BANK VAN ARUBA CENTRALE. Page. Contents. I. Main. institutions. 10. Tourism. No. 344

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1 C CENTRALE BANK VAN ARUBA MONTHLY BULLETIN JULY 2016 Contents I. Main economic indicators II. Operations of the CBA Page 1 3 Statistical Annex 1. Monetary survey 2. Components of broad money 3. Causes of changes in broad money 4. Foreign assets 5. Consolidated balance sheet of the money creating institutions 6. Centrale Bank van Aruba: Summary account 7. Commercial banks' consolidated summary account 8. Government Revenue 9. Government s position with the monetary system 10. Tourism 11. Growth in stay over tourism 12. Consumer price index Published September 8, 2016 No. 344

2 I. Main economicc indicators Monetary developments In July 2016, money supply egistered a growth of Afl million to Afl. 4,157.5 million, compared to the previous month, resulting from increasess in both net domestic assets and net foreign assets 1 of Afl million and Afl million, respectively. Money, as a component of broad money, expandedd by Afl million to Afl. 2,225.0 million, as demandd deposits registered a rise of Afl million, while currency in circulation marked a decrease of Afl. 3.5 million. The growth in demand deposits resulted from an expansion in deposits denominated in both foreign currency and Aruban florin of Afl million and Afl million, respectively. Quasi money grew by Afl million to Afl. 1,932.5 million, as time depositss denominated in Aruban florin recorded an increase of Afl million, while savings deposits denominated d in Aruban florin marked a slight fall of Afl. 3.1 million. The growth in the domestic component of the money supply was brought about by increases in both domestic credit and non credit related balance sheet items of Afl million and Afl million, respectively. The latter resulted from a decrease in shareholders' equity, an increase in other liabilities, as well as clearing transactions. Domestic credit increased as the net claims of the banking sector on the public sector and the claims on the private sector recorded gains of Afl million and Afl. 8.6 million, respectively. The surge in net claims on the public sector resulted mainly from the drawing down of government deposits and development funds by Afl million and Afl. 2.0 million, respectively. The rise in claims of the banking sector on the private sector was mostly due to increases in housing mortgages (+Afl. 7.9 million) (Chart 1) and consumer credit (+Afl. 5.1 million), whichh weree partly offset by a decrease in loans to enterprises ( Afl. 4.7 million). The expansion in the net foreign assets of the bankingg sector was driven by net purchasess of foreignn exchange of Afl million from the public, mainlyy associated with tourism, net transfers from foreignn accounts, transportation, and direct investment. These purchasess of foreign exchange were partiallyy counter balanced by net sales of foreign exchange of Afl million to the public, largely related to net payments for goods, other services, other investment, portfolio investment, financial derivatives, current transfers, and income (Table A). Table A. Change in Net Foreign Assets (NFA) July 2016 (in Afl. millions) Net purchases of foreign exchange Tourism services Net transfers from foreign accounts 13.0 Transportation services 6.2 Direct investmentt 3.0 Government services 2.22 Items not yet classified 0.2 Net sales of foreign exchange Goods Other services Other investment -10 Portfolio investment -8.6 Financial derivatives -7.6 Current transfers -4.7 Income -3.4 Capital account transactions -0.6 NET CHANGE IN NFA (minus (-) denotes a decrease) 6.7 Source: Centrale Bank van Aruba Source: Centrale Bank van Aruba 1 Excluding revaluation differences of gold and foreign exchange holdings. 1

