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On September 15, 2008 the Executive Board of the International Monetary Fund (IMF) concluded an Article IV consultation with the Netherlands Antilles.
Beginning their conclusions, the directors welcomed the resurgence of economic growth in the Netherlands Antilles, and commended the authorities for their efforts to implement key reforms ahead of the legal and political dissolution of the Netherlands Antilles, now planned for January 2010.
Directors welcomed the measures envisaged to underpin the balanced budget rule, and the plans to achieve balanced current budgets from 2009 onwards.
In particular, they supported plans to sustain revenues by broadening the tax base and rebalancing the tax burden.
Directors emphasized that fiscal policy will need to take into account the costs of targeted income subsidies to mitigate the impact on the poorest households of increased prices and higher levels of indirect taxes.
Additional expenditure savings will be needed, including through entitlement
reforms, civil service rationalization, wage restraint, and further pension
reform, to achieve budget balance while meeting key social spending needs.
In conjunction with this, directors observed that, given the limited macroeconomic policy tools available, structural reforms - including supportive tax and labor market policies - will be key to preserving investor confidence and external competitiveness. The broad spectrum of reforms envisaged in the draft tripartite protocol between the government, employers, and the labor unions should help in this regard.
Lastly, the directors recommended that the reforms be implemented as a package, to facilitate their acceptance by all the concerned parties.
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