly NAf 760 million in current prices in 1979-83. In constant
prices, this investment level would be about 45% above the 1974-78 total. In
the past, public investment was heavily concentrated in infrastructure and
social sectors with a relatively small share allocated to directly productive
sectors (Table 4). Over the next five years, basic infrastructure accounts
for over one-half of planned capital expenditure, an increase over their
1974-78 share (48%). This includes large-scale power and water projects,
1/   This includes outlays for equipment purchases, expenditures for general
developmental purposes etc. which are not investment expenditures in
the strict sense.



- 28 -
sea and airport expansion to handle increased flows of tourists, and improve-
ment of the telephone system, to be carried out by newly created Government
corporations. An increased share is also allocated to industry, commerce,
and tourism. Housing continues to account for around 10% of planned public
investment and an enlarged share has been allocated to community projects.
On the other hand, education and training accounts for a lower proportion
than in past years which is not in accordance with the importance of this
sector a long-term solution to unemployment.
58.       In order for public investment to correspond more closely to
the development requirements of the economy on the one hand and the public
sector's financial capacity, on the other, some restructuring and stream-
lining of the capital expenditure program might be appropriate. Priority
should be given to strengthening the export capacity of the economy. Further
improvements in the productive infrastructure through investment in energy,
water and telecommunications would facilitate location of export-oriented
activities. However, some projects envisaged in these sectors might be
scaled down or postponed without affecting the productive capacity of the
economy over the medium term. Increased expenditure on secondary and
technical education and vocational training is required to upgrade the
productivity on the labor force. On the other hand, expenditures in social
sectors not directly related to alleviating poverty should be postponed until
a lasting improvement in public finances is achieved. Given the relatively
high income levels in the Antilles, it appears feasible that a larger share
of expenditures in housing and other social and community programs be financed
by the beneficiaries themselves.
59.       In the past, higher than required standards were chosen for a
significant portion of investment projects. In preparing the public
investment program, stricter criteria for economic feasibility of projects
should be applied and least cost solutions be chosen. Cost efficiency of
public investment could be enhanced through international competitive
bidding for projects whose financing is prcvided through untied capital
aid.
60.       Based on these modifications, the public investment program for
1979-83 is projected to total NAf 678 million in current prices (US$377
million equivalent). Its foreign exchange component is estimated to be
close to 75%. External sources are expected to finance an even larger
share of capital expenditure than in the past. Disbursements of loans and
grants in 1979-83 net of loan amortization are projected to total NAf 453
million (US$251 million equivalent) 1/ and to finance two-thirds of public
capital expenditure, up from 60.6% financed during 1974-78. Public savings
including capital revenues would meet 26.52 of capital expenditure in 1979-83
compared to 8% in 1974-78.  The remainder would have to be provided through
1/   On a gross basis, external capital inflows in 1979-83 are projected to
total NAf586 million (US$325 million), up from NAf284 million in 1974-78.



- 29-
Table 4: PUBLIC SECTOR INVFSTMENT AND FINANCING
1974-78 AND 1979-83 (PROJECTED)
(Current NAf Millions and Percent)
1974-78                        1979-83
______________   LOVt  Est-imate        ixtission hSttmAtE-
NAf mn      ZNAf mn   __                   NAf mn       %__
TOTAL INVESTMENT         400.4      1lq,QJ-    758.0    100.0         678.0     100.0
Agriculture                ..0.9                 12.4       1.6       12.4         1.8
Industry & Commerce        ..4.4                 73.3       9.7       73.3         9.2
Tourism                    ..3.0                 52.7       7.0       52.7         7.5
Transport & Commu-
nications               ..27.5               209.4      27.6      185.0       28.1
Energy                     ..12.6               134.3      17.7      120.0       19.1
Water & Sewerage            ..7.5                47.0       6.2       40.0         6.7
Education & Training       ..13.7                50.6       6.7       96.0       13.7
Housing                    ..11.4                74.9       9.9       40.0         5.7
Health                     ..3.6                  8.5       1.1        8.5        1.2
Community Services         ..2.6                 49.3       6.5       10.0        1.4
Unidentified               ..12.8                45.6       6.0       40.0        5.6
FINANCED BY:
External $ources  242.5  60.6                      ~~452.5    66.7
Externa  Sourcs   242.        Ł06254.3   (37.5)
198.2   (28.1)
Disbursements            283.6                                       585.8
olw Loans               (137.7)                                     (343.3)
Grants              (145.9)                                     (242.5)
Netherlands              245.1                                       311.5
EEC                       38.0                                        60.0
Suppliers                  0.5                                       142.6
Unidentified               --71.7
Amortization              41.1                                       133.3
117.2
16 .1
Domestic Sources         157.9       39.4                            225.5       33.3
Public Sector Surplus   32.4         (8.0)                           179.7      (26.5)
Domestic Borrowing       102.4      (25.6)                            45.8       (6.8)
Other  bI                 23.1       (5.8) 
a! Breakdown corresponds to 1975-78 period.



- 30 -
domestic borrowing. While borrowing from the banking system is likely to be
important in the years immediately ahead it is assumed that a growing propor-
tion of the public sector's financing requirements will be met through market
borrowing. This is contingent on a more solid fiscal position to secure
acceptance of government securities by the general public.
External Aid
61.       Since the early 1960s, soft loans and grants from the Netherlands
and the EEC have sustained public investment and have provided important
balance of payments support. On a gross basis, disbursements during 1974-78
have totalled US$155.5 million, equivalent to per capita aid flows of US$128
p.a., which are among the highest in the world. Over the next five years,
the Netherlands and EEC are prepared to make even larger amounts of aid
available (i.e., about US$80 million p.a. from the Netherlands, US$8 million
p.a. from the EEC). Of future Dutch aid, the proportion given through
grants will be increased from about 40% to 50%. For educational and social
projects, 75% grant financing is available from a separate fund. At the same
time, the Netherlands has introduced important changes in its aid policy for
the Antilles which in effect make drawings on Dutch aid more difficult,
viz:
(a) Aid is now granted on a project--by-project basis instead of
program-type allocations as under previous five-year aid agree-
ments for which drawing arrangements were more flexible;
(b) Financing of projects in other than directly productive sectors
(e.g., basic infrastructure) is to be reduced as the Antilles
is already relatively well served with infrastructure facilities;
(c) Financing of tourism (which is not considered a productive sector)
has been discontinued;
(d) The contribution to financing larger scale projects (e.g., public
utilities) has been reduced, with the balance to be provided
through conventional loans and domestic sources.
62.       As a result of these modifications, a growing proportion of the
public sector's external capital requirements will have to be mobilized
through harder term loans. The share of concessionary aid from the Nether-
lands is expected to shrink to 53% of capital aid received in 1979-83 and
that of the EEC, to 10% compared to 86.5% and 13.4%, respectively, in 1974-78.
Suppliers' credits, which were virtually non-existent until 1978, are pro-
jected to provide over 24% of external capital disbursements to the public
sector. About US$40 million, equivalent to some 12% of external capital
requirements of the public sector in 1979-83, would have to be mobilized
from hitherto unidentified sources, probably on conventional terms.



31 -
Absorptive Capacity and Technical Assistance Requirements
63.       In order to utilize available capital aid, project preparation
and implementation in the productive sectors of the economy have to be
substantially strengthened. The absorptive capacity has been restricted by
institutional weaknesses and lack of experienced personnel for preparation
and implementation of projects. Technical assistance has been provided
by the Netherlands and UNDP but its effectiveness has often been impaired by
the lack of suitable local counterpart staff. With gross external capital
requirements for the public sector totalling around US$325 million in 1979-83,
disbursements of only US$200 million can be expected for projects that are
presently reasonably well prepared for securing aid commitments. In order to
mobilize additional disbursements of US$125 million, financing commitments of
about US$190 million have to be obtained by 1981 at the latest. Increased
amounts of local counterpart funds will be required to match available
capital aid which reinforces the need to increase public sector savings
and to establish domestic borrowing for development projects.
64.       With the aim of accelerating project preparation and increasing
absorptive capacity, the Central Government is trying to secujre technical
assistance in a number of areas including national accounting, studies on
natural resource-based industrial projects, inter-island transport, and
indigenous energy resources (Annex). For enhancing the effectiveness of
its development policies, the Government might wish to secure as a matter
of priority additional technical assistance in the following areas:
(i) Nationwide surveys of natural resources to establish more
clearly the development potential of the individual islands;
(ii) Surveys of productive sectors especially tourism and
manufacturing to identify development constraints, options
and requirements;
(iii) Development planning, including planning of public
investment on the national level;
(iv) Tax reform and budget control;
(v) Administration of public enterprises;
(vi) Inter-governmental fiscal relations.
3. Balance of Payments and External Debt
65.       Increased long-term viability of the economy depends to a signi-
ficant agree on a lasting improvement in the balance of payments. Since
there are indications that external capital requirements beyond a certain
magnitude could only be met through hard-term borrowing, a strengthened
current account position is required. Growth of merchandise and non-factor



- 32 -
service exports should therefore be brought: into line with increases in
imports. Since faster economic growth can be expected to result in an
acceleration of import growth of investment goods and of current inputs for
export sectors, a key requirement for successful balance of payments manage-
ment consistent with higher growth levels is to limit increases in consumer
goods imports for domestic consumption through appropriate fiscal, monetary
and incomes policies. Overall import growth over the 1979-83 period should
not be much more than 13% p.a., 1.25 times GDP growth.
66.       Exports of goods and non-factor services during 1979-83 are pro-
jected to grow by 12.6% p.a. Net of petro]Leum products, export growth is
projected at 15.8% p.a., 1.4 times the increase of non-petroleum GDP. There
is scope for faster growth of nonpetroleum merchandise exports if industrial
export processing can be developed and resource-based activities in mining
and agriculture are expanded. Depending on ship movements, bunker fuel sales
are likely to continue to increase significantly but further volume declines
in other petroleum product exports might be unavoidable. Tourism growth in
the short term might be somewhat below the very high rates attained in recent
years especially if the U.S. economy were to slow down in 1979-80. Beyond
that, growth prospects for tourism are good if hotel capacity is expanded
(para 35). For attaining an improvement in the current account position of
the balance of payments, net outflows on factor service and transfer account
should grow less rapidly than in the past. This would be the case if factor
service payments by the petroleum refining sector were to decline.  Based on
the Mission's assumptions, the current account deficit is projected to
decline from 3.3% of GDP estimated in 1978 to 2.5% in 1983.
67.       Gross external capital requirements during 1979-83 for financing
current account deficits, public debt amortization and re-establishing
foreign exchange reserves at 2.7 months of imports by the end of the 1979-83
period to avoid high vulnerability to unexpected shifts in international
payments are projected to total US$465 mil:Lion (Table 5). Disbursements
of loans and grants to the public sector are assumed to meet 70% of these
requirements, compared to 39% in 1974-78, which indicates the growing import-
ance of public investment and the greatly dliminished role of petroleum-related
foreign investment. The need for resource mobilization of this magnitude
through the public sector underlines the irmportance of broadening the absorp-
tive capacity for external financing of projects. Direct investment and
long-term private loans combined are projected to provide 27% of gross
capital requirements in 1979-83. External private capital is expected to be
mainly allocated to investment in tourism and manufacturing and some mainten-
ance investment in oil refining. Short-term capital flows are projected
to cover a much reduced share of external capital requirements.



- 33 -
Table 5:  GROSS EXTERNAL CA-PITAL REQUIREMENTS, 1974-78
AND 1979-83 (PROJECTED)
(Current US$ million)
1974-78          1979-83
Gross External Capital Requirements                402.6           465.6
Current Account Deficit                           -359.8          -203.8
Public Debt Amortization                           -22.7           -74.0
Accumulation of International Reserves             -20.1          -187.7
Financed by:
Direct Foreign Investment a/                        74.8            82.5
Long-term Private Capital b/                        93.3            43.0
Short-term Capital c/                               78.1            14.7
Public Sector Capital                              156.4           325.4
Loan Disbursements                                 (75.8)         (190.7)
Grant Disbursements                                (80.6)         (134.7)
a/   Net of portfolio investment abroad.
1b/   Including banking system.
c/   Including errors and ommissions.
Source: Tables 3.1;3.4 of Statistical Appendix.
External Debt
68.       The Antilles' external public debt outstanding and disbursed  by
end-1977 amounted to US$246 million, equivalent to 33.5% of estimated GDP.
It consists almost entirely of loans from the Netherlands, most of them on
concessionary terms (i.e., 2.5% interest, repayment over 30 years including
10 years grace). Despite the high level of external public debt relative to
GDP, the debt service has been low even after amortization payments increased
as result of expiration of grace periods and of exchange rate movements: it
amounted in 1977 to 2% of goods and nonfactor service exports net of
investment income abroad. Since a large proportion of future external
financing requirements of the public sector is expected to be met through
grants, the outstanding debt is projected to increase relatively moderately
to US$370 million by 1983 and decline as a proportion of GDP (to below 25%)
by the same year. Even with significant hard-term borrowing the service on
external public debt is projected to be only 3% of net exports by 1983.
Despite low debt service, the scope for increasing external borrowing much
beyond the indicated levels to accelerate economic growth is limited by



- 34 -
constraints on absorptive capacity, uncertainties about the Government's
development policies, and weaknesses in public finances and in the balance of
payments expected to prevail at least in initial phases of the 1979-83
period. Once policies conducive to enhanced economic viability including
improved project preparation and implementation are firmly implemented and a
lasting improvement in the fiscal and balance of payments position is achieved,
the Antilles can be expected to increasing:Ly shift to external borrowing on
harder te'rms.



- 35 -
ANNEX
Technical Assistance Requirements indicated by the
Netherlands Antilles Government
During the mission's stay in the Netherlands Antilles, the General
Government indicated technical assistance requirements in the following areas:
1.        Establishment of a system of national accounts.
2.        Improvement of sea transport especially for cargo between the
individual islands and between the Netherlands Antilles and the
South American continent.
3.        Assessment of the feasibility of cement production including the
optimum location of such production.
4.        Assessment of possibilities for industrial processing of solar
salt produced in Bonaire.
5.        Assessment of possibilities for industrial processing of phosphate
mined in Curacao.
6.        Assessment of possibilities for utilization of clay for building
materials.
7.        Analysis of the potential for geothermal energy on the island of
Saba.



