The new government's near-term policy focus will be the same as its predecessor's: to contain the economic fallout from the covid-19 pandemic, which is likely to linger until global tourism returns to pre-pandemic levels. On a positive note, the covid-19 infection rate on the island has stabilised over the past few months, to an average of 15 cases per day. However, the vaccination curve appears to be flattening, with just over 60% of the population inoculated with two doses as at early December (up by just 5 percentage points over the past three months). We expect the vaccination drive to continue at this slow pace going into 2022. However, the emergence of a new, more contagious, covid-19 variant, Omicron, raises the risk of the government imposing renewed lockdown measures to contain its spread domestically.

Other items on the new government's policy agenda include boosting production and exports by diversifying the economy, improving public-sector efficiency and tax collection, strengthening and expanding tourism, restarting operations at the Isla refinery and the Bullen Bay Oil Terminal, increasing alternative energy generation, developing a second port at Vaersenbaai Noord, and improving co-operation with the other Dutch Caribbean islands. However, Curaçao's ability to undertake recovery measures will depend on the level of Dutch financing that it manages to secure. By early November Curaçao had reportedly met the conditions to obtain its seventh tranche of financing (since the pandemic began, and the last one for 2021) from the Netherlands, worth Naf76m (US$42.5m, or 1.4% of GDP). Meeting these conditions entailed the introduction of a number of reforms to reduce excessive spending at the Social Insurance Bank, reforms to tax authorities and efforts to reduce losses at the Curaçao Medical Centre. Subsequent financing in 2022 will be conditional on the implementation of these reforms. We expect steady progress on these reforms in the forecast period.