Kingdom of the Netherlands-Aruba: Technical Assistance Report; Options for a New Rules-Based Fiscal Framework

Kingdom of the Netherlands-Aruba: Technical Assistance Report; Options for a New Rules-Based Fiscal Framework
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Volume/Issue: Volume 2025 Issue 030
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Economics- Macroeconomics , Public Finance , Capacity Development , Fiscal Rules , Technical Assistance , Aruba , Fiscal Council , Fiscal Policy , Forecasting and Other Model Applications , , Budget planning and preparation , Fiscal rules , Fiscal stance

Summary

This technical assistance (TA) mission on Fiscal Rules was conducted from October 31 to November 12, 2024. Public debt management is crucial for Aruba, particularly due to its economic reliance on tourism. Following the 2008 Global Financial Crisis, debt levels surged to over 70 percent of GDP, and the COVID-19 pandemic further exacerbated this, pushing debt to 112.3 percent in 2020. To address these issues, Aruba aims to reduce public debt to 50 percent of GDP by 2040 through fiscal tightening and revised fiscal rules. Key recommendations include simplifying fiscal rules, implementing a Medium-Term Fiscal Framework (MTFF), and enhancing institutional capacity for effective fiscal management. These measures are essential to ensure fiscal sustainability and economic resilience in Aruba.