Debt briefing: Aruba

Explanation of terms used: 

Term	Meaning
Sovereign debt (also called government debt, national debt, or public debt)	The amount of money a nation's government has borrowed from creditors which can be domestic or external
Domestic debt	All debt owed to domestic creditors, often issued in local currency or under local law
External debt	All debt owed to foreign creditors (= non-resident, both public and private, including commercial banks, governments, or international financial institutions), often issued in foreign currency or under foreign law
Debt-to-GDP ratio	Showing how much a country owes compared to the financial value of everything that is produced and sold in that country in a year (GDP)
Debt swaps	An agreement where a country restructures its debt by exchanging it for something else in order to reduce its debt burden or improve repayment terms
Public debt audits	A detailed review of how much a government has borrowed, owes, to whom, for what purpose, and whether the debt was acquired legally, transparently, and in the public interest.
Refinancing a loan	Replacing an existing loan with a new loan

Historical context:

The earliest evidence of human settlement on the island of Aruba dates back to the second millennium B.C. Several waves of colonization and slave trade brought Caquetio people, Europeans, and Africans to the island. As a result, the majority of Arubans today are of mixed heritage. In 1986, Aruba became a constituent country within the Kingdom of the Netherlands.

Economy:

Oil industry

Aruba's modern history is closely tied to fossil fuels. The refining of Venezuelan oil played a major role in the island's economy during the last century. In 1985, ExxonMobil closed one of the world's largest refineries, dealing a severe blow to the economy of the island, which at the time had a population of just 60,000. Various attempts by other American companies to reopen the refinery were short-lived, and the government of Aruba announced the permanent decommissioning of the site in 2025.[1]

Mass tourism

The sudden closure of the refinery in 1985 led to the expansion of the tourism sector. In 2019, it accounted for 73.4% of GDP and 84.3% of jobs, according to the World Travel and Tourism Council. As mass tourism can only take place via cruise ships and aeroplanes, this sector must be regarded as fossil fuel-intensive. The island’s economy urgently needs to reinvent itself for a second time in less than 50 years.

Debt colonialism:

The COVID-19 pandemic and the collapse of the tourism industry have plunged the island into serious difficulties, and the government has been forced to take on new debt. The Netherlands, the former colonial power, has granted loans but has made them conditional on neoliberal fiscal austerity policies. [2] According to the IMF, Aruba’s debt stood at 68.6% of GDP in 2025. [3] Debt servicing accounted for 1.9% of expenditure.[4]

Climate crisis:

Today, the climate crisis poses significant challenges for the island’s residents. Rising sea levels and ocean acidification are causing coral bleaching. The weakening of this barrier is leading to significant coastal erosion. This situation, caused primarily by the Global North, will result in significant costs, not just financial ones. Given the current institutional framework, this climate debt owed by wealthy nations is likely to remain unpaid, even as budget cuts are imposed on Aruba to pay off its sovereign debt.

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Debt briefing_ Aruba_EN.pdf

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