3 Inflation The consumer price index (CPI) for July 2016 noted a 1.1 percent decrease year over year (YoY) (Chart 2). The contributors to this decrease weree mainly the component Housing, whichh was largely driven by a fall in electricity costs, and the component Transport, primarily due to a declinee in gasoline prices. In contrast, the components Recreation and Culture, Clothing and Footwear, and Restaurants s and Hotels registered an increase. Excluding the effect of food and energy 2, the growth in the core CPI was 0.7 percent (YoY) (Table B). The 12 month average inflationn rate was 0.8 percent in July 2016, compared to 0.66 percent in June 2016 (Chart 3). Source: Central Bureau of Statisticss Chart 3: Inflation Aruba (in percent, twelve month average) Jan Feb Mar Apr May Jun Jull Aug Sep Oct Nov Dec Source: Central Bureau of Statisticss 2 Partly affects the housing and transport components. Tablee B. Components of Inflation End month 12 month Inflation components inflation average inflationn Jul 15 Jul 16 Jul 15 Jul 16 Food And Non Alcoholic Beverages Beverages And Tobacco Products Cloth ing & Footwear Housing Household Operation Health Transport Communication 0.2 Recreation And Culture Education Restaurants And Hotels 0.2 Miscellaneous Goods And Services Total Total Excluding Energy & Food Source: Central Bureau of Statistics and Centrale Bank van Aruba Tourism In July 2016, the number of stay over visitors totaledd 99,418, which is 9.0 percent ( 9,833 visitors) less thann in July 2015 (Chart 4). The decline in the Latinn American market of 33.3 percent ( 11,425 visitors) was primarily responsible for this contraction. On thee other hand, the European market and the Northh American Market registered increases of 7.7 percent (+606 visitors) and 1.7 percent (+1,064 visitors) ), respectively. The decrease in the Latin American market was principally caused by a drop in visitors from Venezuelaa ( 11,769 visitors or 45.7 percent). The expansion in the North American market resultedd mainly from a 1.7 percent rise in arrivals from thee United States (+1,020 visitors). In the month under review, total number of nights spent in Aruba, as indicatedd by the visitors, grew byy 0.8 percent to 752,973, compared to the same monthh of the previous year. The average intended night stays increased from 6.8 nights in July 2015 to 7.6 nights inn July The number of cruise visitors registered a downturnn of 4,706 or 19.9 percent to 18,921 in July 2016, compared to July The number of ship calls notedd a decline, from 10 in July 2015 to 8 in July

4 Government revenue In July 2016, available information from the Departamento di Aduana (Aruba Customs) indicates that excises on beer and import duties fell by Afl. 0.9 million and Afl. 0.7 million, respectively. In contrast, excises on gasoline increased by Afl million. In addition, foreign exchange tax decreased by Afl million. Please note that the monthly figures for July 2016 on government revenue from the Departamento di Impuesto (Aruban Tax Authority) were not available at the time of publication of this bulletin. II. Operations of the CBA On August 26, 2016, Afl. 45 million in three monthh treasury bills were issued at an average price of Afl per Afl. 100 nominal, yielding 0.42 percent on a yearly basis. 3

5 TABLE 1: MONETARY SURVEY* End of period May June July May June I. Net domestic assets 2, , , , , , , , ,21 A) Domestic credit 2, , , , , , , , , ) Net claims on public sector a) Gross claims** b) Government's deposits c) Development funds ) Claims on private sector a) Enterprises b) Individuals 1) Consumer credit 2) Housing mortgages c) Other 2, , , , , , , , , , , , , , , , , , , , , , , , ,31 1, , , , , , , , , , B) Other items, net II. Net foreign assets 1, , , , ,33 1, , , ,861.2 A) Centrale Bank van Aruba*** B) Commercial banks 1, , , , , , , , , III. Broad money 3, , , , , , , , ,071.2 A) Money B) Quasi-money 1, , , , , , , , , , , , , , , , , ,915.1 * T he mon etary survey conso lidates th e accoun ts of the Centrale Bank van Aruba, the commercial banks an d th e Gov ernment related on ly to the issuance of components of the money supply, i.e., coin s and treasury bills. This survey sho ws the financial relation ship between the monetary sector, whose liabilities include the money supply, and oth er sectors of the econ omy. ** Gross claims include loans granted as well as government bond s in the han ds of the mon etary sectors and claims resulting from the issuance of treasury bills, cash certificates, and coins. *** Revaluation differen ces of gold an d official foreign exchange holdings are excluded in order to approximate the net import of foreign fu nds by the n onmonetary sectors. July 2, , , , , , , , , , ,

