The ongoing pandemic has increased the need for expansionary fiscal policy and the next government will have little recourse other than relying on Dutch financing to fund economic recovery efforts as domestic sources of revenue generation will remain inadequate in the near term. This will come with the condition of adopting austerity measures in other areas of spending that are not of emergency nature. Although the MFK has criticised the PAR for conceding to Dutch-imposed conditions, they themselves will have little option upon forming government (which is our baseline forecast) other than to rely on Dutch assistance. On a positive note, the government's fiscal position will improve in 2021 given the recent agreement with the Netherlands signed in early November 2020, under which Curaçao received its third tranche of liquidity support from the Dutch to the tune of Naf181m (4.4% of estimated 2020 GDP), which will help the island to meet its expected spending requirements in 2021. The first two tranches of fiscal support from the Netherlands totalled EUR460m. These included payroll subsidies for private-sector employees of up to 80% of wages (depending on the revenue loss to the company); income support of Naf1,335 (US$754) per month for self-employed people; support of Naf1,000 (US$557) per person per month for workers rendered unemployed since mid-March; credit support for small and medium-sized enterprises (SMEs); and compensation for the Social Security Bank's premium losses.

Curaçao will continue to rely on additional support from the Dutch during much of the forecast period or at least until the economy is back on track and domestic sources of revenue have recuperated. Dutch assistance will come at the cost fiscal tightening on the government's part, especially on non-emergency spending. The national debt will also rise as a result; the IMF forecasts that national debt will exceed 100% of GDP in 2021 (up from 55% of GDP in 2019). Reining in non-emergency expenditure such as on remuneration, hiring and appraisals will prove difficult bearing in mind the implications on political stability, which in turn will pose risks to fiscal adjustment.