1. Annual Report 2008
December 8, 2018

2. Outline presentation Developments in: Outlook for 2009 Real sector.
Public sector.
External sector.
Monetary and financial sector.
Outlook for 2009
December 8, 2018

3. Real sector
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4. Main developments in 2008 Slower economic growth of 2.0%.
Soaring inflation of 6.3%, fueled by the rising world oil and food prices.
Decline in unemployment rate (9.7%).
Real GDP decelerated to 2.0% caused by fewer domestic economic activities, due to
both the private and public sectors. Private demand slowed, as both
consumer spending and private investments expanded at a reduced pace.
The soaring consumer price inflation put perceptible strains on consumer spending
and investments.
The weaker value added growth in 2008 was shared by almost all economic sectors,
with the exception of hotels & restaurants and the real estate, renting & business services.
Annual inflation soared to 6.3% in 2008, led largely by external factors, i.e., the
rising oil and other commodity prices.
In spite of the overall slowdown in economic growth, the employment improved
in the Netherlands Antilles. This performance can be explained by the fact that
developments in production have a lagged effect on the labor market. As a result,
the jobless rate was lowered to 9.7% in 2008, the first time ever a single-digit figure.
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5. Macro-economic key figures: a comparison
Real GDP
Consumer prices
Unemployment rate
2007
2008
2007
2008
2007
2008
Netherlands Antilles
3.8%
2.0%
2.8%
6.3%
11.5%
9.7%
United States
2.2%
1.1%
2.9%
3.8%
4.9%
7.2%
Venezuela
8.4%
4.8%
18.7%
31.4%
6.2%
6.1%
Real GDP growth decelerated in the Neth. Antilles, the US, Venezuela and the Netherlands; Aruba turned into recession.
By contrast, inflation increased in all countries.
In line with slower economic growth, the unemployment rate rose in the U.S.
However, the jobless rate declined in the Neth. Antilles, Venezuela and the Netherlands.
The Netherlands
3.5%
2.0%
1.6%
2.5%
4.5%
3.9%
Aruba
2.1%
-2.2%
6.0%
8.3%
n.a.
n.a.
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6. Economic development December 8, 2018
Following the revival in the economy that started in 2006, activities
slowed in 2008.
Inflation soared in 2008, the highest since 2000.
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7. Labor market Curacao St. Maarten Bonaire 2007 2008 2005 2007 2006 2008
Employment
54,049
56,535
18,073
20,720
5,647
6,408
Unemployment rate
12.4%
10.3%
13.4%
10.6%
7.8%
6.3%
Youth unemployment
24.2%
26.3%
30.4%
26.0%
20.5%
11.5%
Participation rate
45.0%
45.5%
58.1%
59.4%
47.9%
52.7%
Unemployment rate declined in both Curacao and Bonaire in 2008.
Both Curaçao and Bonaire show an increase in the number of employed and a decline in the number of unemployed.
Youth unemployment rose in Curacao, while Bonaire’s declined.
Unemployment
7,659
6,486
2,798
2,446
481
433
Labor force
61,708
63,021
20,871
23,166
6,128
6,841
Population
137,124
138,642
35,910
39,011
11,793
12,631
December 8, 2018

8. Development int’l crude oil price vs Curaçao gasoline price
Average crude oil prices increased between 2003 and 2008.
Crude oil prices growth accelerated between the first quarter of and the second quarter of However, since the third quarter of 2008, petroleum prices on the international markets have dropped significantly. In the first quarter of 2009, these prices have increased again.
International oil price changes have only partially been passed through into domestic gasoline prices.
Between June 2005 and July 2007 domestic gasoline prices have been kept
constant.
Since 2007, the government has started to adjust the domestic gasoline prices
gradually.
As of January 2009, domestic gasoline prices are adjusted on a monthly basis
according to the international oil price changes.
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9. Public sector
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10. Main developments Deterioration of the primary surplus.
Slight worsening of the budget deficit.
Lower interest burden.
Lower debt ratio.