6 TABLE 2: COMPONENTS OF BROAD MONEY End of period Currency Issued At banks Outside banks Demand deposits Afl. Foreign currency Total Money Other deposits Treassury Quasimoney bills and (1) (2) 1-2) (4) (5) 4+5) 3+6) (8) (9) (10) (11) ) (13) 12+13) Savings Afl. Foreign currency Time Total Afl. Foreign currency cash loan certificates (3= (6= (7= (12= (14= Broad money (15= 7+14) , , , , , , , , , , , , , , , , , , , , , , , , January , , , , , ,470.5 February , , , , , ,525.4 March , , , , , ,543.9 April , , , , , ,567.5 May , , , , , ,572.8 June , , , , , ,612.6 July , , , , , ,601.2 August , , , , , ,706.1 September , , , , , ,715.0 October , , , , , ,703.3 November , , , , , ,73 December , , , , , , January , , , , , ,861.2 February , , , , , ,88 March , , , , , ,935.1 April , , , , , ,972.7 May , , , , , ,945.2 June , , , , , , ,071.2 July , , , , , , ,

7 TABLE 3: CAUSES OF CHANGES IN BROAD MONEY During period May June July May June July I. Net domestic money creation A) Domestic credit ) Net claims on public sector a) Recourse to monetary system b) Drawing down of bank balances 1) Government's deposits 2) Development funds ) Claims on private sector a) Enterprises b) Individuals 1) Consumer credit 2) Housing mortgages c) Other B) Other domestic factors II. Inflow of foreign funds* III. Broad money ) Money 2) Quasi-money * Revaluation differen ces o f gold and official foreign exchan ge holdings are exclu ded in order to approximate the net import of foreig n fund s b y the nonmonetary sectors. 6

8 TABLE 4: FOREIGN ASSETS Centrale Bank van Aruba Gold Other assets tion diffe- excl.( 9) Net rences* Liabilities Net Assets Liabilities Commercial banks Total Revalua- Total End of period (4= (7= (8= (10= (1) (2) (3) 1+2-3) (5) (6) 5-6) 4+7) (9) 8-9) , , , , , , , , , , , , , , , January , , , ,266.3 February , , , ,289.8 March , , , ,261.5 April , , , ,308.1 May , , , ,33 June , , , ,378.2 July , , , ,342.2 August , , , ,475.7 September , , , ,471.1 October , , , ,493.2 November , , , ,479.6 December , , , , January , , , ,582.8 February , , , ,645.5 March , , , ,618.8 April , , , ,652.4 May , , , ,844.5 June , , , ,861.2 July , , , ,867.9 * Of go ld an d official foreig n exchange h oldings, in accordan ce with the Central Bank O rd inance as revised in December

9 TABLE 5a: CONSOLIDATED BALANCE SHEET OF THE MONEY-CREATING INSTITUTIONS End of period May ASSETS 1. Claims on money-creating institutions a) Monetary authorities b) Commercial banks , , Claims on the public sector a) Short-term b) Long-term Claims on the private sector a) Enterprises b) Individuals 1) Consumer credit 2) Housing mortgages c) Capital market investments d) Other 2, , , , , , , , , , , , , , , , , , , Foreign assets a) Gold b) Short-term c) Long-term 2, , , , , , , , , Other domestic assets Total assets 6, , , , ,245.9 June 1, , , , , , , ,322.9 July 1, , ,31 1, , , , , May 1, , , , , , , , ,99 June 1, , , , , , , , ,029.2 July 1, , , , , , , , ,