- 36 -
STATISTICAL AP:PENDIX
Table No.
I. POPULATION, LABOR FORCE AND INCOMES
1.1       Population Trends, 1972-77
1.2       Population by Age and Sex, 1972-1977
1.3       Estimated Labor Force and Participation Rates, 1972-77
1.4       Estimated Labor Force and Employmnent, 1972-77
1.5       Projected Population and Labor Force, 1978-88
1.6       Monthly Income Data, 1972
II. NATIONAL ACCOUNTS
2.1       Gross Domestic Product by Industrial Origin, 1972-78
2.2       Implicit Deflators, 1972-77
2.3       Expenditure on Gross Domestic Product, 1972-78 (Current Prices)
2.4       Expenditure on Gross Domestic Product, 1972-78 (1972 Prices)
2.5       Projected Expenditure on Gross Domestic Product, 1973-83
III. BALANCE OF PAYMENTS
3.1       Balance of Payments, 1972-78
3.2       Merchandise Trade by Commodity Groups, 1972-77
3.3       Composition of Merchandise Imports, 1972-77
3.4       Direction of Trade, 1972-77
3.5       Projected Balance of Payments, 1979-83
IV. PUBLIC DEBT
4.1       External Public Debt and Service on External Public Debt, 1972-78
4.2       Projected External Public Debt and Service on External Public Debt,
1979-83
V. PUBLIC FINANCES
5.1       Sources and Uses of Funds, Consolidated Public Sector, 1972-78
5.2       Consolidated Finances of Central Government and Island Governments
of Curacao and Aruba, 1972-78
5.3       Current Rvenues of the Central Government and Island Governments
of Curacao and Aruba, 1972-77
5.4       Finances of ALM, 1973-78
5.5       Projected Sources and Uses of Funds, 1079-83
5.6       Projected Revenues of the Central and Island Governments, 1979-83
5.7       Projected Central and Island Governments Current Expenditure, 1979-83
5.8       Public Sector Investment Program/Summary, 1978-83
5.9       Public Sector Investment Program/Financed Projects, 1978-83
5.10      Public Sector Investment Program/New Projects, 1978-83



- 37 -
VI. MONEY AND CREDIT
6.1       Summary Accounts of the Banking System, 1974-June 1978
6.2       Deposits of the Island Governments of Curacao and Aruba with
the Banking System, 1972-78
6.3       Interest Rates, 1973-June 1978
6.4       Loans of the Banking System to the Private Sector, 1975-76
VII. SELECTED SECTORAL STATISTICS
7.1       Petroleum Product Exports, 1973-78
7.2       Tourism Data, 1972-June 1978
VIII. PRICES AND WAGES
8.1       Consumer Price Indices, 1972-March 1978
8.2       Annual Changes in Wage Rates, 1974-77 and 1978
8.3       Weekly Wage Rates in Curacao, Aruba and Selected Caribbean
Countries, 1975-77



-38-
Table 1.1: NETHERLANDS ANTILLES - POPULATION TRENDS, 1972-77
('000)
1972        1973        1974         1975        1976        1977
Population - Beginning of Year   228.2           230.8       234.4        236.8       239.8       242.8
Natural Increase                       4.0         3.5          3.2         3.1         3.0          2.9
Births                              (5.2)       (4.6)       (4.4)        (4.3)       (4.2)        (4.2)
Deaths                            (-1.2)       (-1.1)      (-1.2)       (-1.2)      (-1.2)      (-1.3)
Net Migration                         -1.4         0.1        -0.8         -0.1         --         -0.5
Population - End-Year                230.8       234.4       236.8        239.8       242.8       245.2
Percentage Change
Natural Increase                       1.7         1.5         1.4          1.3         1.3          1.2
Birth Rate                          (2.2)       (2.0)       (1.9)        (1.8)       (1.8)        (1.7)
Death Rate                         (-0.5)      (-0.5)      (-0.5)       (-0.5)      (-0.5)      (-0.5)
Net Migration                         -0.6         0.1        -0.4          --          --          -0.2
Population Growth                      1.1         1.6         1.0          1.3         1.3          1.0
Source: Bureau of Statistics



- 39 -
Table 1.2:   NETHERLANDS ANTILLES - POPULATION BY AGE AND SEX, 1972; 1977
('000)
Netherlands Antilles                                                   Windward
Age Groups           Total       Male       Female        Curacao      Aruba      Bonaire       Islands
1972
0-14                87.7        45.0        42.7           58.0       22.3          3.2          4.2
15-19                25.6        13.1        12.5            16.7        7.3         0.7          0.9
20-24                19.4         9.6         9.8            12.5        5.3         0.5          1.1
25-29                16.7         7.8         8.9           10.8        4.3          0.6          1.0
30-44                38.5        18.4        20.1           24.5       11.1          1.2          1.7
45-49                 9.1         4.5         4.6             6.0        2.4         0.3          0.4
50-54                 7.8         3.7         4.1             5.1        2.0         0.3          0.4
55-59                 6.8         3.2         3.6        8(               .           .            .
60-64                 6.7         3.2         35              8.3        3.9         0.5          0.8
65 and over          12.5         5.1         7.4             8.1        2.7         0.9          0.8
TOTAL               230.8       113.6       117.2           150.0       61.3         8.2         11.3
1977
0-14                74.2        37.5        36.7           50.1       16.5                7.6
15-19                29.5        14.9        14.6            19.2        8.1               2.2
20-24                25.3        12.5        12.8           15.6         7.5               2.2
25-29                21.6        10.6        11.0           13.5         5.7               2.4
30-44                47.1        22.5        24.6            29.4      13.3                4.4
45-49                11.2         5.5         5.7             7.1        3.3               0.8
50-54                 8.7         4.3         4.4             5.6        2.4               0.7
55-59                 7.5         3.6         3.9             4.8        2.0               0.7
60-64                 6.6         3.1         3.5             4.0        2.0               0.6
65 and over          13.5         5.6         7.9             9.6        2.0               1.9
TOTAL               245.2       120.1       125.1          158.9       62.8               23.5
Source: Bureau of Statistics.



- 40 -
Table 1.3:  NETHERLANDS ANTILLES - ESTIMATED LABOR FORCE AND PARTICIPATION RATES, 1972-77
1972
Labor Force                   Participation Rate
Age Group           Total      Male      Female              Male      Female
15 - 19              8.5       4.6        3.8               35.1       30.4
20 - 24             14.2       7.9        6.3               82.3       64.3
25 - 29             11.3       6.9        4.4               88.5       49.4
30 - 34              9.0       6.1        3.0               88.4       40.0
35 - 39              8.0       5.6        2.4               88.9       34.3
40 - 44              6.4       4.7        1.7               90.4       30.4
45 - 49              5.2       3.9        1.3               86.7       28.3
50 - 54              4.0       3.1        1.0               83.8       24.4
55 - 59              3.1       2.4        0.8               75.0       22.2
60 - 64              2.0       1.5        0.4               46.9       11.4
Total               71.7      46.7       25.0               73.5       37.3
1977
15 - 19             10.0        5.3       4.7                35.7      32.2
20 - 24             19.1       10.5       8.6                84.0      67.2
25 - 29             15.0        9.3       5.7                87.7      51.8
30 - 44             29.0       19.9       9.1                88.4      37.0
45 - 49               6.3       4.7       1.6                85.5      28.1
50 - 54               4.6       3.5       1.1                81.3      25.0
55 - 59               3.6       2.7       0.9                75.0      23.1
60 - 64               1.9       1.4       0.5                45.2      14.3
Total               89.5      57.3       32.2                74.4      40.0
Source: Bureau of Statistics, Bank of the Netherlands Antilles, Mission Estimates.



- 4 1 -
Table 1.4: NETHERLANDS ANTILLES - ESTIMATED LABOR FORCE
AND EMPLOYMENT, 1972-77
(?000)
1972     1974      1975      1977
Total Labor Force                                71.7      76.3     78.5      89.5
Total Employed                                   65.6      66.9     66.3      75.3
Agriculture and Fishing                        C.T4/    1.1a/    l.O5/     0.8
Mining                                         *-                           0.4
Oil - Refining                                 4.8       4.4      4.1       4.1
Manufacturing                                  6.8       *-       6.0       5.7
Electricity, gas, and water                    1.2a/    1.2a/    1.2a/    1.3
Construction                                   5.8      5.5       5.0       5.9
Hotels, Restaurants etc.                       6.8       7.4       7.9      8.0
Trade                                         12.0     12.5      12.4      13.8
Transport, Storage and Communication          (7.8      8 3       8         4.8
Financing, Insurance and Business Services (            (        (          8.3
Public Administration                         11.5     12.8      13.5      16.7
Other Services and Activites not
Adequately Defined                           7.8     13.7      6.7        5.5
Total Unemployed                                  6.1       9.4     12.2      14.2
Unemployment as % of Labor Force                  8.5      12.3     15.5      15.9
a/ Mission estimate.
Source: Bank of the Netherlands Antilles, Department of Statistics
Note:   The 1977 data, which represent the most detailed investigation into the
Netherlands Antilles employment situation, are not fully comparable with
an earlier study from which 1972 and 1975 data are taken as the 1977 data
are based on a wider definition of labor force and employment.



- 42 -
Table 1.5: NETHERLANDS ANTILLES - PROJECTED POPULATION AND LABOR FORCE, 1978-88
('000)
Est.
1977                            1978                             1983                               1988
TOTAL    Male    Female         TOTAL   Male    Female          TOTAL    Male    Female           TOTAL     Male    Female
POPULATION
TOTAL            245.2    120.1   125.1           248.9   122.8   126.1           267.7    131 6    136.0           286.9    141.3    145.6
Ages 0-14         74.2      37.5    36.7           74.8    38.0    36.8            73.9      37.6    36.3            76.2       38.7    37.5
15-19         29.5      14.9    14.6           30.0    15.1    14.9            26.1      13.2     12.9           24.6      12.4    12.2
20-24         25.3      12.5    12.8           26.8    13.4    13.4            29.9      15.1     14.8           26.0      13.2      12.8
25-64        102.7      49.6    53.1          102.4    49.2    53.2           120.9      58.6    62.3           141.6      49.0      72.6
65 +          13.5       5.6      7.9          14.9      7.1      7.8          16.8       7.1      9.7           18.5        8.0    10.5
LABOR FORCE
TOTAL             89.5      57.3    32.2           91.2    58.4    32.8           109.3      71.8     37.5          121.6       81.4    40.2
Ages 15-19        10.0       5.3      4.7          10.2      5.4      4.8           9.5       5.0      4.5            9.2       4.8       4.4
20-24       19.1      10.5      8.6          20.4    11.4       9.0          23.5      13.6      9.9           20.7       12.1      8.6
25-64       60.4      41.5    18.9           60.6    41.6    19.0            76.3      53.2     23.1           91.7       64.5     27.2
Source  Bureau of Statistics:  Berekeningen omtrent  de toekonstige bevalkingsg-oei van Aruba en Curacao in de periode
1974-2000; Mission estimates.



-- 43 -
Table 1.6: NETHERLANDS ANTILLES-MONTHLY INCOME DATA, BY SOURCE, 1972
(NAf)
Income Source &           Less than   NAf350-       NAf650-       Over
No. of Recipients           NAf350         650        1,000     NAfl,000    Total
Wages & Salaries            29,863      16,716        6,635       6,264     59,478
Capital Income                 607         324          173         349      1,453
Pensions & Social
Security                     339        177            42         48         606
Other Transfer Income           66          22           39           5        132
Income Received from
Family Members               519         203           67        116         905
Total                       31,394      17,442        6,956      6,782      62,574
Source: Bureau of Statistics.



- 44 -
Table 2-1: NETHERLANDS ANTILLES - GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN, 1972-78
(Current and 1972 NAF millions)
Estimated
1972       1973        1974        1975        1976        1977        1978
Current NAF millions
GDP at Market Prices                         793.6       884.7    1,057.4    1,096.7    1,163.4    1,319.5    1,555.8
Agriculture and Fisheries                     15.7        18.0        16.2        18.3        18.2        25.5        27.2
Mining                                         5.4         7.1        22.1        16.4        10.2        10.5        14.4
Petroleum Refining                           214.4       245.1       256.3       201.2       193.2       196.2       212.0
Manufacturing                                 57.5        64,1        77.1        92.3       102.2       114,5        130.6
Construction, Trade, Financial
Intermediation                              236.5       240.1       322.2       346.3       369.2       427.0       508.6
Tourism                                       99.0       126.0       137.4       156.8       177.4       208.8       259.3
Electricity, Water, Transport                 30.3        33.3        39.2        43.2        48.2        53.6        65.0
General Government                           127.0       142.5       176.5       211.2       233.4       270.7       312.3
Other                                          7.8         8.5        10.4        11.0        11.4        12.7        14.1
1972 NAF millions
GDP at Market Prices                         793.6       852.2       842.2       807.4       832.1       872.1       939.5
Agriculture and Fisheries                     15.7        15.7        10.6        11.1        10.5        14.0        14.0
Mining                                         5.4         6.7         6.7         4.1         4.5         5.2          6.2
Petroleum Refining                           214,2       255,0       220.6       174.2       175.5       162.7       167.4
Manufacturing                                 57.5        60,3        65.4        70.0        73.5        78.0        82.4
Construction, Trade, Financial
Intermediation                              236.5       222.1       240.8       237.5       238.2       249.1       262.8
Tourism                                       99.0       119.1       118.0       123.2       132.4       147.9       177.5
Electricity, Water, Transport                 30.3        33.3        35.2        37.8        40.9        43.6        46.0
General Government                           127.0       131.8       136.6       141.5       148.5       163.1       174.5
Other                                          7.8         8.2         8.3         8.0         8.1         8.5          8.7
Note:  There exist  only National Accounts (on an income basis) for the years 1972-74.  The Mission has therefore
estimated value-added growth of major productive sectors based on sectoral volume and price indicators.
Source: Department of Statistics; Bank of the Netherlands Antilles; Mission estimates.



- 45 -
Table 2.2:   NETHERLANDS ANTILLES-IMPLICIT DEFLATORS, 1972-78
(1972 = 100.0)
Est.
1972       1973       1974       1975       1976       1977       -;'78
GDP at Market Prices                    100.0      103.8      125.6      135.8      139.8      151.3      165.6
Agriculture and Fisheries               100.0       114.9     153.2      164.9      173.1      182.6      194.5
Mining                                  100.0       106.0     329.9      400.0      226.7      202.0      232.8
Petroleum Refining                     100.0         96.1     116.2      115.5      110.2      120.6      126.6
Manufacturing                           100.0       106.3     117.9      131.9      139.0      146.8      158.5
Construction, Trade, Financial
Intermediation                        100.0       108.1      133.8      145.8      155.0      171.5      193.6
Tourism                                 100.0      105.8      116.4      127.3      134.0      141.2      152.5
Electricity, Water, Transport          100.0       100.0      111.4      114.3      117.8      122.9      141.4
General Government                     100.0       108.1      129.2      149.3      157.2      165.9      179.0
Other                                  100.0       103.1      125.8      137.5      141.5      150.0      162.0
Source:  Department of Statistics; Mission estimates.



