EIU expects the political climate to be broadly stable over the 2022-23 forecast period. After winning the general election on March 19th, the Movementu Futuro Kòrsou (MFK) and the Partido Nashonal di Pueblo (PNP) formed a coalition government-led by the prime minister, Gilmar Pisas-which was sworn in on June 14th. The coalition government holds 13 out of the 21 seats in the Staten (parliament), compared with 11 seats held by the previous government-a coalition between the Partido Alternativa Real (PAR) and the Partido MAN (MAN). As a result, the current government will experience fewer risks to governability than the previous administration, which had a more difficult time advancing its policy agenda.

Although cross-party differences relating to the Dutch government's influence over Curaçao's internal affairs and economic policy-especially regarding fiscal support during the pandemic-will persist, the government's strong legislative position will allow it to advance its policy agenda with relative ease. The most important task facing the MFK government is steering Curaçao's economic recovery from the covid-19 pandemic, which has dramatically affected the small, tourism-dependent economy.

Conditions of Dutch-led oversight and governance structures have proven extremely contentious in Curaçao. The MFK claimed prior to the general election that a fresh poll would give the new government a stronger mandate in future negotiations with the Netherlands, and also ran on a platform of reduced Dutch influence on the island's fiscal and economic matters, as well as less dependence on Dutch financing. Mr Pisas did manage to renegotiate the terms of an agreement signed under the previous administration that sought to create a new fiscal oversight body called the Caribisch Orgaan voor Hervorming en Ontwikkeling (COHO, a Caribbean reform and development body). However, we do not expect the new government to be able to wean the island off Dutch financing, given that it has few alternative sources of finance. Nor do we expect the government to be able to overturn the main conditions of Dutch financing-adopting austerity measures to enable fiscal consolidation. Downside risks to political stability and governability include civil unrest and strikes in response to austerity measures (as seen in June 2020), which would undermine the economic recovery.