10 TABLE 5b: CONSOLIDATED BALANCE SHEET OF THE MONEY-CREATING INSTITUTIONS (continued) End of period May June July LIABILITIES 7. Broad money a) Money b) Quasi-money 3, , , , , , , , , , , , , , , , , , , , , Money-creating institutions a) Monetary authorities b) Commercial banks , , , , , , Public sector deposits a) Government b) Development funds Long-term liabilities a) Government b) Private sector 11. Subordinated debt Capital and reserves Foreign liabilities a) Short-term b) Long-term Revaluation differences* Other domestic liabilities Total liabilities 6, , , , , , ,305.8 * Of gold an d official fo reign exchange holdings May 3, , , , , , June 4, , , , , , July 4, , , , , ,

11 TABLE 6: CENTRALE BANK VAN ARUBA: SUMMARY ACCOUNT Domestic assets Foreign assets Total assets = Total liabilities Domestic liabilities Capital and reserves Government Develop- ment funds Reserve money Demand Time Total Other reserve money End of period (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Notes deposits deposits Revaluation of gold and foreign exchange holdings Foreign liabilities (13) , , , , , , , , , , January , , , February , , , March , , , April , , , May , , , June , , , July , , , August , , , September , , , October , , , November , , , December , , , January , , , February , , , March , , , April , , , May , , , June , , , July , , ,

12 TABLE 7: COMMERCIAL BANKS' CONSOLIDATED SUMMARY ACCOUNT End of period June 2016 Overall Resident Non- Resident July 2016 Overall Resident Non- Resident Assets 1) Cash ) Central Bank 1, , , ,139.7 a) Current account b) Time deposits ) Due from banks a) Current account b) Time deposits ) One year and below ) Over one year 4) Loans 3, , , , a) Enterprises b) Individuals c) Mortgage 1, , , , d) Government ) Securities a) Short-term securities b) Government bonds c) Other ) Sundry ) Fixed assets ) Total 5, , , , Liabilities 9) Current account 2, , , , a) Government b) Private sector 2, , , , ) Savings deposits 1, , , , ) Time deposits 1, , a) Development funds b) Private sector 1, , ) Due to banks ) Other liabilities ) Capital and reserves ) Total 5, , , , Supervisory ratios* Capital/risk-weighted assets ratio Loan/deposit ratio Liquidity ratio * Supervisory ratios cannot be derived from the consolidated balance sheet. 11

13 TABLE 8: GOVERNMENT REVENUE May June July May June July TOTAL REVENUE 1, , , , n.a. TAX REVENUE , , n.a. Taxes on income and profit n.a. Of which: -Wage tax n.a. -Income tax n.a. -Profit tax n.a. Taxes on commodities Of which: -Excises on gasoline Excises on tobacco Excises on beer Excises on liquor Import duties Taxes on property n.a. Of which: -Motor vehicle fees n.a. -Succession tax n.a. -Land tax n.a. -Transfer tax n.a. Taxes on services n.a. Of which: -Gambling licenses n.a. -Hotel room tax n.a. -Stamp duties n.a. -Other Turnover tax (B.B.O.) n.a. Foreign exchange tax NONTAX REVENUE n.a. Of which: - Grants n.a. - Other nontax revenue * n.a. * Including dividend distributions. Source: Tax Collector's Office/Centrale Bank van Aruba 12

14 TABLE 9: GOVERNMENT'S POSITION WITH THE MONETARY SYSTEM Domestic deposits Gross Liabilities to Net Central Commercial liquidity Monetary Commercial Total liability Bank banks position authorities banks to the monetary Free Earmarked Development Total Demand Development system funds funds End of (4= (7= (10= (11= period (1) (2) (3) 1+2+3) (5) (6) 4+5+6) (8) (9) 8+9) 10-7) Change in net liability during period (12) January February March April May June July August September October November December January February March April May June July