- 46 -
Table 2.3: NETHERLANDS ANTILLES - EXPENDITURE ON GROSS DOMESTIC PRODUCT, 1972-78
(Current NAf Millions)
Estimated
1972          1973          1974           1975          1976           1977           1978
GDP at Factor Cost                          72b.0         812.7          981.9       1,027,5        1,087.0       1,237.2        1,452.5
Net Indirect Taxes                        67.6          72.0           75.5          69.2           76.4          82.3          103.3
GDP at Market Prices                        793.6         884.7        1,057.4       1,096.7        1,163.4       1,319.5        1,555.8
Imports of Goods & NFS                      618.3         714.0          946.8         950.2        1,032.0       1,181.4        1,363.9
Exports of Goods & NFS                      570.2         652.1          678.0         846.6        1,081.7       1,227.8        1,477.1
Resource Gap (- Surplus)                     48.1           61.9         268.8         103.6          -49.7          -46.4        -113.2
Resource Availability = Uses                841.7         946.6        1,326.2       1,200.3        1,113.7       1,273.1        1,442.6
Consumption                                 637.7         733.8          923.0       1,004.3          948.7       1,092.7        1,249.0
Public                                  (155.4)       (178.5)        (222.2)       (284.2)        (300.4)       (354.0)        (396.5)
Private                                 (482.3)       (555.3)        (700.8)       (720.1)        (648.3)       (738.7)        (852.5)
Investment                                  204.0         212.8          403.2         196.0          165.0          180.4         193.6
Public                                   (52.8)        (34.8)         (47.9)        (58.4)         (73.8)         (65.3)        (72.2)
Private                                 (151.2)       (178.0)        (355.3)       (137.6)         (91.2)       (115.1)        (121.4)
Domestic Savings                            155.9         150.9          134.4           92.4         214.7          226.8         306.8
+ Net Current Transfers                     -23.2         -27.4          -24.5         -23.0          -20.9          -27.2         -30.4
- Net Factor Services                       -49.9        -113.4          -39.2           29.9        -113.1        -102.4         -133.7
National Savings                             82.8           10.1          70.7           99.3          80.7           97.2         142.7
GNP at Market Prices                        743.7         771.3        1,018.2       1,066.8        1,050.3       1,217.1        1,422.1
Source: Bank of the Netherlands Antilles; Bureau of Statistics; Mission estimates.



- 47 -
Table 2.4:  NETHERLANDS ANTILLES - EXPENDITURE ON GROSS DOMESTIC PRODUCT, 1972-78
(1972 IDAf Millions)
Estimated
1972         1973         1974         1975          1976         1977         1978
GDP at Factor Cost                     726.0         782.8       7P2,1         756.6         777.5        817.7        877.s
Net Indirect Taxes                   67.6          69.4         60.1         51.0          54.6         54.4         62.L
GDP at Market Prices                   793.6         852.2        842.2        807.6         832.1        872.1        939.5
Resource Gap (- Surplus)                48.1          59.6        214.1         76.3        -35.6         -30.7        -68.4
Rescurce Availability = Uses           641.7        911.8       1,056.3        883.9         796.5        841.4        871.1
Consumption                            637.7         706.8        735.2        739.6        678.6         722.2        754.2
Public                             (155.4)      (172.0)       (176.9)      (209.3)      (214.9)       (234.0)      (239.3)
Private                            (482.3)      (534.8)       (558.3)      (530.3)      (463.7)       (488.2)      (514.9)
Investment                             204.0         205.0        321.1        144.3        118.0         119.2        116.9
Public                              (52.8)        (33.5)       (38.2)       (43.0)       (52.8)        (43.2)       (43-6)
Private                            (151.2)      (171.5)       (282.9)      (101.3)        (65.2)       (76.0)       (73.3)
Gross Domestic Savings                 155.9        145.4         107.0         68.0         153.5        149.9        185.3
+ Net Current Transfers                -23.2         -26.4        -19.5        -16.9         -15.0        -18.0        -18.4
- Net Factor Payments                  -49.9       -109.2         -31.2         22.0  /a   -80.9          -67.7        -80.7
Gross National  Savings                 82.8           9.8         56.3         73.1          57.6         64.2         86.2
GNP at Market Prices                   743.7         743.0        811.0        829.6        751.2         804.4        858.8
/a   Representing losses made by the refineries which are treated as "negative" outflows on factor service
account in the balance of payments.
Source: Bank of the Netherlands Antilles; Bureau of Statistics; Mission estimates.



- '0 -~
Table 2.5:  NETHERLANDS ANTILLES - PROJECI'ED EXPENDITURE ON GROSS
DOMESTI:C PRODUCT, 1979-83
(1972 NAf Million)
Estimated                           Projected
1978            19I79     1980      1981      1982      1983
CDP at Market Prices                939.5           97,7.7  1,011.0  1,047.7  1,094.0  1,142.5
Agriculture and Fisheries         14.0            14.4      14.9      15.3      15.9      16.5
Mining                             6.2             6.4       6.6       6.8       7.0       7.2
Petroleum Refining              167.4            161.3    156.6    152.0    147.6    143.3
Manufacturing                     82.4            86.8      91.4      96.2    101.3    106.7
Tourism                         177.5            187.7    196.1    207.8    224.4    240.8
Other                           492.0            521.1    545.4    569.6    597.8    627.9
Imports of Goods and NFS            823.6           867.4    915.8    962.1  1,004.2  1,051.0
Exports of Goods and NFS            892.0           934.0    971.2  1,015.9  1,062.6  1,111.6
Resource Gap (- Surplus)            -68.4           -66.6    -55.4    -53.8    -58.4    -60.5
Resource Availability = Uses        871.1           911.1    955.6    993.9  1,035.6  1,082.0
Consumption                         754.2           787.6    813.7    840.1    866.7    895.8
Public                          (239.3)         (247.0)  (254.2)  (261.6)  (268.5)  (276.3)
Private                         (514.9)         (540.6)   (559.5)  (578.5)  (598.2)  (619.5)
Investment                          116.9           123.5    141.9    153.8    168.9    186.2
Public                           (43.6)          (45.5)   (51.4)   (58.6)   (63.2)   (68.2)
Private                          (73.3)          (78.0)    (90.5)   (95.2)  (105.7)  (118.0)
Gross Domestic Savings              185.3           190.1    197.3    207.6    227.3    246.7
+ Net Current Transfers            -18.4           -18.8    -18.6    -18.2    -16.1    -15.0
- Net Factor Payments              -80.7           -77.8    -78.4    -76.9    -76.8    -73.7
Gross National Savings               86.2            9:3.5    100.3    112.5    134.4    158.0
GNP at Market Prices                858.8           899.9    932.6    970.8  1,017.2  1,068.8
Source: Mission estimates



- 49 -
Table 3.1: NETHERLANDS ANTILLES - BALANCE OF PAYMENTS, 1972-78
(US$ Millions)
IEstimated
1972        1973         1974         1975         1976         1977        1978
Merchandise                                      -97.4        -65.6       -208.3       -199.4       -285.7       -201.8      -273.6
Non-oil Exports                                    39.6        57.5        101.1         90.2        102.7         94.6        106.7
Non-oil Imports                                 -319.5       -349.7       -488.8       -483.7       -524.1       -576.9      -682.3
Oil Balance  /a                                   182.5       226.6        179.4        194.1        135.7        280.6        302.0
Bunker                                         (42.0)      (62.3)      (171.6)      (183.4)      (213.9)      (265.2)     (226.3)
Other                                         (140.5)     (164.3)        (7.8)       (10.7)      (-78.2)       (15.4)       (75.7)
Non-Factor Services (Net)                          70.7         31.2        59.0        141.9        257.9        283.1        336.5
Transport                                        -10.8        -43.5        -27.4         55.0        104.2        107.7        137.3
Travel                                            101.3       110.2        125.6        115.4        152.4        166.7        228.3
Other                                            -19.8        -35.5        -39.2        -28.5          1.3          8.7       -29.1
Factor Services (Net)                            -27.7        -63.0        -21.8         16.6        -62.8        -56.9       -74.3
Investment Income                                -28.4        -58.9        -20.6         23.2        -48.7       -45.7
Other                                               0.7        -4.1         -1.2         -6.6        -14.1        -11.2
Unrequited Transfers                             -12.9        -15.2        -13.6        -12.8        -11.6        -15.1       -16.9
Private                                          -13.0        -15.3        -13.7        -12.9        -11.7       -15.2        -17.0
Public   /b                                        0.1          0.1          0.1          0.1          0.1          0.1          0.1
CURRENT ACCOUNT                                  -67.3       -112.6       -184.7        -53.8       -102.2          9.3       -28.3
Direct Foreign Investment                          55.1        50.1        138.9        -12.7          8.3
Portfolio Investment                             -10.8        -10.6        -10.6         -8.6         -1.6    (   10.4   (  -49.3
Long-term Loans, Private Sector (Net)            -24.1          5.7         19.7         42.6         32.5    (           (c/
Capital Grants, Public Sector                      14.4         8.3         10.1         16.4         17.1         18.5         18.5
Long-term Loans, Public Sector (Net) /d            11.2         5.2          8.7          8.2         14.1         12.9          6.3
Long-term Loans, Banking System (Net)               2.0        -3.0          0.3         -6.0         -4.4          8.6           ..c/
Short-term Capital                                 19.2        49.8         40.3         29.5         64.4        -68.1
Errors and Omissions                                2.2         5.7         -1.6         -1.9          6.5         12.6         -0.6
Change in International Reservices
(-increase)                                    -1.9          1.4        -21.1        -13.7       -34.5         -4.2         53.4
Menorandum Item:
Net International Reserves                         76.5         75.1        96.2        109.9        144.4        148.6         95.2
- Months of Non-oil Merchandise Imports             2.9          2.6         2.4          2.7          3.3          3.1          1.7
/a   Oil product exports including bunker fuel less crude and products imports.
/b   The larger part of public transfers has been treated as capital grants.
/c   Including banking system.
/d   This item does not fully reflect external loan disbursements for development projects as some payments are not reported
(e.g., disbursements abroad to contractors in lieu of projects implemented in the Antilles).
Source: Bank of the Netherlands Antilles, Mission estimates.



- 50 -
Table 3.2: NETHERLANDS ANTILLES - MERCHANDISE TRADE
BY COMMODITY GROUP, 1972-77
(US$ Millions)
1972       1973      1974       1975       1976       1977
Imports (cif)
Food                                      49.8      62.6       90.4       82.6      111.2      124.1
Beverages & Tobacco                        5.7       7.1        6.8        7.3        8.3        9.9
Crude Materials except Fuels               3.0       3.3        3.7        3.9        4.1        5.4
Mineral Fuels, Lubricants, Related
Products/a                            595.6  1,298.1   3,234.2   2,400.8   3,214.1   2,585.4
Animal & Vegetable Oils & Fats             1.3       1.3        2.9        2.8        1.2         1.8
Chemicals                                 27.6      29.8       36.4       43.5       43.8       63.4
Manufactures                              52.5      53.4       90.4      103.3       76.7       90.9
Machinery & Equipment                     73.8      76.3       93.9      100.2       97.7      132.7
Miscellaneous Manufactures                59.1      60.6       71.1       81.0      109.3      113.7
Other                                      1.0       0.9S       1.0        1.0        1.0        1.0
TOTAL                                    869.4  1,593.4   3,630.8   2,826.4   3,667.4   3,128.3
Exports (fob)
Food                                       0.7       1.8       14.6        1.0       29.2       28.2
Beverages & Tobacco                        0.2       0.2        0.2        0.3        0.1        0.1
Crude Materials except Fuels               4.4       5.5        9.1        8.9       13.8       13.0
Mineral Fuels, Lubricants, Related
Products/a                            713.7  1,307.2   3,125.9   2,312.6   2,412.8   2,552.9
Animal & Vegetable Oils & Fats             -         -          -          -          -          -
Chemicals                                 16.1      29.6       49.2       45.8       48.5       33.8
Manufactures                               1.3       1. 7       1.9        1.6        2.3        2.4
Machinery & Equipment                     16.1      18.2       25.9       22.8       12.4       11.1
Miscellaneous Manufactures                 5.2       6.2        5.7        4.0        4.8        4.8
Other                                      0.2       0.2        0.1        0.1        0.3        0.2
TOTAL                                    757.9  1,370.6   3,232.6   2,397.1   2,524.2   2,646.5
/a  Data on oil and petroleum products included in this category are collected on the basis
of customs receipts and, therefore, differ somiewhat from those in the balance of pay-
ments.
Note: Curaqao, Aruba and Bonaire only.
Source: Department of Statistics.



- 5  -~
Table 3.3:  COMPOSITION OF MERCHANDISE IMPORTS, 1972-i-
(US$ millions and percent)
1972      1973      1974      1975      1976      1977
US$ millions
TOTAL                              273.8    295.3    396.6    425.6    453.3    542.9
Consumer Goods                     175.9    194.2    262.7    280.3    321.3    368.0
Food, Beverages & Tobacco        (55.5)    (69.7)    (97.2)   (89.9)  (119.5)  (134.0)
Chemicals                        (26.2)    (28.3)    (34.6)   (41.3)    (41.6)    (60.2)
Manufactures                     (94.2)    (96.2)  (130.9)  (149.1)  (160.2)  (173 8)
Intermediate Goods                  24.1      24.8      40.0      45.1      34.3      42.2
Crude Materials except Fuels   (3.0)        (3.3)     (3.7)     (3.9)     (4.1)      (5.4)
Animal & Vegetables Oils &
Fats                             (1.3)     (1.3)     (2.9)     (2.8)     (1.2)     (1.8)
Chemicals                         (1.4)     (1.5)     (1.8)     (2.2)     (2.2)      (3.2)
Manufactures                     (18.4)    (18.7)   (31.6)    (36.2)    (26.3)    (31.8)
Capital Goods!/                     73.8      76.3      93.9    100.2        97.7    132.7
Percent
Consumer Goods                      64.2      65.8      66.3      65.9       70.9      67.8
Intermediate Goods                   8.8       8.4      10.1      10.6        7.6       7.8
Capital Goods                       27.0      25.8      23.6      23.5      21.5       24.4
a! Machinery and equipment only.
Note: Non-oil imports by Curacao, Aruba and Bonaire only.
Source: Bureau of Statistics



- 52 -
Table 3.4:  NETHERLANDS ANTILLES--DIRECTION OF TRADE, 1972-77
(US$ million)
-- __ __-___-__________EXPORTS --------------------              ------------------- IMPORTS-------------------------
1972    1973      1974     1975      1976     1977                1972      1973      1974     1975      1976     1977
TOTAL                                       757.9  1.370.6  3,232.6  2,397.1  2,524.2  2.646.5                 869.4   1,593.4  3,630.8  2.826.4  3,667.4  3,128.3
Industrial Countries                        589.0  1.130.5  2,733.7  1 795.9  1,595.4                          236.1     309.8    327.3    362.0    362.8
of which:  USA                              485.3    982.7  2,433.0  1,486.1  1,182.0                          102.9     139.1    160.2    168.6    179.8
Canada                           41.5      58.6      58.7     26.4      10.3                         2.2        2.9       3.1      3.4       3.0
Germany                           8.8       7.6      11.7     23.5      32.7                        14.3       10.1      10.6     12.0      13.4
Netherlands                       14.9     28.0      55.7    124.1      83.3                        50.4       49.1      61.5     70.7      71.7
UK                                4.4       3.2       8.0     66.7    114.0                         18.4       20.9      18.1     19.2      17.2
Other Europe                                 10.8      19.8     25.9      23.7     14.0                          3.1        3.8      8.1       4.8       7.8
Australia, New Zealand, South Africa          3.5       4.1     12.1       3.3      9.6                          1.8        2.6      2.1       2.4       3.2
Oil Exporters                                11.2      14.2     28.6    125.2    252.4                         585.9   1,238.1  3,130.5  2,236.2  3,034,3
of which:  Venezuela                          5.9       8.2      7.7      9.8       9.4                        533.8     905.1  2,145.8  1,585.0  1,657.2
Other  ev.eloping Countries                 143.4    202.0    432.3    449.0    652.8                           42.5       39.1    162.8    221.0    259.3
Note: Curacao, Aruba and Bonaire only.
Source: Department of Economic Affairs; IMF, Direction of Trade.



