The ongoing pandemic has increased the need for expansionary fiscal policy, and the incoming government will have little recourse other than to rely 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 urgent. Although the MFK has criticised the PAR for conceding to Dutch-imposed conditions, it will have little option other than to rely on Dutch assistance.
Curaçao's access to a third tranche of Dutch financing has been put at risk by the incoming government's opposition to the creation of a new oversight body, a condition set by the Netherlands. Although the Dutch government has not yet responded to the MFK-PNP coalition's request for IMF oversight, there is a significant risk that additional financing from the Dutch fails to come through, placing increased fiscal pressure on the incoming government. Given that the country has little recourse other than to rely on Dutch financing, the government will ultimately have to concede to several of the conditions imposed by the Netherlands, which will most likely include austerity measures, 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 for political stability, which in turn will pose risks to fiscal adjustment.