15 TABLE 10: TOURISM Total Total Visitors by origin Diversification Average Average Cruise tourism visitor visitors Index 1) nights hotel nights North Of which Latin Of which Europe Of which Other stay occupancy Number of Ship America U.S.A. America Venezuela Nether- rate passengers calls lands Period (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) ,907, , , , , ,201 79,570 39,973 35, , ,126, , , , , ,020 77,010 37,788 34, , ,692,903 1,072, , , , ,593 80,155 36,995 32, n.a. 667, ,329,592 1,224, , , , ,918 80,590 35,632 41, n.a. 607, January 768, ,914 58,710 52,698 33,728 25,018 6,504 3,313 1, n.a. 77, February 664,780 89,991 56,582 50,737 25,852 18,779 5,454 2,762 2, n.a. 76, March 712, ,506 64,510 58,353 30,948 25,155 5,529 2,735 2, n.a. 61, April 665,687 99,604 60,360 56,888 28,582 22,203 5,307 2,849 5, n.a. 49, May 603,850 87,691 52,796 50,569 25,387 19,158 6,077 3,172 3, n.a. 26, June 594,440 87,447 52,933 51,256 25,335 19,032 6,110 2,449 3, n.a. 22,243 9 July 747, ,251 62,607 60,371 34,328 25,725 7,867 3,464 4, n.a. 23, August 752, ,471 56,312 53,539 43,637 36,728 8,531 2,816 2, n.a. 23, September 616,236 97,263 39,054 36,930 46,713 38,704 8,209 3,036 3, n.a. 24, October 665, ,024 49,218 46,781 47,688 40,387 7,260 3,053 4, n.a. 50, November 681, ,307 53,437 49,953 46,072 39,655 7,459 3,112 3, n.a. 79, December 855, ,466 59,074 53,352 48,984 40,374 6,283 2,871 4, n.a. 91, January 785, ,072 56,597 51,105 36,410 27,925 6,625 2,909 4, n.a. 101, February 689,345 96,185 58,607 52,645 28,727 21,920 5,472 2,744 3, n.a. 81, March 724, ,998 66,055 60,844 34,727 28,041 5,496 2,746 3, n.a. 96, April 645,280 98,823 61,523 58,464 28,220 21,648 5,486 3,213 3, n.a. 50, May 565,763 80,964 52,951 50,512 17,406 10,761 7,258 2,750 3, n.a. 20,462 8 June 612,519 86,697 56,101 54,531 20,600 12,052 6,823 2,550 3, n.a. 25,452 7 July 752,973 99,418 63,671 61,391 22,903 13,956 8,473 3,542 4, n.a. 18, ) The Diversification Index measures the concentration within the tourist market, and thus demonstrates the degree of diversification by tourist origin countries. The higher the index, the higher the level of concentration, meaning less diversification. For further reference on the methodology (which is an application of a Herfindahl-Hirschman index) see the Quarterly Bulletin (2011-I) of the CBA. Source: Aruba Tourism Authority/Central Bureau of Statistics/Aruba Hotel and Tourism Association/Cruise Tourism Authority. 14

16 TABLE 11: GROWTH IN STAY-OVER TOURISM Total Total North Of which Latin Of which Europe Of which Other visitor visitors America U.S.A. America Venezuela Nethernights lands Period (1) (2) (3) (4) (5) (6) (7) (8) (9) Monthly percentage changes 1) 2015 January February March April May June July August September October November December January February March April May June July Cumulative percentage changes 2) 2015 January February March April May June July August September October November December January February March April May June July ) As compared to a year earlier. 2) From the beginning of the year to the end of the indicated period as compared to the corresponding period of a year earlier. 15

17 TABLE 12: CONSUMER PRICE INDEX (December 2006 = 100) Percentage Change All Over Over Over Last 12 months groups previous 3 months a year over previous End of period index month earlier earlier 12 months January February March April May June July August September October November December January February March April May June July * As of January 2009, the basis September 2000 = 100 has been shifted to December 2006 =