- 53 -
Table 3.5:  NETHERLANDS ANTILLES - PROJECTED BALANCE OF PAYME"TS, 19 79-83
(Current US$ Millions)
Estimated
1978                1979              1980              1981             1982              (983
Merchandise                              -273.6                -322.4            -389.6            -454.0           -52°.5            -1  .
Non-Oil Exports                            106./                  I7  150.1                         179.4             2V.'
Non-Oil Imports                          -682.3                -788.2            -894.0          -1,008.4         -1,129.3          -l,_ol.0
Oil Balance                               302.0                 337.8             354.3             375.0             387.8            40.3
Non-Factor Services (Net)                 336.5                 389.6             449.7             516.6             602.5            696.8
Transport                                 137.3                  159.0            181.2             206.8             237.7             2.2
Travel                                    228.3                 263.7             300.6             341.4             394.3            451.5
Other                                     -29.1                 -33.1             -32.1             -31.6             -29.5            -26.9
Factor Services                           -74.3                  -78.5            -85.0             -89.5             _95.9            -93.2
Investmenc Income  & Other                -63.3                 -67.3             -73.0             -75.4             -76.7            -77.0
Interest on Public Debt                   -11.0                 -11.2             -12.0             -14.1            -19.2             -2t.2
Current Transfers                         -16.9                  -19.0            -20.3             -21.1             -20.0            -20.0
Private                                   -17.0                 -19.2             -20.6             -21.6             -20.6            -21.0
Public a/                                    0.1                   0.2              0.3               0.5               0.6               1.0
CURRENT ACCOUNT                           -28.3                  -30.3            -45.2             -48.0             -42 9            -37.4
Direct l'oreign Investment               (                        17.0             20.5              25.0              30.0              30.0
Portfolio Investment                     (-49.3                   -8.0             -8.0              -8.0              -8.0             -8.0
Medium Lo Long-term Loans,
Private Sector (Net) b/                 (                         4.0              5.0              10.0              12.0             12.0
Capizal Grants, Public Sector               18.5                  18.5             20.5              24.9              31.0             39.8
Medium to Long-term Loans,
Public Sector (Net)                        6.3                   16.6             34.1              27.1             22.8              16.1
Lisbursements                          (14.5)                (26.5)            (43.6)            (41.8)           (42.1)            (36.1)
Amortizations                          (-8.2)                (-9.9)            (-9.5)            (14.7)          (-19.3)           (-20.6)
Short-Term Capital                         -0.6 c/              -1.3               3.6               4.0               4.4              4.0
Change in International Reserves,
(- Increase)                              53.4                -16.5             -30.5            -35.0             -49.3             -56.5
Memorandum Item:
Net International Reserves                95.2                111.7             142.2             177.2            226.5             283.0
- As Months of Non-Oil Merchandise         1.7                  1.7               1.9               2.1              2.4               2.7
Imports
a/ The iarger part of public transfers has been treated as capital grants.
b/ Including banking system.
C/ Including errors anc ommissions.
Source: Mission estimates.



- 54 -
Table 4.1: NETHERLANDS ANTILLES--EXTERNAL PUBLIC DEBT AND SERVICE ON
EXTERNAL PUBLIC DEBT, 1972-78_a
(US$ Million)
Estimated
1972    1973    19,74    1975    1976    1977               1978
Debt Outstanding & Disbursed            129.6   156.8   186.4   181.3   214.4   245.9                252.2
Debt Service                              10.2    10.7    10.2    10.4    11.1    13.5                19.2
Interest                                6.4      6.7      6.5     6.3      7.0    11.0              11.0
Amortization                            3.8      4.0      3.7     4.1      4.1      2.5               8.2
Net Exports of Goods & NFS               293.8   297.3   356.1   470.3   496.7   692.0               757.0
Exports of Goods & NFS                 322.2   356.2   376.7   470.3   545.4   737.7               820. 6
Investment Income Abroad              -28.4   -58.9   -20.6    ..        -48.7   -45.7             -63.6
Debt Service Ratio (Percent)               3.5     3.6      2.9      2.2     2.2      2.0              2.5
a/ Including Government- guaranteed
Source: Central Government Department of Finance; Bank of the Netherlands Antilles.



- 55 -
Table 4.2: NETHERLANDS ANTILLES--PROJECTED EXTERNAL PUBLIC DEBT AND SERVICE ON
EXTERNAL PUBLIC DEBT, 1979-83a/
(US$ Million)
Estimated
1978               1979      1980       1981       1982     1983
Debt Outstanding & Disbursed             252.2             268.8      302.9      330.0     352.8    368.9
Debt Service                              19,2              21.1       21.5       28.8      38.5      41.8
Interest                                11.0              11.2       12.0       14.1      19.2      21.2
Amortization                             8,2               9.9        9.5       14.7      19.3      20.6
Net Exports of Goods & NFS                757.0             875.5     980.2  1IlO7.5   1,25. 1  1_4O5.1
Exports of Goods & NFS                 820.6             942.8   1,053.2   1,182.9   1,327.8  1,482.1
Investment Income Abroad               -63.3             -67.3      -73.0      -75.4     -76.7    -77.0
Debt Service Ratio (Percent)               2.5                2.4       2.2        2.6        3.1      3.0
a! Including Government- guaranteed
Source: Central Government of Finance; Bank of the Netherlands Antilles; Mission estimates.



- 56 -
Table 5.1:  NETHERLANDS ANTILLES - SOURCES AND USES OF FUNDS, CONSOLIDATED PUBLIC SECTOR, 1972-78
(N.A.f. Millions)
Estimated
1972     1973      1974      1975      1976     1977      1978
SOURCES OF FUNDS                               60.6      49.1      68.4      78.3     87.0      91.1    116.4
Public Sector Savings                          13.4      -4.4      46.2    -17.3      39.8    -22.4    -28.0
General Government                             13.4      -5.6      47.0    -20.1      33.2    -25.8    -27.8
Current Revenue                            (218.0)  (231.4)  (336.6)  (359.0)  (472.3)  (516.7)  (585.0)
Current Expenditure                        (204-6)  (237.0)  (289.6)  (379.1)  (439.1)  (5427;)  (612.8)
Public Enterprises                              ..        1.2      -0.8       2.8      6.6       3.4      -0.2
Capital Revenues                                         10.3       1.1       1.1       1.3      1.8       8.7
Gross External Disbursements a/                46.7      37.0      40.6      51.6     63.6      61.0      59.4
o/w Loans                                     (20.8)   (22.1)    (22.4)   (22.1)   (32.8)    (27.7)   (26.1)
Grants                                    (25.9)   (14.9)   (18.2)   (29.5)   (30.8)   (33.3)~ (33.3)
Domestic Borrowing (Net)                       -8.4      23.1    -28.4       36.0    -30.2      52.6      72.4
Treasury Bills                              ( -  )   ( -  )   ( -  )   ( -  )   ( -  )   (15.7)   (13.0)
Banking System                              (-8.4)   (23.1)  (-28.4)   (36.0)  (-30.2)   (36.9)   (59.4)
Otherb/                                         8.9   -16.9         8.9       6.9      12.5     -1.9       3.9
USES OF FUNDS                                  60.6      49.1      68.4      78.3     87.0      91.1    116.4
External Debt Amortization                      6.8       7.2       6.7       7.4       7.4      4.5      14.8
Public Sector Capital Expenditure              53.8      41.9      61.7      70.9     79.6      86.6      101.6
General Government                          (53.8)   (41.1)   (59.4)   (67.9)   (78.1)   (76.4)    (86.9)
Public Enterprises                          ( .. )   ( 0.8)   ( 2.3)   ( 3.0)   ( 1.5)   (10.2)    (14.7)
a/ From balance of payments. There is a difference between balance of payments and fiscal data as some
disbursements are carried out directly in The Netherlands and the rest of the EEC, without being
reported in the balance of payments of the Netherlands Antilles.
D/ Cash balances; float; errors and omissions.
Source: Central & Island Government Finance Departments; Bank of Netherlands Antilles; TMF; Mission
estimates.



Table 5.2:  NETHERLANDS AN'I'ILLES - CONSOLIDATED FINANCES OF CENTRAL GOVERNMENT, AND ISLAN,I C00V53N>NTS OF
CUPACAO ANTe ARUBA, 1972-78
(N.A. f. millions)
ksti.-ated
1972      1973        1974       1975       1976        1977        1378
Current Revenues                                     218.0      225.5       328.2     348.6      457.1        500.6      569.0
Income and Profit Taxes                            108.6     105.0       205.6      222.7      308.0       315.6
Import Duties                                       28.9      29.3        34.8       36.7       41.5        50.1
Excise Taxes                                        29.1      31.3        27.2       22.3       27.6        26.8
Other Revenues                                      51.4      59.9        60.6       66.9       80.0       11085.1
Coirrent Expenditures a/                             204.6      231.1       281.2     368.7      423.9       '26.4       596.8
Wages, salaries and social security payments    94.8         102.9       125.2      156.5      182.2       222.2
Other Goods and Services                            36.5       39.6       48.2       61.7       77.1       101.3
Interest                                             9.0       9.0         9.5        9.5        9.5        13.3
Subsidies                                            1.9       2.0         2.2        5.1       13.0        15.5
Transfers to:  Households                            6.8        7.0         7.7      10.7       16.3        21.0
Parochial Schools                  30.5       33.1        40.3       52.5       64.0        77.0
Bonaire and Windward Islands        10.2      10.8        11.0       11.2        8.9         8.7
Other Unclassified Expenditures                     14.9       26.7        37.1      61.5       52.9        68.4
Current Surplus/Deficit (-)                           13.4       -5.6        47.0     -20.1        33.2      -25.8       -27.8
Capital Expenditures                                  53.8       41.1        59.4       67.9       78.1        76.4 b/    86.9
Overall Deficit (-)                                  -40.4      -46.7       -12.4     -88.0      -44.9      -102.2      -114.7
Financing
Net External Capital Inflows                        39.9       29.8        33.9        44.2      56.2        56.5       44.6
Disbursements                                  (46.7)    (37.0)       (40.6)      (51.6)   (63.6)      (61.0)      (59.4)
Amsortization                                 (-6,8)    (-7.2)       (-6.7)      (-7.4)    (-7.4)      (-4.5)    (-14.8)
Net Domestic Sources                                 0.5       16.9       -21.5       43.8     -11.3         45.7       70.1
Banking System (Net)                          (-8.4)    (23.1)      (-28.4)    (36.0)   (-30.2)        (52.6)      (72.4)
Other c/                                        (8.9)    (-6.2)        (6.9)     (7.8)    (18.9)       (-6.9)      (-2.3)
a/ The economic classification of current expenditures is approximate only.
b/ Excludes capital expenditure of Naf20.1 million for OGEM takeover in 1977.
9/ Cash balances: float; errors and omissions.
Source: Central Government Department of Finance; Bank of the Netherlands Antilles; IMF; Mission estimates.



- 58 -
Table 5.3: NETHERLANDS ANTILLES: CURREN' REVENUES OF THE GENERAL GOVERNMENT,
1972-77
(N.A.f. millions)
1972     1973      1974      1975      1976      1977   Preliminary
1978
Taxes on Income and Profits                108.6    110.0    212.9    231.5    321.3    329.7   360.0
Income Tax                                43.3      51.1      62.8      84.9      67.2     47.2
Wage tax                                    -         -         -        -        90.8    123.4
Profits tax                              :65.3      58.5    150.1    146.6    163.3    159.1
Of which:  Offshore Companies           (--)    (29.4)   (38.0)   (54.0)   (49.7)   (41.8)
Taxes on Property                            5.0       7.4      10.8       8.6       8.9      27.2     28.3
Land Tax                                   2.8       3.9       7.6       6.1       5.7       5.0
OccupancY Tax                              1.1       1.1       1.2       1.3       1.4       1.3
Death and Gift Taxes                       0.1       1.1       0.8       0.2       0.3       0.5
Property Transfer Tax                      1.0       1.3       1.2       1.0       1.5       2.8
Tank Tax (Curacao)                          -         -         -         -         -      14.7
Bullenbaai Tax (Curacao)                              -         -         -         -        2.9
Taxes on Goods and Services                 36.9      39.6      36.7      32.2      40.3     40.5      53.6
Excise on Liquor                           6.4       7.9       8.3       8.7      12.3       9.9
Excise on Beer                             5.6       5.4       3.9       3.9       5.5       6.7
Excise on Tobacco                          3.3       3.3       3.8       5.5       5.6       5.9
Excise on Gasoline                        13.8      14.7      11.2       4.2       4.2       4.3
Mtotor Vehicle Fees                        4.1       4.5       5.1       5.4       6.2       6.5
Gambling Licenses                          2.5       2.1       2.7       3.0       3.5       4.5
Hotel Room Tax                             1.2       1.7       1.7       1.5       3.0       2.7
Taxes on International Transactions         32.6      34.4      40.8      42.1      49.1      57.3     68.3
Import Duties                             28.9      29.3      34.8      36.7     41.5      50.1
Foreign Exchange Commission                3.7       5.1       6.0       5.4       7.6       7.2
Other Taxes                                  5.6       6.2       7.0       7.8       8.4       9.8    14.8
Stamp Duties                               5.3       5.9       6.7       7.5      8.1       9.7
Other                                      0.3       0.3       0.3       0.3       0.3       0.1    I
Total Taxes                                188.7    197;6    308.2    322.2    428.0    464.5    525.0
Nontax Revenues                           29.3      33.8      28.4      36.8     44.3      52.2      60.0
Total Current Revenues                     218.0    231.4    336.6    359.0    472.3    516.7    585.0
Source: Bank of the Netherlands Antilles; IMF; Mission Estimates



- 59 -
Table 5.4:  NETHERLANDS ANTILLES - FINANCES OF ALM, 1973- a97
(N.A.f. '000)
Estimated
1973       1974      1975        1976         1977       1978
Operating Revenues                                        33475       41188    48567        57813       73535       93151
Operating Expenditures                                    30150       39986    44328        50279       68206       89667
Operating Surplus                                   3325         1202      4239        7534         5329       3484
Depreciation                                              2889         1098      1059        1262        1774        2484
Interest                                                  1773          857       747         765         765        1196
Other Revenues (net)I-                                    2559          -55       404        1077          655        -
Net Profit Before Taxes                                   1222         -808      2837        6584        3445        -1%6
Less:  Taxes                                         -            -          -          -            -
Net Profit After Taxes                                    1222         -808      2837        6584        3445        -' 96
Capital Revenues -/                                       7400-         -         -           -            -         6200
Capital Expenditures                                       806         2265      3029        1496       10158        9512
Overall Surplus/Deficit                                   7816        -3073      -192        5088       -6713       -3508
Financing:
Net External Borrowing                             -8252         -380       -467       -386         -457       -478
Gross Disbursements                             (L)          (_)       (_)        (_)          (_)         (_)
Amortization                                  (-8252)       (-380)   (-467)       (-386)      (-457)      (-478)
Net Domestic Borrowing                                 -          -          236        -            -         6211
Other Financing                                            436         3453       423       -4702        7170       -2225
Depreciation                                        (2889)       1098       1059       1262         1774       2484
Other (Changes in Cash Balances)                  (*2453)        2355       -636      -5964         5396      -4709
a/ Fiscal year April 1 - March 31.
b/ Includes some capital revenues.
c/ Mainly sale of planes.
Source: ALM, Mission estimates.



