Upon review of all the major economic indicators, which the Department of Economic Policy & Research (DEPR) monitors, it was observed that there was growth in the economy in 2000, compared to 1999. It should be noted from the outset that this general review of the economy does not take into account the various individual and/or sectorial developments. The reason for this is the Island Government of St. Maarten does not have the legal authority to requests this information, as this is the responsibility of the Federal Government. However, seeing the importance of this information the Department of Economic Policy & Research has engaged in an Investment Survey to acquire more detailed information on the performance of each sector of the economy.

Despite the lack of information on a Federal level, the following seven major economic indicators were utilized namely, Turnover tax (ToT), Cruise Tourism, Stay-over Tourism, Weighted Tourist days, Residential Deposits, Residential Loans, and Government Revenue. All of the above-mentioned indicators have shown growth with the exception of stay-over tourism and government revenues. This points to the fact that the economy is still expanding.

The ToT is considered the most important indicator, as it is a tax, which is based on the turnover of business activity. So if the Turnover tax increases, this implies that consumption had to have increased. Naturally, we would have to factor out inflation. Indications from the Central Bureau of Statistics (CBS) have shown a flat or insignificant change in inflation in 2000. Considering the above-mentioned and the increase of ToT in 2000, compared to 1999, this shows that the economy is indeed expanding.

The tremendous increase and volume of the cruise tourists market primarily drove the economy and subsequently, increased ToT. The cruise tourism industry showed an astounding increase in 2000, relative to 1999. Naturally part of this increase is a direct result of the drastic reduction of the industry in 1999 caused by Hurricane Lenny. Factoring out the decline of Lenny, St. Maarten still observed a double-digit increase, in cruise tourism.

With respect to stay-over tourist arrivals, we experienced a slight decline. This decrease also spilled over into the government revenue where we observed a moderate slide of government revenue. There were decreases, in particular in the tourist-related revenue for government of room, rental, and timeshare taxes. These developments have also had a ripple effect on the overall economy, which affect jobs and profits of the economy, subsequently, causing contractions in wage and profit tax in 2000, compared to 1999. A possible explanation of the decrease may also be the malignant problem of tax assessment and collection, however, considering that this has been a structural problem for some time now, this can only partially explain the decline of government revenue.

When we consider the economic impact of the cruise tourist and stay-over tourist, numerically and statistically, one arrives at the Total weighted-tourist days. This figure distributes the relative contribution of the various types of tourists, factoring out the number of tourists going to the French side and taking into account the number of days each stay-over tourist remains on the Dutch-side of the island. When we calculate this figure, we observe an increase in 2000, relative to 1999.

Upon review, we realize that there is a relatively close approximation to the increase of ToT and the total weighted-tourists’ days, reflecting a relatively close correlation, when we take into account the relative impact of the various types of tourist markets. In the final analysis, St. Maarten has done relatively good in both cruise and stay-over when compared to the regional developments.

Looking at developments in the banking industry, we also observed growth in the economy. The residential Deposits witnessed a moderate increase in 2000, compared to 1999. And in the residential Loans, we see a whopping increase in 2000, compared to 1999.

In addition, the liquidity challenges of government caused by the decline of government revenue result in less revenue for export (i.e. tourism) promotion and subsequently, affects the stay-over arrivals. As mentioned already, a partial explanation for the liquidity problems can be the assessment and/or collection of taxes. This particular issue needs to be addressed to continue to promote the island, thereby acquiring additional revenue. In interim period, a possible solution could be to appropriate the taxes directly obtained from tourism towards marketing of the island. With the re-opening of Maho, the tourist season could be bright, however, the revenue to market the island needs to be in place.

Due to the lack of detailed and updated data, it should be noted and we have to consider the possibility that the figures may be concealing developments, which may exist. This may lead to the realization that the projections of the economy may be off by a slight margin.

Considering the above-mentioned, an alternative scenario could be that there is the possibility that the economy could have remained flat or even contracted slightly because of the relative increase in ToT. When we observe marginal increases in key indicators, after a year of a hurricane, this could be regarded as a relative weak economy. When we consider that ToT is the most comprehensive reflection of the economy against the estimated ToT, after factoring out the assumed inflation, and the marginal increase, the real growth of the economy might be marginal or even may have contracted slightly. However, DEPR believes the latter explanation to be the least plausible base on our analysis.

In conclusion, we observe growth in the economy, in particular, considering major developments such as the Harbor having been completed; the airport is in Phase II of its expansion plans, as well as Maho having re-opened its doors in the latter part of the 2000 tourist season. Barring no hurricanes in 2001, with our renewed expansions plans, projects, and capacity, St. Maarten will experience significant growth. In addition, a renewed call for economic diversification is imperative to jumpstart the economy, create jobs and alleviate the liquidity challenges of government for additional and continued export (i.e. tourism) promotion.