The primary balance decreased from 2.3% of GDP in 2007 to 1.9% of GDP in
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11. Budget development general government (Cash basis)
The deficit of the general government deteriorated by NAf. 1.7 million
compared to 2007, reaching NAf million in 2008.
-170
-172
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12. Budget development general government (Cash basis)
The expenditures of the general government increased by
NAf million in 2008 due mainly to higher capital transfers,
and increased outlays on wages & salaries and goods & services.
-170
-172
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13. Budget development general government (Cash basis)
General government revenues increased by NAf million in 2008,
due mainly to a surge in tax revenues.
-170
-172
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14. Revenues and expenditures central government (Cash basis)
Improvement of central government deficit (NAf. 5.9 million).
The increase in revenues (NAf. 101 million) occurred mostly in indirect taxes
(sales tax and import duties).
The increase in expenditures (NAf million) was largely related to higher
capital transfers and outlays on goods & services.
In contrast, interest payments dropped by NAf million, compared to 2007.
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15. Revenues and expenditures Curaçao government (Cash basis)
Deterioration of the island government of Curaçao’s deficit by NAf. 7.6 million.
The rise in total expenditures (NAf million) was largely the result of
higher outlays on pension premiums and transfers to nonprofit institutions.
The increase in revenues (NAf million) occurred mostly in taxes on
income & profits.
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16. Total public debt December 8, 2018
The total consolidated public debt of the Netherlands Antilles increased by
NAf million (5.1%) during 2008, reaching NAf. 5.8 billion.
Domestic debt rose by NAf million, largely as a result of the net issue of
government securities.
Foreign debt declined by NAf million. The appreciation of the
US dollar/NAf. against the euro at the end of 2008 resulted in a NAf million drop
in the guilder-equivalent of the euro-denominated debt compared to the end of 2007.
However, this drop was partly offset by the rise in the outstanding debt with the
Netherlands.
In 2009, total public consolidated debt is expected to drop to approximately
NAf.4.6 billion as a result of debt relief, while GDP is projected to increase to
NAf.7.3 billion.
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17. Total public debt-to-GDP ratio
The debt-to-GDP ratio dropped from 84.5% in 2007 to 82.1% in 2008.
This drop occurred because debt grew at a slower rate than GDP.
In 2009, the debt-to-GDP ratio is projected to drop to approximately 63%.
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18. Interest burden (Cash basis)
Interest payments dropped from NAf million in 2007 to NAf million in 2008 (central government NAf million and island government of Curaçao NAf million).
This drop was caused by the decline in interest rates.
Interest payments projected for 2009 total NAf. 323 million (central government NAf. 167 million and Curaçao NAf. 156 million).
As a result of debt relief: interest savings of approximately NAf. 226 million
(central government NAf. 117 million and Curaçao NAf. 109 million).
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19. Net borrowing of general government
In 2008, net borrowing of the general government totaled NAf million
(island government of Curaçao NAf million and central government
NAf million).
Due to debt relief, net borrowing will be negative in 2009.
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20. Government bonds maturity schedule
: NAf. 3.2 billion of government bonds mature.
Annual average is NAf. 317 million; NAf. 276 million matures in 2009.
Average share of central government is 65%.
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21. External sector
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22. Main developments Current account worsened in 2008 due to:
Decline in net foreign demand
Deterioration of income balance
Increase in capital account surplus.
Large increase in external financing (financial account).
Developments resulted in balance of payments surplus.
Current account deficit widened in 2008 due to a decline in net foreign demand accompanied by a worsening of the income balance.
Net foreign demand dropped as growth in imports of goods and services increased,
partially offset by a rise in exports.
Export growth was related to: (1) higher foreign exchange receipts from bunkering activities (due to higher oil prices and volumes sold), (2) increased re-exports by freezone companies, and (3) increased foreign exchange receipts from tourism, particularly in Curacao.
Higher imports were related to increased commodity prices (both oil and non oil, (2) more imports by the freezone companies, (3) increased investments (albeit decelerating compared to the previous year), and (4) favorable developments in the tourism industry .