- 60 -
Table 5.5:  NETHERLANDS ANTILLES - PROJECTED SOURCES AND USES OF FUNDS, CONSOLIDATED PUBLIC SECTOR, 1979-83
(Current N.A.f. millions)
Estimated
1978            1979        1980       1981       1982        1983
SOUtRCES OF FUNDS                           116.4            122.3      132.7      156.5       189.7      210.1
Public Sector Savings                       -28.0            -43.9        3.8        19.6       69.6      106.2
General Government                      -27.8            -46.9        n0.2       15.1        64.4      100.2
Current Revenue                    (585.0)          (616.5)    (718.2)    (800.3)    (929.0) (1 053. n)
Current Expenditure                 (612.8)          (663.4)    (718.0)    (785.2)    (864.6)    (952.8)
Public Enterprises                       - 0.2               3.0        3.6        4.5         5.2        6.0
Capital Revenues                               8.7              3.1        3.7        4.5         5.6        7.0
Cross External Disbursements                  59.4             81.0      115.4      120.0       131.i      137.8
Loans                                     (26.1)          (47.7)      (78.5)     (75.2)      (75.8)     (66.1)
Grants                                    (33.3)          (33.3)      (36.9)     (44.8)      (55.8)     (71.7)
Domestic Borrowing (Net)                      72.4             82.1        9.8       12.4       -17.1      -40.9
Market Borrowing                           ( - )           (20.0)      (5.0)      (8.0)      (  - )   (-12.5)
Banking System a/                         (72.4)           (62.1)      (4.8)      (4.4)    (-17.1)   (-28.4)
Other                                       3.              -            -
U1SES OF FtJNDS                              116.4            122.3       132.7    156.5        189.7      210.1
External Debt Amortization                    14.8             17.8       17.2       26.5        34.7       37.1
Public Sector Capital Expenditure            101.6            104.5      115.5      130.0       155.0      173.0
Fixed Investment                          72.2             82.7       100.3      122.8      142.1       163.7
General Government                        (57.5)           (65.9)     (79.3)     (95.8)    (102.1)    (113.7)
Rest of Public Sector                    (14.7)           (16.8)      (21.0)     (27-0)     (40.0)      (50.0)
Financial Investment & Other              29.4              21.8       15,2         7.2       12.9        9.3
a/ Including treasury bills held by banks.
Source:  Central & Island Governments' Departments of Finance; Bank of the Netherlands Antilles; Mission
estimates



- 61 -
Table 5.6: NETHERLANDS ANTILLES--PROJECTED REVENUES OF THE CENTRAL
AND ISLAND GOVERNhENTS, 1979-83
(Current N.A.f. millions)
Estimated
1978             1979       1980      1981       1982     1983
CURRENT REVENUE                        585.0             616.5      718.2     800.8      929.0    1,053.0
Tax Revenue                            525.0             547.8      640.2     712.3      828.5      939.3
Taxes on Income & Profits              360.0             356.5      397.3     433;9     480.0       545.0
Income Tax                             180.0             153.0     157.6      174.4     193.3       215.5
Profits Tax                            180.0             203.7      211.6     236.1     264.6       296.0
Refineries                           (62.0)            (62.0)    (62.0)    (62.0)    (62.0)       (62.0)
Other                                (57.0)           (141.7)    (73.7)    (83.0)    (93.3)    (105.0)
Taxes on Property                       28.3              29.9      33.0       37.3      42.6        48.1
Oil Transshipment Taxes                 17.6              17.6      17.6       17.6      17.6        17.6
Land Tax ; Other                        10.7              12.3       9.0       12.0      15.5        19.5
Taxes on Goods & Services               53.6              64.5      80.3       94.6     110.4       124.7
Liquor, Beer & Tobacco Excises          23.9              33.2      36.8       40.9     T45.5        50.5
Gasoline Excises                         4.5               9.6      10.6       12.9      i5,8        19.4
Other                                   12.4              13.7      15.1       16.6      18.4        20.5
Sales Tax                                                           16.5       18.2      25.2        32.3
Taxes on International Trans-
actions                               68.3              81.0     111.4      126.3     173.0       196.0
Other Taxes                             14.8             16.4       18.2      20.2       22.5       25.2
Other Current Revenue                   60.0              68.7      78.0       88.5     100.5       114.0
Source: Central & Island Governments' Departments of Finance; Mission estimates.



- 62-
Table 5.7: NETHERLANDS ANTILLES - PROJECTED CENTRAL AND ISLAND GOVERNMENTS
CURRENT EXPENDITURE, 1979-83
(Current NAf millions)
Est.
1978     1979      1980      1981     1982      1983
TOTAL                                          612.8    663.4    718.0    785.2    864.6    952.8
Wages; Other Goods & Services/a                460.2    512.4    558.3    613.8    675.6    743.8
Interest                                        15.0     20.2      21.6      25.3      34.5     38.1
Subsidies                                       18.6     14.0      12.5      11.0      10.0      8.5
Transfers to Private Sector                    119.0    116.8    125.6    135.1    144.5    162.4
Households                                   (24.0)   (25.8)   (27.3)   (29.0)   (29.9)   (31.0)
Parochial Schools                            (85.0)   (91.0)   (98.3)  (106.1)  (114.6)  (131.4)
/a   Including Central Government Transfers to Bonaire and Windward Islands.
Source: Central and Island Government Finance Departments; Bank of the Netherlands Antilles;
Mission estimates.



oahbl  S.8:   NLTG!GRLANDS ANTILLES -- PU113,1  SECTOR INVESTMENT PRO8 2 SUM1MARY, 1978-83
(         U-,rr S us$ -ollio-6)
----- PROECT COST                    FINANCNG-------                --            ---- PROJECT IMPLEMENTATION  ------------------                    ------ EXTERNAL tLSN DTSBURSEMETS ----------                     ------- EXTERdAL M TR8T RDESRsER          TS ---_ -_-___
Losol
1080]l    Forri4n       -orsS     Erterntil    Toonrr-
parE               1978         1979         1980          1981         1982         1983          1978      1979      1980       1981     1982       1983           1978       1979       1980       1981       1982        1983
_RANS TCTAL                               544.8        352.2      197.6        412.5        132.3               48.7         57.9          82.7         83.3         94.0        103.2           24.1      Z6.5     43.6       41.8      42.1       36.7           18.6       18.5       20.5       24.9      31.0         n.6
Financed Project6                         319.5        210.5      109.0        267.3         52.2               49.7          57.9         70.9         71.4         37.1           3.5          24.1      26.5      39.8       38.3     23.7        2.6           18.6       18.5       17.4       21.8        9.1         0.7
Prij(-ts   -0 be Ftn..nced                225.3        141.7       83.6        145.2         80.1                  -            -          11.8         11.9         56.9          74.5             -        -        3.8        3.5     18.4       22.1             -          -         3.1        3.1       21.9        30.1
Orojeets to be Identified                                                                                                                                                          25.2                                                             12.0                                                                    9.0
Agrirolture                                11.8          4.4        7.4         10.7           1.1                1.0          1.3          0.8           0.3          1.9          2.6           0.3       0.6        _         0.1       0.8        1.2           0.6        0.6        0.4        0.1        0.9         1.2
FInessed Projects                        (4.4)        (1.8)      (2.9)        (3.92        (0.52              (1.07         (1.32        (0.82         (-2          (-2           (-)          (0.32    (8.62       (-)        ()       ()         ()            (0.62      (0.62      (8.42       (-2        (-)          .)
Proje.st to be FiRsnr-d                  (7.4)        (2.9)    (4.5)          (6.8)        (0.62               (_)           (.2          7-)         (0.3)        (1.9)        (2.6)           (-)       (2      '7.)       (0.1)    (0.8)       (1.2)           (-3        (-)        (-2       (0.8)      (0.9)       (1.2)
Irdoetry 4 Comm.ere                        47.9         28.8       19.1         38.0           9.9                3.9          4.6          9.8          ,i.6          9.9         11.8           1.9       1.9       3.5        0.4      3.0        2.8            1.3        1.5        4,1        3.3        4.9         5.6
F.....ed ProjeCts                       (17.4)       (10.5)      (6.9)       (13.9)        73.5)              (3.9)         (4.6)        (3.1)        13.8)        (2.0)          (-)          (1.9)    (1.9)    (0.8)       (0.2)      7-)        (-)           11.3)      (1.2)      (1.4)      (3.1)      (1.9)        (-)
FroP-j-s to be FiRe--d                  (30.5)       (18.3)   (12.2)         724.1)        (6.4)                ()           (-)         (6.7)        (0.8)        (7.9)       (11.8)           (-)       (-)      (2.7)      (0.2)    (3.0)      (2.8)           (-)        (-)       (2.7)      (0.2)      (3.0)       (5.6)
loFrl .m                                   41.5         26.5       15.0         28.3         13.2                 3.9          ZS3          4.4          6.7           8.9          7.0           1.9       0.5       0.2        0.0       2.7        2.5           1.3        1.2        2.8        4.0        3.2         2.5
Firesced Prorects                       (19.5)       (17.87      (7.02       703.62        (5.9)               (3.9)        (2.3)        (4.4)        (6.0)        (2.41          (-5          (1.97    (0.2)    (2.2)        (0.2)    (0.2)       (-2           (1.3)      (1.27      (2.82      (3.72      (1.5)        (-)
Projects to bt Fin.n.sd                 722.0)       (14.0)      (8.0)       (14.7)        (7.3)                (-)          7-)         (7)          (0.7)        (6.5)         (7.0)          (_)       (_)       (-)       (0.3)    (2.5)      (2.5)           (_)        (-)        (-)       (0.35      (2.08       (2.5)
Tra..po..  6t 6h Cree--tlo-               145.0        101.5       43.5         97.8          47.2               16.3         17.0         32.8          28.3         19.4         19.2   '        8.3      6.7      17.5       12.2       7.4        6.0           6.8        5.2        65         8.9        5.2         5.0
FInanced Froiectr                       192.4)       (65.0)    (27.4)        (76.')       (15.7)             (16.3)        (17.0)       (28.07       (03.07        (6.0)          (-2          (8.2)    (6.7)   (16.6)           (10.5)    (3.13    (-)          (6.9)      (5.2)      (6.37      (8.62      (2.3)        (-)
P- Je,-  t o bh  Filnt-ed               (52.6)       (96.5)    116.1)        (21.1)       (31.5)                7_)          (_)         (4.5)        (5.3)       (13.4)        (19.2)          (-)       7-)      (6.9)      (1.7)    (4.3)      (6.0)           (_)        (.)       (0.2)      (0.35      (2.,3       (5.0)
tener7y                                    78.7         55.1       23.6         72.6           6.1                2.9          3.6          15.8         28.1         23.8          3.3            0.8      2.5      14.1       24.8      20.4        2.7           0.6        0.4         1.1        2.1       2.0          0.3
Fi.., -d Proj-ctr                       (76.7)       (53.6)   (23.1)         (71.0)        (5.7)               (2.9)        (3.6)       (15.8)       (28.1)       (22.5)         (3.0)         (0.8)    (2.5)   (14.1)    (24.8)   (19.9)          (2.6)         (0.6)      (0.4)      (1.1)      (2.1)      (1.5)       (0.2)
Froje-t. -  6b  HI--nOd                  (2.0)        (1.0)      (0.5)        (1.6)        (0.4)                ()           (_)          7-)           (-)         (1.3)        (0.3)           (-)      (-)       (_)        (-)      (0.5)      (0.1)          (-)        (-)        (7)         (-)      (0.5)        (0.1)
Idoter 4 Sceorago                          33.8         20.8       13.0          26.2          7.6                623    ~      9,6         10.3          5.0          1.2           _             2.4       4.3      4.7        2.3       0.6         _             1.7        3.2        3.5        1.8        0.3          -
Fi.a...J Pro-e-to                       (33.6)       (20.7)   (12.9)         (26.0)        (7.6)               (6.3)        (9.6)       (10.3)        (5.0)        (1.1)          7-)          (2.4)    (4.3)    (4.T)        (2.3)    (0.5)        (-2          (1.7)      (3.2)      (3.5)      (1.8)    (0.3)           (-)
Feo)ects to be Fi-tnced                  (0.2)        (0.17      (0.1)        (0.2)          7-)                (-2          7-)          7-)          (-)          (0.1)                        (-7      (-)       (-)        (-)      (0.15       C)            (-3        (-)        7.)        (.)        (.)          (_)
td2cl-ios 6 TroOrRof                       56.7          36.0      20.7         46.1          10.6                4.3          4.3           2.0          3.8          9.0          9.0            1.3       1.0      0.5        0.2       0.4        0.6            2.8        2.7        1.3        2.8        6.9         6.9
F' sonced Projsr4-                      (27.0)       (17.1)      (9.9)       (25.1)        (1.9)               (4.3)        (4.3)        (1.8)        (2.37         (1.6)        (0.5)         (1.3)    (1.0)    (0.4)         (-7       (-)        (-)          (2.8)      (2.7)      (1.2)       (1.8)     (1.3)        (0.5)
FMo)ects to be F--oosCed                (29.7)       (18.9)   (10.8)         (21.0)        (8.7)                (-)          (-)         (0.2)         (1.5)        (7.4)        (78.)           (-)       (-)     (0.1)      (0.2)    (0.4)       (0.6)           (-)        (-)       (0.1)      (1.0)      (5.6)       (6.4)
HerSlong                                   64.4          38.1      26.3         52.1          12.3                5.)           7.3          2.5          2.0         12.5         17.3            4.8       6.8       2.2       0.7       4.7        6.2            0.7        0.5        0.1        0.8        4.7         6.0
F     -nred PFrojeete                   (1, 9 )    (8.47         (6.5)       (14.0)         (0.9)              (0.5)        (7.3)        (2.1)          (-)          (-2          ())           (4.8)    (6.8)    (2.1)        (-)       (-)        (-)           (0.7)      (0.5)            (-2               7)         (2)
FMo)ects to be Finsn-ed                 (49.5)       (29.7)    (19.8)        (38.1)       (11.4)                (_2          7-)         (0.4)         (2.0)       (12.5)       (17.3)           (-)       (_)     (0.1)      (0.7)    (4.7)       (6.2)           (_)        (_2       (0.1)      (0.8)      (4.7)       (6.0)
OealLt4                                    12.4          11.0        (.4        13.8           3.6                2.0           0.2          0.2          0.4          0.9          2.0            0.5        -         -         0.1      0.3        0.7            1.1        0.7        0.2        0.2        0.3         0.8
Flnanced Pr-o- 7t 11.4)                               77.4)      (4.03        79.3)         (2.1)              (2.0)        (1.2)        (0.2)          (_)          (_)          7-2           (0.5)      (_)      (_)        (-2       (-)        (-)           (1.1)      (0.7)      (0.2)       (-2        (-i         (_2
Projeor  te be Fi--aoord                 (6.0)        (3.6)    (2.4)          (4.5)         (0.5)               7-)          ()            (-)         (0.4)        (0.9)        (2.0)           (.)       7.)      (-2       (0.1)    (0.3)       (0.7)           (-)        (-)        (.)       (0.2)      (0.3)       (0.8)
Community  -ise.ce.                        47.6          30.0      17.6          26.9         20.7                3.6           6.7          4.4          4.1          6.5           5.8           1.9       2.2       0.9        0.5       1.8        2.0           1.6        2.5         0.5       0.9         2.3         2.5
rlranered Perirets                      (22.2)       (13.8)      (8.4)       (13.8)         (8.4)              (3.6)        (6.7)         (4.4)        (3.2)        (0.5)         (-)           (1.9)    (2.2)    (0.9)       (0.3)      (-)        (-)           (1.6)      (2.5)      (0.5)      (0.7)      (0.3)        (_)
Fro)srts 80 be RlnasF- d                (25.4)       (16.2)      (9.2)       (13.1)       (12.3)                (_)          (-)           (_)         (0.9)        (5.0)        (5.8)           (-2       7-)      (-2       (0.2)    (1.8)       (7.0)           (_2        (-)        (-0       (0.2)    (2.0)         (2.5)
Note,   P-ei-t derailr orr  on rho basti  of the Cr0t180  and 1s.1-d Gosr.sla' lG-        t         sts ent pr-gr-s.
S-orre    D-e-raLmon  of                                                            I lconomlc Developmen;( Cor o;o, Arolo & 8onrlre Irloed GO-erneent.; Mis-ie-  estleares.



