Under the tutelage of the Kingdom Council of the Netherlands, the government will intensify its fiscal consolidation efforts. After posting a fiscal deficit in 2017 of 1.5% of GDP (which was the result of large increases in expenditure, primarily contributions to SVB, the social security bank), a rise in tax revenue is estimated to have generated a small fiscal surplus. We expect further small surpluses in 2019-20.

A financial supervision arrangement with the Dutch government will sustain support for fiscal reform, but in the meantime expenditure will be held down (a spending freeze has been in place since 2012). Low economic growth in 2019-20 will discourage tax increases. Although the relationship with the Netherlands will remain useful in reining in the deficit, the CBCS has criticised it for being too inflexible.

Pressure to keep the island's numerous social funds well capitalised and to continue upgrading infrastructure will remain a constant challenge. The public debt burden is fairly heavy, at around 50% of GDP. The authorities are aiming to reduce this ratio to 40% in the medium term; in the absence of larger fiscal surpluses, this may be difficult, but we still expect a modest decline in the public debt burden in 2019-20.