The shift in the income balance was due to a decline in interest income on portfolio investments abroad reflecting the international financial crisis.
Capital transfers from abroad rose reflecting an increase in development aid funds from the Netherlands.
Increased external financing was related mainly to more net borrowing from abroad (loans and credits).
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23. Balance of payments (transaction basis, NAf mln)
2004
2005
2006
2007
2008
Current account
-157.6
-189.4
-465.2
-1,063.0
-1,560.9
Capital account
142.2
171.1
179.6
218.8
244.8
External Financing
27.7
110.1
315.0
976.3
1,579.8
Direct investments
-0.7
-42.1
-140.5
425.1
449.0
Loans and credits
30.2
194.8
353.9
700.5
1,257.4
Continued
Worsening of the loans and credits balance was related to (1) withdrawal of funds abroad by domestic companies to finance part of their imports, (2) repatriation of funds abroad by financial corporations operating in the Netherlands Antilles, (3) repayments of outstanding claims for construction services that domestic companies provided abroad in the past, (4) decline of net trade credits extended to abroad (as increase in repayments exceeded rise in net trade credit extended on exports).
Increase in direct investments from abroad was related to investments in the
tourism industry and the purchase of real estate.
The portfolio investment balance improved because the purchase of foreign bonds and notes by institutional investors exceeded the maturing securities.
Portfolio investments
-1.7
-42.7
101.6
-149.3
-126.6
Change in reserves
-65.7
-132.7
-84.3
-277.5
-371.6
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24. Contribution to foreign exchange income* in 2008
Other services,
Re-exports
Refining, 7%
18%
freezone, 12%
Bunker, 15%
Transportation,
Int. financial
Tourism, 38% 5%
business sector, 6%
*Income from the export of goods and services
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25. Tourism sector December 8, 2018
Foreign exchange revenues from tourism increased in 2008 largely due to a marked increase in tourism in Curacao.
Foreign exchange receipts from stay-over tourism in Curacao increased by NAf.83.5 million (13.6%) in 2008, while those from cruise tourism rose by NAf.7.9 million (13%).
The foreign exchange earnings from stay-over and cruise tourism on Bonaire rose by NAf.7.5 million (4.0%) and NAf.13.2 million (47%), respectively.
On the Windward Islands, tourism revenues remained relatively similar to the year before; receipts from cruise tourism dropped by NAf.4.2 million (1%) while revenues from stay-over tourism increased by NAf.7.4 million (1%).
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26. Offshore financial sector
Foreign exchange revenues from international financial services dropped, reflecting the effect of the international financial crisis on this sector.
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27. Monthly import coverage
During 2008, the average import coverage remained stable at 3.0 months because the official reserves and merchandise imports grew at par.
Import coverage above 3 months as of January 2009 reflecting increase in official reserves due to inflow of capital related to debt relief and more funds held domestically by local investors due to the uncertainty in the international securities markets.
Import coverage is projected to remain above 3 months for the remaining of the year.
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28. Monetary and financial sector
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29. Main monetary developments
Increase in money supply.
Continued strong growth in credit extension.
Interest rates on government paper dropped.
Declining trend in private sector interest rates.
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30. Money supply
Money supply grew by 12.7% in 2008 (12.1% in 2007).
Increase of 22.6% in net foreign assets (19.7% in 2007) contributed most to the increase in money supply during 2008 (Bank’s official reserves increased by 24.1%).
Net domestic assets grew by 7.5% in 2007 (8.5% in 2007 ).
December 8, 2018

31. Net domestic credit December 8, 2018
Net credit to private sector increased by 12.3% (11.7% in 2007), due mostly to
increase in commercial bank loans extended (11.9%).
Net credit to government increased by 11.7% (10.3% in 2007) due to rise in
government securities with the commercial banks.
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32. Credit extension Leeward Islands (annual changes)
Total loans increased by 13.8% in 2008 (13.0% in 2007).
Sizable increase in mortgages. Marginal decline in consumer loans. Constant growth in business loans.