- 64 -
Table 5o.8:  NETHERLANDS ANTILLES - PUBLIC SECTOR INVESTMIENT PROGRAWFPTINACED PROJECTS
(Carto    U S$ eillioo)
Page 1  f 2 pags.
Total    Poreigo   bool    oE-nol                           Co..untep-rt              Prolate  Imo1e--tatl
Cost       Cose      Coso   Pioanele         Sooro          CoooLhotloe.  1978   1979   1980   1981   1982    1983                     BR-orh
US$..    7
08L.&ND TOTAL                              jo.4        198.1   109.0       258.5                        49.0            40.9    14.8   70.9   71.4   37.1         3.5
AGRICULTURE                                  44          1.5      2.9         3.9                        0.0             10      1.3    1.8
Ro-f-rtntito                                1.9         0.5      1.4        1.9    Seth.                 -       -       .S    0.8      0.6
Aoinol Ho-bodry                             0.3         0.1      0.2        0.3    Seth.                 -       -0.1    0.2
Peg-aohi  Projec  (G3                       3.2         0.9      1.3        1.7    N-ehl-5.U.C.F.   0.3   23.0    0.3           0.4
IS_DUSTRU AND CUOMtoRCE                     17.4        10.1      6.9       13.9                         3.5             3.9    4.6    31-1    3.8       2.1
rtej--gat Iod.-trll Park                    0.7         1.0      0.7         1.6    Beth.               8.1    6.0      0.7      -
Briooheo-  FroeZ. To e-Rooo    Lot          5.2         3.1      2.1        4.3    NBet.                U.9   12.6    U.9    3.3        1.1
Uod_oti ol Loon                             0.5         U.3      U.2        U.5    Neth.                 -       -      U.5                                            To -e-apit.line  -cototi..no-p-yp
S_rpy-rd F-isblllty Stody                   0.1         0.1       -         0.1    Ntth.                 -       -       -      0.1                                    To estshlinh fea-thility of p-ocnojio   -crp
Lro   itot  irc  proda--o
Slooghtarhoooe                  ~~~~        ~~~~~2.4  1.5  0.9   2.4    EE                    -       -       -       -      0.3    2.5    0.6
Oootlopn.eot Book                ~~~~       ~~2.5  1.5  1.0      2.5    EEC                   -       -       -      0.2    0.3    1.0       1.0            Line of  -rdit to fo-th-otlg denelap-oo  han,k.
For  Uco-Infotot                            0.0        0.5       0.3         -         -                0.8  1U5.U      0.4    0.4
Fre  Con-A   3 lndoatrlsl U1a1ln            1.5         0.9      0.6        U.5    Beth.                1.0   64.7       -      0.3    0.7    U.5
lie  Racket                                 0.5         0.3      0.2          -                          .5  105.0       -      0.1    0.3    0.1
Hood orft Cooner                            1.0         0.1      0.1        0.8     Seth.               2.2   25.0      0.2     0.2     2.2     0.3    0.1
Trade P-ooto-                               1.0        0.7       0.3        2.0    000                   -       .       -      0.8     0.2    0.4    0.3
Iodocrolal Loan                  0.~~~~~~~n2  0.1     0.1        0.2     Seth.                -       -      0.2                                            'or rf.prtie    t0  CAURtS I-oiLt  C,.
0)10109                         ~~~~ ~~~~~~~~19.5  12.5  7.0     13.6                         1.9             39    23    4.4         60      2.
Onto1 School                     o~~   ~ ~~~~        ~~~.O  2.4  1.3  3.7    P.0              -                              o-0.7    3.0    2.0            Totn-io  lom   co.nE
tore! donooaetoc  'rograr       ~~~~~7.2    4.7      2.5         1.3     NeB,h.             5.9   01.9    0.8    0.8        8.7    3.5       1.4            Financed alt   od  tood   oo,aoofod17
toa   0o                             4.3         2.8      1.5         4.3    EtC                   .       .             0.0     2.0     1.5                    To triC  tiddll--       lr -cff~
Rote)1  ronTlon .OO  top-oio-               4.3         2.4      1.7        4.3    Beth.                 .       -      3.0     0.7
Ion           --UTrtig                                                           EEC/ILO                            0.1
AOt,.l 01.  AilE5 ::inltt              00.4       53.0    37.4        67.8                        12.6             7.4    1 3.9   28.0   03.0      6.0
Cooralne  UTonlon                          24.3        25.2      9.1       18.8    INth.                4.4   10.1    0.5       3.0     9.5   11.3
AirPon  .onnooo                             7.8         3.8      3.2        8.5    EtC                  0.3     7.1    2.4      2.7    0.5
Airport Apro  FenilitIto                    0.7         0.4      0.3        0.7    Neth.                 .       -      0.3
orojeao ...      Rhblato                  0.8         0.5      0.3         0.8    N-Oh.                 .      -      0.8
Slroje__d Foo  - Ifra-r-co-                0.6        0.4       0.2         -         -0.6  100.0                              0.      05
Co.taine  Term~'lio                        10.0         6.3      3.7        7.2    eN.h.                2.8   28.5    0.3    2.0'    3.5        4.2
Airpor  - Carg  BoIldioR                    2.1         1.3      U.8        2.1     Beth.                -       -1.3    0.8
Airport  1- Fr  Stoclon                     0.0         0.5      0.3          -        -                O.R  P30U.0    0.0    0.6
teepon    i-ron                      23.7        17.8      0.9        20.2    OPppi-eo            3.5   14.8      0.3    2.2   22.5       5.0      3 .7           Projeo In iloden  2        -t h-oltofe, 12,050 oddi.
1i0001 linet pl.. -eqoi-d c-hle sod co
Bonsire                                                                                                                                                                 tinootok.
Roll-on    Eol-f  PIr86                                 0.4      0.2        0.6     Neth.                .       -      0.4
Airpot- UooptnnIn                           4.2         2.7      1.5        4.2    EEC                                  2 . 0.  2.0
ALt-   Coroo-liarl   Oqolpoe-           0.0        0.1        .         0.1    enAt.                               0 .
Win d-ad Inlan.do
St. M_rtr_  hinpon  Inprone_o_              5.5         3.6      1.9        5.5    EEC                   -       -       -       -      0.7     2.5     2.-3
ENERGY                                      76.7        53.6    23.1        71.0                         5.7             2.9     3.6   15.8   28.1   22.5         3.0
Poon  Enpsn-i-                             44.0        30.8     13.2        5.0     Seth.               1.2     2 .7            2.5   13.5   10.0   10.0               To add Bo25 KW4 thor..ol g--eAttngoi.
37.0     SoPpjli-r
Sofoty Otrp--neonFcr/-         e P-1`   laoe    4.6     3.0      1.6        2.1    lNBh.                2.5   54.3    2.1       1.1
Pooco Fo"p-...o                            27.8       19.5       8.0        4.2     Neth.               2.0     7.2                     2.3   10.0   10.5       3.0
21.6     SoPppiLeB
Poe-  flar  toio    rdy                     0.2        0.2        .         0.7     NLott.               -       -      0.2
Aliernaio- Enegy S--cr  Stody               0.1         0.1       .         0.1    EtC      -           ----                                   8.1
WAT00 AlND SEWERAGE                         35.6        20.7     12.9       26.0                         7.6             6.5     9.6   10.3      5.5     1.1
Waee  li-nhtionli   (2od Phon) -
Pipe Onntollstton               ~~~~       ~~~1.2  0.6  0.6     1.       Sth.                -       -      0.1     1.1
Weter Di-irihnto   (3rd Phas)               98          55       45          7.4    Neth.               2.4   24512                     3.5    4.0      1.1
111 1979-01 Ph...                         12.4)
121  -anda Aso                            13.91
145 Salinjo 4 G-oo  Ko-nee  Poop
I-~re.. toe-  Plant                     3.2         2.6      1.4        3.2    Seth.                 -       -      0.7     1.3     1.2
Aqoenone Wate  Pleon                       13.8         9.6      4.2        8.6     Beth.               5.0   30.7    4.6       4.8    3.1
Ora.jeand 45. Son.. oWae
tDintlhoiooi                                4.0        2.2      1.8         4.0    Neth.                 -       -             0.5     2.5      1.0
_aeder    ste  Soppl                        05          .3      0.2         0.5    NetA.                 -       -     0.5
S__eoao  poro        lynt  Nn ha                        04       02         06      Bth.                 .              0.2    0.4
Wate  Dlnnrlhutto-                          0,5         0.3      0.2        0.5    Neth.                 .       -      0.2    0.3
I/   C ahirh 0S529 oilli-t ipleoreond by -ed-1977.



- R5 -
Thblc 5.9:  NETHERiANDS ANTILLES - PUBLIC SECTOR INVESTMENT PROGRAM/FINANCRD PROJECTS
(Currect US$ oilliSo)
Page 2 of 2 pages
Tota     F-ieg.  Loca    Exetcos'                        Co,ac-p-c
C.ot      Coat      Cost   Fi t..i.g    Sosroc         C-etcibution             prola-t Implek7Pntati4n                    R-eckae
UBS$.    %      1978   1979   1980   1981   1982   1983
EDUCATION AhD TRAINING                   27.0       17.1      9.9       25.1                       1.9             4.3    4.3    S.f    2.3    1.6    2.5
Curacao
Scroe Pocloos Prlcarp ar.d Ltwer
Secoodacy Schools                       2.2        1.3      0.9       2.2    Neth.                -      -       0.5    1.1    0.6
Pro-prira) dnd Pricory Schools           4.2        2.5      1.7       4.2    Neth.                -      -       0.5
Central lhb.ary                          3.7        2.4      1.3       2.8    Neth.-S.E.C.F.   0.9   25.0                        0.5    2.0    1.2
rsubh
Technictl Scsool                         2.5        1.5      1.0        2.5   REC                  -      -       0.5
2 Pce-pri-rY Schools                     0.4        0.2      0.2       0.3    Neth.-S.E.C.P.   0.1   25.0        0.1
Cor-trocoio- T-roinin                     0.2        -       0.2        0.2    Neth.-S.E.C.F.    -        -              0.1    0.1
Bonaire
Prc-prloorp sod Priosoy School           0.9        0.5      0.4       0.9    Neth.                -      -      0.7    0.2
Looeo hooholoal School                    3.1       1.8      1.3       2.3    Neth.-S.E.C.F.   0.8   25.0        0.7    2.0    0.4
Spcal School                           0.5        Q.3      0.2       0.4    Neth.-S.E.C.F    0.1   25.0        0.2    0.3
Nsioon-oite
Collcgc fo.r Higher Stdoos                5.6       3.6      2.0        5.6    Neth.               -      -       1.0    0.4
soholarshipr                             3.7        3.0      0.7        3.7    EE                 -       -      0.1    0.2    0.2    0.3    0.4    0.5    Por I-or sod ciddle leveL cr1-       tl-j   in
Sorpo, o-ibb-ao sod B,A.
ATOOSINC                                 14.9        0.4      6.5       14.0                      3.9              5.5    7.3    2.1
Loo ..co.. .o....f.                     11.7        6.5      5.2       10.8    Neth.             0.9              3.7    6.0    2.0
(l1 toctbhtcor-i (204 ho-sesS          11.91
121 Scooc PorcoI s (566 hooses)        15.2)
13) goods Abao                         (0.91
14  Ktocal Specht Oralnago             (0.31
I5) Ocher Infrastruoture               11.31
A-ssistant Neth-rlands Ho-sing
A-otoiatlio                             0.3        0.2      0.1        0.3    Neth.              -       -              0.3
Aruba
Los ZncowHousing P-roj-c (Noord;
Toraboan; l:adii)- Ctmpletion           1.2        0.7      3.3        1.2    Neth.              -       -       1.2
hoso ilcighOs Rehabili-tai-o             0.7        0.4      0.3       0.7    Neth.                -      -      0.3    0.4                                    L-o p.rcoso-
Bonaire
Los rocooe Hoousig 150 cits)           0.7        0.4      0.3       0.7    Neth.                -      -      0.3    0.4
,os Incore Apartmo-ts (30  nit5)         0.3        0.2     0.1        0.3    Neth.               -       -              0.2    0.1
FEAlLS)i AND SANITATIIN                  1104        2.4      4.0       9.3                       2.1              2.0    1.2    0.2
C.uracao
0Illw Feoor tIrol ro,                     1.7       1.4      0.3        1.7    Seth.               -      -       0.7
st  hlloaheoh  Htopital hoparsloc        4.7        3.1      1.6       4.0    Yoth.-S.E.C.P.   0.7   16.0        0.1
rod-col ArcOhie                          0.4        0.2      0.2        0.3    Neth.-S.E.C.F.   3.1   25.0        3.     .1I
,Irh,r                                   2.6        2.1      1.5       2.5    Neth.-S.E.C.F.   1.1   30.0         0.7    0.7
Aruba
Oar Ojoolas & 011 -r b.ee    o,ui
Ic-16h Coolers                          0.9        0.5     0.4        0.7    Neth.-S.E.C.F.   0.2   25.0        0.3    0.4    0.2
hoont.1 ca.lr hocrllrasse3.1                        0.1       -        0.1    Neth.                -      -       3.1
hr0500l'l'Y OPOOIOCS                  32.2       13.8      8.4       13.8                      8.4              3.6    6.7    4.4    3.2    1.5
...prvr......   Yoblic A"dminira--m      0.4        0.2     0.2        0.4    Neth.               -       -      0.2    0.2
clco_a I     rho  loprovocrot             3.0       2.1      0.9        3.0    Noth.               -      -       3.2
(ll-rioffll Nloi-cl Pork                0.6        0.3      0.3       0.6    Neth.                .         -   04    0.2
Aruba
'oSlblio  ouildligr                      7.6        4.5      3.1        -        -               7.6  100.0        -     1.5    3.0    2.0    1.1
Mcr-s Stolla Old P'eople's 0c             1.3       0.9      0.6        1.1    Neth.-S.E.C.F.   0.4   23.0        0.5    1.0
Coopoig 0itcr  (     Iocoosop rcoters     1.5       0.6      0.9        1.1    Neth.-S.E.C.F.   0.4   25.0         -     0.4            0.7    0.4
ewroocestad Reotoretlocs                 0.1        0.1      -         0.1    Neth.-S,E.C.F.    .    25.0         -      0.1
Sporro Stadiso                           3.2        0.1      0.1       0.2    3och.                -      -        -     3.1    0.1
cc.ourooioo Oletoulcal 3515dinE          3.0        0.6      0.2       0.8    Neth.                -      -        -     0.1    0.7
Wind-ard looeds
V..oo.s Pro-c-s                         5.4        3.5      1.9        5.4    Neth.               -      -       1.0    2.5    0.6    0.5
Nation-wide
rop,oorsphMc b,aps                      1.1        0.9     3.2        1.1    Neth.               -       -      0.5    2.b



66 -
Table 5.10:  \CT((ERLASDS ARTICLES - PUBLIC SECTOR INVO ESTM PROCiA,TI ~7EW PROIJECTS, 1978-83
(Cren   ss million)
_______________                                                                                                                                                                                    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Page 1 0f 2
Total                   I ti c,  --a ica,cue    Pas-ie    Cootrpr
Cost      Cos t     Cost   Required      Sourc       Contnibo-ionSau                                                                    ead                                                       rjc   eceeet
TRANRO T'ITAL1T                                      1RO.9     112. 3     26.6      127.2                  61.7    32.0                                                                                                                                       12.3   29.2   47.3   62.9
AC'RICULCUROC                                          7.4        2.9      4.5        6.8                   0.6                                                                                                                                 -       -      0.5    0.8      1.9    2.6
Rortirulcoce                           ~~~~      ~~~~      ~~~~~2.8  1.1  1.0  2.5  OtCh.   0. 3   20.0       Pr-feaibiiiev  stein tanpicted.                       US10.12 million  for proje-t prepor..riom
app-o-d by RetberIands
Coatal Inpro-ont                                     0.2       0.1       0.1       0.2    Netb.       .          20.       Concpt and majo- coponets  identified.
Tun  Fisbing                                        0.1        S.C      0.2        0.5     Neth.         Wi    20.0        ibid
Aruba
Sibab  Horrins ten                                   0.0       0.3       0.0       0.6    Seth.          2.2   20.0        Conce~pt and najor mampa-eetidemrtlfid.
Agni-oltu-l Eqnipnent                                0.3       0.3        -         0.3   NSceb.           -       -                                                              Appr-n1 pe-ding on  -npltio- of agrimolen-l
Aloe Rebubiiirstinm                                  0.0       0.2       0.5        0.2     NetS.          -       -       Conce~pt and major campenets  identified.              To i- -ra    yilds  for enports
Refore-atoti                                         2.0       0.5       1.0        2.0   NSerb.                           Pea ct idea.                                           8-10 y-a  progra- cepd
IRDUSTRY 000D _COPORCO                                13.8        8.6      5.2       10,007                                                                                                                                                                    1.0    2.0       3.5    6.2
Industrial Iefroscru-cr                              2.2       1.5       0.0        1.2    Neth.          0.5   20.0       ld-oiifi-sti-mc-plersd.
Small Craft Yard                                    i4.3       3.R       0 .3       3.3    N-ch.          1.0   25.0       Pref-aibiliry study being prepard.                     Pi...scieg of priosre project totalling
0078.6 illliom.
Orienh-nn  Prec lone - Induatrial Rails              0,0        1.2     C),b       0.9   NReib.           0.9   50.0       Fe-sibilicy  trudy ...nplctnd.                         Pemding r _nit  of feaibility study.
Ce.nen  Partory - feasibility Stody                  0.6       0.6        -        0.4    Seth.            -       -       ldestifi-atio-   -plered.   Finaning
requeted.
On-rte-job TraIning                                  1.2       03        (1-        107    Netb.           -       -       Co-npt and nueru0pnuneta  identified.
Pro  lone / Airport                                  2.4       0.0       0.9        1.8    Serb.          0.6   25.0       P-ef-oibility study being prepared.                    To es-ablinb additional fre   oato airport
lSu-ght-h-ns                                         0.8       0.6       0.2       0.2      Seth.         0.1   15.0       Prefe-ibilitp stody being p-epared.
Indotrnia 1Halls                                     0.2       0.1       0.1       0.2    Serbh.           -       -       ibid                                                   To op-grade fretoe
TOURISM                                               22.0       14.0      8.0       14.2                   0.3                                                                                                                                                 2.2    5.5    65    7.0
Onpmen-ne    Tour.ism I.fias -tratar                 2.0       0.8       1.2        1,1    Beth.          0.5   20.0       Project idea
Cal f Course- P.asibility Study                      1.9        1.3      R.6        0.2     unbo...       1.2   63.0       ld-tifinati-n copleted.
Hilton Hotel - Enp-ri-e                             10.6       2.4       3.2        5.0     unbo....      4.8   45.0       P-of-aibility tompleted.
Medin-prim-d Ho.tel - F-aibility Stody               0.1       0.1        -          -        -           0.1  100.0       ibid.
Pisrnadera Bay Marina                                4.4       2.6       1.8        4.0    nekene         0.6   10.0       ibid
_iSnte                                               3.0        1.8      1.2        2.0    unbkses        0.3   10.0
TRANSPORT AND COCR8ONICATIONS                         32.9       16.8     16.1       16.5                  16.4                                                                                                                                  -       -      1.5    6.9      8.2   13.2
Port  oderniestine                                   1.9        1.2      0.7        1.5     Nebh.         0.6   20.0       Ideitfieistio . a. per.   d                            Rodereisation  of Brimeha.mes.
Pochseo   --are                               3.9                 3.9 99      -      NOch.         3.9  100.0       Proje-t ides    Pedifg polity decision.                Part of g-_ee_t ple so rake neat primate
qnOy  and ohs-.e  to Pare  rare Anekhfipy.
Relocati-o  f Wo..nhons-                             3.9        2.4      1.5         -      NSth.         3.9  100.0       Idenifi-iti-n                                          Pert re-gefe"rise  to sake ram  far rcite
ship q-aps
Ecet Inrvnne2.0                                                 1.6      0.0        1.9    Nath.          0.5   20.0       Feaibility  trod2  -splered.   Financ ing              Part of port easier plain
requeted.
Sr. Mtis,ielbaag Mn-rng Bonys                        0.2       8.2        -         0.2    Herb.           -       -       Prefesibility study rampieted.
Resroes                                ~~~~      ~~~~       ~     ~    ~    ~~~0.1  0.1 - - -  0.1  1SR.0     P'ef-uibility stady being prepard.
Airpot  -Saiisin                                     5.0        3. 1     1.9        4.0   (Serb. or       0.2    4.0       Pe-ibility stody befsg prepare.d.                      Profspreesrpln
- Aointin- F-ilities                       1.6        0.8      0.8        1.3   (FOC)           0.3   20.0        Pref-sibility ~trdy being prepared.P-                         f-t PI
Beads                                                6.4       2.4       4.0         -        -           6.4  100.0       Feaibility study  -unpleted.                           Parr of ongoing program
Queen  nt  Bridge llndersiestio-                     0.9       0.3       0.6        0.0    ineS.          0.2   25.0       Sd-ntiBi-tio-
Airpere Ep-enion                                     6.4       4.5       1.9        5.9    EEC            0.5     1.0      Pr-f-aibillty being.. modn-te.
Pluip-ent P-teat                                     0.2       0.2        -         0.2    Seth.           -       -       Eqoip-et Seinf seleeted.                               Pornas   of stone e-nhbe  to prad... knildieg
atrasfor rod and airportteetaci
BOOBOY                                                  2.0       1.5       0.5       L.6E                  0.4                                                                                                                                  -        -       -     0.6    1.3    8.3
Aruba
Clea  Ea-gy Be-eorh Teeter                           2.0        1.5      0.5        1.6    EtC            0.4     1.6      Prejeet idea.
1A1TER0 ASPOIWERAGi                                    0.2        0.1       0,0       0.2                     -                                                                                                                                   -                      .       0.
BImmo  Se--cof                                       0.2        0.1      0.1        0.2     Seti.          -       -       Projec   id-oified.
I'  -told1eg technicalstncre



- 67-
Talble 8.10: ELTHERI.ANDS ANTILLES - PUELIC SECTOR INVESTMENT PRSORAI/NEW PROJECTS, 1978o83
(Curren US$ mIllIon)
Page 2 of 2
Total   F-ri0c  Loca   Pil...uing  Poss.ible    Cou-trpart
Cos-   t   C-     Cost  Requbred    Source        Contribution                 Statu                                           MEm-tos                                                    PrjctI  laaetto
oS5,,    7,                                                                                                                   1978   1979   1980   1981   1982   1983
EDUCATION AND5 TRAINEIN                            29.7      18.9    10.8       21. 0                 8.7                                                                                                                             -       -      1.4    4 5     7 4    8.5
Cartoon
15 Pr-prlctay Schools                             3.9      2.3      1.6       2.u    Seth.-         1.0   25.0      FeaIbility s-dic  being prepare.d.
Special Schools                                   2.6       1.7     0.9        2.0                  0 .6   25.0     ibid.
3 Sedan Sec...d-ry Schools                       5.5        3.6     1.9       4.1                   1.4   25.0      ibid.
Radalpho- College Eopantain                       0.9       0.6      0.3       0.7                  0.2   25.0       ibid.
S Technicol SchuoLs                             10.8       7.0      3.8       8,5                   2.7   25.0      ibid.
M1 ~ IgeIacoa  School Facilitias                  1.5       1.8      0.5        -        -          1.5  100.0       ibid.
PobliEs  ibrar.y Bra-hee                          0.3       0.2      0.1        -        -          0.3  100.0      Prefe...lbiiity study hb.i   c-doccd.
Pe-p,,i-tay School; Playgros..d                   1.2       0.2      0.5       0.9    Seth. -       0.3   25.0      Pre-icoiility scody hoimE coductd.
Orao.jotsd Public Library                         2.1       1.0      0.7       1.6                  0.8   25.0       ibid.
iCesssty C-te-                                    08.       0.4      0.4       0.6                  0.2   55.0       ibid.
Bonaire
V-rti-el Traising Center                          0.1        -       0.1       0.1                   .     25.0      Pccfi...ibiliry study being cod-tood.
HOUSING                                            49,5      29.7    19.0       38.1                 11.4                                                                                                                             -3 28                  7.4   12.2    17.3
Poblie Hesing Program - Centin...tion            18.0      11.2      7.5      13.7    SNobh.        5.0   27.0      Concpt and najor com ponents identified.             Parr cf progrn         .. coo trrot atotal of
3,000 bosses  by 1982/83.
mortgage Pond                                    15.0       9.0      6.0      13.5   Venee ...  0. .5   10.0         ibid.                                               Ecrtbl ishms o.L   ramolvlng fond to ficeoce
75. of cotrotiso cot far 200 boss..s p.s.
Ease Heights Village Rehabilisatioc               7.5       4.5      3.0       5.5    Seth.         2.0   27,0       Prefi...ibility study being c-docted.               5-7 year progra  to impro-  e-itiog bo...ieg
and to.s....oc-t 200-300 n-o bost.-
Self-help sasing                                  8.3       5.0      3.3       5.4   Ve.e..e Se    2.9   35.0        Conce pt and nejor c-p-cett  id-ctified.
HEALTH                                              h.S       3.6      2.4       4L.5                 1.5                                                                                                                             -       -       -      0.5    8.9    2.0
Health med MdclCemtere                            1.2       0.8      0.0       0.9    lIstb.        0.3   25.0       F-aibilbty siadhic being prepared.
Fond Cootro1 Labortory                            0.3       0.2      0.1       0.2                  0.1   33.0       Concpt and major u-po....t  identified.
Oeh-r                                             4.5       2.6      1.9       3.4                  1.1   25.0       ibid.
COWMUNITSY SERTICES                                25.4      16.2      9. 2     13.1                 12.3                                                                                                                              -      -      19    3.2    5.5    5.8
gill-mtrd Urban fnpraenett-                       4.5       3.1      1.4       3.4    Seth.-        1.1   58.0       Pref-oibllity study being prepard.                  Sogniog pragr-  to restor  historic buildings.
Cootie...mion                                                                         0.E.C.P.
Garbage Cole-ti-n System                          4.9       3.2      1.7       3.7    ockoos        1.2   25.0       C.ncepr and maJor  -op-ceta id-tcified.
Sperts Fa-ilities                                 0.9       0,4      0.4       0.6    Serbh -       0.2   25.0       Prefe...tiility study bcing c..cdsnted.
Pacers Pine Statics                               5.6       2.3      1.3       2.9    Serb.         0.7   20.0       Desigo beiog copleted  Fino..ciog c-q-ets
forthcoing.
Rio Cameo go and Ampere Fire Station
and Equ4pmcot.                                  0.7       0.0       0.2        -        -          0.7  10-0.0     Pr-tncibiiiiy study being  -odotrnd.                 RI-nantiso aE minp-t fire stmti-m
C-moity Co.tte                                    0.8       0.5      0.3       0.8    Seth.-        0.2   25.0       Prefea..liility crud7 being  -odacied.
N.E.C.F.
Public Bsildings                                  7.6       4.5      3.1        -        -          2.6  100.0       P-cf-aibility etsdtes beEng candanted.              Central G-v -mtl -ocd mod financd.
Bonaire
R-otor..ti- Historic Boildioge                    2.0       1.4      0.6       1.5   (Seth.-        0.5   25.0       Coocpi sod major componets  identified,
Sports Parilitico                                 0.5       0.3      0.2       0.4   (StEOP..    0.0   25.0          Pr-j Ci ide..
TECHNICAL ASSISTAN0E
Phos.phate Process.ing Stady                   -cnnouk-o    UNDP                                                     Project idea                                        As---rt of posibilities  at iodastial
pru--nice cf phosphate.
.e.elop-ert Planning and Project Analysis    0.2           0.1      0.]       0.1    Ncthor        0.1   52.0       Concept and majortp- L  id-tont   ierfiad.          S  ocos  for 3-yea  period.
EEC
Solar SuIt Proc-osio  Otody                    ..kcasa                      ockno    TNDP                            ProJect idea                                         A-seoo t  f po-ibilitiea ciinutra
proc-ning of sola  salt.
Harbor Pilotage                                   0.1       0,0                0.0     -k-ost        -               ibid.                                                Prooico   -qo-s   - rjected by Set h-l-ds,
Fgc-fighting                                      0.0       0.1I               0.0    Seth.          -               Caccplt-ad -ujoc cap 000          identified.        Toorfa-i- fir-fightini conceo  arpa-t.
Sindaurd Iclands
Gmotber-l Energy Stady                         stAnces                      -kb-       unknow                        Projct idea.                                         Ta otdy fe-th-lm potential or the Island
of Saba.
Nati-el A-no ring ti.   felroJ d Analysis      soikoen                      sknoa    UNI)ly                          C--opt and najor cop o-ats id-toc Ejd.               Ta establieh synrem  f National  Ad-atn cc sd
suppoting  -tsOtntlc.
Tranport SReady                                                                                                      ibid.                                                Tore-c.m..od imp.---mot  of co  ira-pocs
b---oc  usInde and sagth Sooth Ancri-s
Clay St,]7                                                                                                           ibid.                                                cs--otocntf po-billi-e to otilior clay