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33. Credit extension Windward Islands (annual changes)
Total loans increased by 7.9% in 2008 (8.8% in 2007 ).
Sizable increase in mortgages. Decline in consumer loans. Slower growth in business loans.
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34. Domestic interest rates (government securities)
Relatively stable yields during 2007.
Declining yields in 2008 in line with drop US rates and high demand for new issues in
view of the debt takeover.
Sharp decline in treasury bill rate in 2009 due to “staande inschrijving”
Government securities april
Government bonds (5-year effective yield)
Treasury bills (1 month)
December 8, 2018

35. Domestic interest rates (commercial bank lending rates)
Declining trend in lending rates.
Average mortgage rate Dec 2008: 8.25% (Apr 2009: 7.27%)
Average rate on time loans Dec 2008: 8.24% (Apr 2009: 8.88%)
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36. Main financial developments
Banks:
Improving capitalization.
No increase in non-performing loans.
Increase in earnings and profitability.
Institutional investors:
Growth in assets, except non-life insurers.
Increase in profitability.
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37. Balance sheet domestic banks
Total assets increased by 10.6% in 2008 (16.4% in 2007)
Main contributors were:
Loans %
Interest-bearing cash %
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38. Profit & loss domestic banks
Increase in net operating income before taxes in 2008 because income grew faster than expenditures.
Non-interest income component increased most.
Because of extraordinary items, net income after taxes rose considerably (48.2%).
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39. Capital adequacy
7.0%
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40. Assets quality December 8, 2018
Improvement in the quality of the assets base in 2008:
Ratio nonperforming loans-to-total loans improved as total loans increased by
11.0% and nonperforming loans stayed on more or less the same level as in 2007.
Gross general provisions-to-total loans declined because general provisioning for loan losses remained about the same but total loans increased.
Gross specific provisions-to-total loans increased due to an increase in specific
provisions.
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41. Earnings & profitability
Return on assets increased in 2008 because income grew faster than assets
Income growth due primarily to non-interest income and extraordinary income
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42. Liquidity
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43. Profit development BNA
Operating profit BNA increased further in 2008:
Increase in income due to license fee (NAf.79 million collected) and foreign
exchange earnings;
NAf 93 million transferred to the government (NAf 85 million in 2007)
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44. Balance sheet domestic life insurance sector
Assets domestic life insurers grew by 11% in 2007.
Capitalization strengthened further.
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45. Balance sheet domestic non-life insurance sector
Assets domestic non-life insurers dropped by 2% in 2007.
Capitalization strengthened further.
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46. Net income domestic insurance companies (before taxes)
Profitability of both life insurers and non-life insurers increased in 2007.
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47. Balance sheet of the pension funds
Assets grew by 2.4% in 2007.
Equity position remained about the same.
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48. Profit and loss of the pension funds
Profitability pension industry increased in 2007, primarily due to better performance
investment portfolio.
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49. Outlook 2009
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50. Expected developments in 2009
Economic growth continues to weaken to 1.0%, reflecting the deepening of the global financial and economic crisis.
Lower inflation of 2.1%, driven by declining global oil and other commodity prices.
Nearly balanced general government budget deficit as a result of the debt relief program.
Worsening of the current account of the balance of payments as export of goods and services are expected to drop, partly offset by a decline in imports.
Expectations are that economic activities will continue to weaken in 2009.
Inflation will moderate, due to diminishing cost pressures from oil and other commodities.
As a result of the debt relief program:
A general government budget deficit of NAf. 5 million is anticipated
(central government NAf. +10 million and Curaçao NAf. -15 million).
General government interest savings of NAf. 226 are projected.
Government investment is expected to increase significantly
due to the implementation of Social Economic Initiative and other projects.
The current account balance is expected to worsen in 2009 as exports of goods and services will drop partly offset by a decline in imports.
Capital transfers will increase substantially due to the debt relief
and Social Economic Initiative. The strong capital inflow will result in a further increase of foreign exchange reserves in 2009, although at a slower pace than in 2008.
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51. Thank you for your attention
December 8, 2018