- 68 -
Table 6.1: NETHERLANDS ANTILLES - SUMMARY ACCOUNTS OF THE BANKING SYSTEM, 1974 - 1978
… ____-------------------…December 31…---------------…-___________
1972      1973       1974       1975       1976       1977         19783
NAf millions
Net Foreign Assets                          137.6      135.0     173.0      197.7      259.8      267.4        169.1
Domestic Credit                             291.9      346.1     360.3      402.3      414.3      535.0        746-,
Public Sector                               6.7      29.8         1.4      37.4        7.2       59.8        152.2
Central Government (net)               (-4.0)      (8.1)    (30.6)    (72.1)    (59.9)    (B].7)         (139.6)
Island Governments (net)              (10.7)    (21.7)   (-29.2)   (-34.7)   (-52.7)    (-21.9)           (-7.4)
Private Sector                            285.2      316.3     35,8.9     364.9      407.1      475.2        613.8
Other Items (net)                           -50.9      -58.9     -67.2      -69.8      -86.3    -111.4        -125.7
Liabilities of the Banking System           378.6     422.2      466.1      530.2      587.8      691.0        789.4
Currency in Circulation                    58.4       60.9      74.6       85.7       91.7      105.0        4.2
Demand Deposits                          119.9      124.1      120.2      144.6      168.1      218.1       ( 01
Time Deposits                              86.1       83.2      91.1       97.6       90.9       92.0        3882
Savings Deposits                          114.2     154.0      180.2      202.3      237.1      275.9       (
Memorandum Item: Deposits of Island
Governments                               9.4        2.1      52.1       59.4       74.2       62.5         59.2
/a    Incl.lding Island Covernment denosits.
Source: Bank of the Netherlands Antilles



- 69 -
Table 6.2:  NETHERLANDS ANTILLES - DEPOSITS OF THE ISLAND GOVER1NMENTS OF
CURACAO AND ARUBA WITH THE BANKING SYSTEM, 1972-78
(NAf million)
June   June
1972   1973   1974   1975   1976   1977    1977   1978
Demand Deposits                  9.4    2.1   21.4   13.4   10.2   20.5    10.2   12.8
- Central Bank                  9.4      -    10.0    2.6    1.0    7.7        4.0    3.6
- Commercial Banks               -      2.1   11.4   10.8    9.2   12.8        6.2    9.2
Time Deposits                     -       -    30.5   46.0   64.0   42.0    14.1    9.0
- Central Bank                   -       -    23.0   44.0   55.0   38.0    10.0    5.0
- Commercial Banks               -       -      7.5    2.0    9.0    4.0       4.1    4.0
Source: Bank of the Netherlands Antilles



- 70 -
Table 6.3:   NETHERLANDS ANTILLES - INTEREST RATES, 1973-JUNE 1978
(Percent)
End-Year
1973                1974                 1975                 1976                 1977                  June 1978
Lowest    Highest  Lowest    Highest  Lowest    Highest  Lowest    Highest  Lowest    Highest              Lowest    highest
Deposit Rates
3 Months
Curacao, Aruba, Bonaire          2.3        5.5       5.0        7.0       5.0        7.0       2.0        5.8       2.3        5.5          2.         5.5
Windward Islands                 5.0        7.3       5.5        7.8       5.0        6.5       2.0        5.5       2.3       6.5           3.1       6.8
12 Months
Curacao, Aruba, Bonaire          3.0        6.5       5.3        8.3       5.5        7.8       2.5        6.8       2.8        6.5          2.;       6.5
%lind-ard Islands                6.0        7.8       5.5        8.5       5.0        6.8       2.5       6.0        2.6        7.0          4.t        7.3
-urodollar Deposit Rate
3 months                              10.1                10.2                 5.8                  5.0                  7.2                     8.7
12 months                             9.6                  9.8                 7.2                  5.6                  7.7                     9.2
Lending Rates -
Current Account
Curacao, Aruba, Bonaire          7.5        8.5       7.5       11.8       8.0        9.5       8.0        9.5       7.5      12.0           7.5      12.0
Windward Islands                 8.0       12.0       9.0       12.0       9.0       10.5      8.0        11.0      8.5       11.0           8.5       12.0
Mortgage Loans
Caraca-, Aruba, Bonaire          8.0        9.5       9.0       10.5       8.5       11.0      8.5        11.0      8.5       12.0           8.5       12.0
Windward Islands                 8.0       11.0       9.0       12.0       9.0       11.5       8.5      11.5       9.0       11.5         11.C        12.0
I Year Term Loans
Curacao, Aruba, Bonaire          8.5        9.5       9.0       10.5       6.3       12.0      8.5       11.0        8.0      11.0           8.0       11.0
Windward Islands                 8.0       10.0       9.0       12.0       9.0       12.0       8.5      11.5       8.5       10.3          9. C      12.0
Year Term Loans
Curacao, Aruba, Bonaire          8.0        9.0       9.0       12.0       9.0       10.5       8.5       12.0      8.5       12.C           8.5       12.0
Tindwa-rd Islands                8.0       10.0       9.0       12.0           12.0            8.5       11.8       8.5       11.8               12.0
i.ur.dollar 3 Months Lending Rate        10.8                 11.3                 6.7                 5.5                  7.6                      9.1
P/ I'rime borrowers.
T-urc:  Bank of the Netherlands Antilles



- 71 -
Table 6.4: LOANS OF THE BANKING SYSTEM TO THE PRIVATE SECTOR, 1975-76
(NAf millions)
May              Nov.             May               Nov.
1975             1975             1976              1976
TOTAL                                     370.9            372.4             370.7            402.5
Enterprises                               286.6            284.6             282.1            309.8
Agriculture, Fishing and Mining             1.6               1.6              1.6              0.7
Manufacturing                              20.0             18.3              19.1             24.1
Electricity, Gas, Water                    11.0             12.8               8.0             16.1
Construction                               15.3             20.2              19.0             19,0
Trade                                     159.3            162.7             167.1            175.8
Hotels, Restaurants                        36.0             25.8              19.5             22.6
Transport, Storage, Communications          3.8               5.2              5.3             12.2
Financing, Insurance, Real Estate          28.3             29.7              31.1             28.5
Other                                      11.3              8.3              11.4             10.8
Individuals                                84X3             87.8              88.6             92.7
Source: Bank of the Netherlands Antilles



- 72 -
Table 7.1: NETHERLANDS ANTILLES-PETROLEUM PRODUCT EXPORTS,
1973-78
(Bbls '000/d')
1973       1974       :L975      1976        1977       1978
TOTAL                         872        745        579         572        551        569
Shell Curacao N.V.            448        337        263         252        289        266
US                        (246)      (160)       (83)        (56)       (46)       (48)
Other Countries           (202)      (177)      (180)       (196)      (243)      (218)
Lago Oil & Transport Co.   424           408        316         320        262         303
uS                        (362)      (355)      (240)       (236)      (189)      (214)
Other Countries            (62)       (53)       (76)        (84)       (73)       (89)
Source: Central Government



- 72 -
Table 7.2: NETHERUANDS A.NTTLLES - TOURISM DATA, 1972-June 19 1
Stay-Over Tourism
Total Netherlands Antilles                        Stay-ever I7uTi_sts
Visitor   Average
Period             Visitors   nights  Stay(Nights)   Aruba         Curacao      Bo aiae      St. Yaary-r
1972               204,869  1,163,398    5.7           88,652      108,150         8,0C'7
1973               229,228  1,433,396    6.3           95,153      123,192       10,L3.
1974               226,018  1,422,062    6.3          105,267      109,649        l1,' IC.
1975               240,779  1,556,687    6.5          128,852      103,304        8,6p3
1976               273,799  1,619,059    5.9          146,489      117,037       t 21.
1977               298,840  1,776,341    5.9          151,169      133,532       14,139
Jan-June 1977        ..          ..       ..            ..          60,095
Jan-June 1978        ..          ..       ..            ..          70,631
Cruise Tourism
Period              Total NTetherlands Antilles        Aruba       Bonaire      Curacao      St. Maarten
1972                           271,925                 45,35Q        l,n1       114,375         119,995
1973                           315,532                 44,532        5,180      168,932          96,888
1974                           312,071                 62,273        4,655      176,302          68,841
1975                           299,961                 57,830        4,130      178,946          58,704
1976                           340,871                  67,745       5,765      178,109          89,252
1977                           380,862                 88,686        1,068      193,642          97,466
Note: Stay-over tourism for Curacao, Aruba and Bonaire only.
Source: Bank of Netherlands; Island Tourist Boards



- 74 -
Table 8.1: NETHERLANDS ANTILLES - CONSUMER PRICE INDICES, 1972 - March 1978
(1972=100.0)
March    March
1972      1973      1974      1975      1976      1977      1977       1978
General Index                                       100    108.1    129.2    149.3    157.2    165.7    162.8    174.7
Food & Beverages                                 100    107.8    122.1    139.8    147.6    156.5    152.1    167.4
Clothing & Footwear                              100    104.8    113.8    124.2    130.3    137.1    135.1    144.0
Housing                                          100    103.4    112.0    121.2    125.8    132.3    130.8    135.0
Recreation & Culture                             100    102                  116.3    123.7    127.8    126.0    133.4
Education                                        100         5    106.7    114.9    116.3    116.7    116.4    118.2
Medical Care                                     100    105.7    115.9    135.6    147.0    161.6    158.1    179.9
Transportation & Communication/a                 100    102.8    111.5    120.6    124.7    129.9    129.3    136.1
/a  1972-74 transportation only.
Source: Bureau of Statistics.



- 75 -
Table 8.2:  NETHERLANDS ANTIILLES - ANNUAL CHANGES TN WAGE RATES,
1974-77 AND 1978
(Percent)
Est.
Sector              1974       1975      1976       1977       1978
CURACAO
Mining                            9.0       16.1       5.9       11.7        6.5
Oil Refining                     21.0       16.1       7.9        5.3
Ship Repair                      22.7       14.5       7.7        9.5        7.5
Food Industries                  21.6       19.5       8.5        7.5
Beverages                        11.7       19.4       9.2       17.9       10.0
Bakeries                          ..        29.4      15.7        5.4        6.5
Electric Power Company           16.0       16.6       7.6        9.2
Construction                     11.9       18.7      10.0        8.0        6.3
Metal Construction/a             31.5       27.0        6.5       4.5        5.9
Wholesale                         ..        18.4      10.5        7.5        7.5
Manufacturing and Retail          ..        27.1       16.7       7.2       10.0
Hotels                            9.8       15.3        5.3       9.2        5.3
Restaurants                       9.2       14.7       8.5        7.0       11.0
Local Airline Company           116.7       17.0       6.0        3.3        5.0
Foreign Airline Companies         ..        13.0       9.5       21.9       12.0
Banking                          13.7       15.4       8.0       11.4        6.8
Hospitals                        15.3       20.5      11.3        4.0        5).0
Medical Centers                   ..         3.4        6.7      10.6        9.2
Island Government                20.3       11.1       4.4        5.3        8.0
Central Government               20.3       11.1       4.4        5.3        8.0
ARUBA
Oil Refining                      ..         ..         9.9      10.0
Brewery                           ..         ..        1.7       12.9
Bakeries                          ..         ..       12.3        4.7
Electric Power Company            ..         ..        6.7        6.2
Wholesale                         ..         ..         3.8      15.1
Retail                            ..         ..       12.1        5.4
Hotels                            ..         ..        6.0        1.0
Banking                           ..         ..       -8.9       35.3
Insurance                         ..        ..        -2.8        3.2
Hospitals                         ..         ..         5.5       8.0
/a Mainly maintenance and repair at oil refinery.
Source: I)epartment of Economic and Social Affairs.



Table 8.3: NETHERLANDS ANTILLES--WEEKLY WAGE RATES IN CURACAO, ARUBA AND SELECTED CARIBBEAN COUJNTRIES, 1975-77
(US$ Equivalent)
1975                                                           1976                                                               1977
Trinidad                                                       Trinidad                                                         Trinidad
Cura9ao    Aru.ba  & Tobago  Barbados  Jamaica               Cura9ao       Aruba   & Tobago  Barbados    Jamaica             Curaqao       Aruba     & Tobago  Barbados         Jamaira
(Jan.-SePt.)
Oil Refining                       ..     131. 20  101.95          58.25        ..         144.20       144.20      114.90       76.-2 5       .151.75                   158.60      135.30        80.00
Mining                             ..        -          --                       .88.95                     ..         -            -        193.60          99.30        i.-                        -           99.75
Ship Building                      .         -        7 7 . 30      -            .         182.80/a         ..       84.25         -                        200.20!a      .          105.65-                        -
Manufacturing:
Electronic Assembly/b            .         -       46.38          ...                     80.00           --       46.35        .-                         90.20        --48.9G
Food Industries                  ..       ..         .           36.65        ..78.00                      .         ..        38.00        73.40          83.85         ...47.00                             65.35
Beverages                        .        ..       48'.05        337.45       ..62.35                     ..       52.05       40.00        ..73.50                     ..75.05                  50.00
Breweries                        .        --       51.50          .                       80.30           --       58.05        ..                         84.50        --61.00
Bakeries                         ..      62. 35    34.75          .            .73.65                  69.95       36.10        .                          77.65        73. 35      39.70        48.00
Uther                            ..      59. 85   40.75           .                         .67.20                 44.60         ..41.60                    ..66.80                '53.40          ..38.50
Construction                       ..       3. 60      ..          31.50         ..8720                   85.00         .        41.45         79.80         94.15         95.95        ..50.00                  78.55
Metal Construction/c               ..        .          ..                       .         119.85          .                        ..                      125.20         .
Vholesale Trade                    ..      65.'90      ..          38.25         ..90.20                  68.45        ..         41.25        ..96.95                     78.80         .44.00
Retail Trade                       ..      47. 85      ..          21.78         ..62.35                  53.65        ..         22.OC        .             66.85         56.85        ..30.00                   ..
Banking                            ..      86. 75      ...                       .         117.45         79.05/a      ...                     .130.75                   106.95         .             ..
Tnsurance                          8. 4. 7 0           .                        ..                       823           ...4....95.
Diotels                            .       83. 70      .           28.73         .          80.:60        88.75        .          27.3          .             800   8       9.65 99.6               35.00
Nestporants.  basro.                         .         .             ..                     63.80          ...                      ..                       68.30          .
lower Utilities         ..     11~~~~~3.:50  .          55.:45       ..         123.10       12i1.1          .        5.0         161.80         134.4        126.40         ..70.50                 159.70
Do~',l  i.ir lioe              ..        .          ..                        .         180.85         .                        ..                      186.80          .
fore.ign Airl ine                  ..        .          ..                       .85.20                    .                        ..                      103.85          .
llosniitls l                               92.40       ...                       .         114.55         97.10        ...                      .120.20                  105.30
Lidry dock
liou,-hn Id. applisnces
c iain1v oil rtfin-r, nnintonance
LOnrc(:  De-partment of Labor (Netherlerudm Antilles); Central Statistical ~ffics- (Trinidad and lobngo); Department of Labor (Barbados); Department of Statistics; IMF (Jamaica).