Aruba: Country and Foreign Investment
Economy and Currency
This page was last updated on 20 Feb 2019.
The pillars of the Aruban economy are tourism, oil refining, manufactured exports and offshore financial services. Tourism is the island's principal industry, employer and foreign exchange earner. Constant warm weather and some of the most beautiful beaches in the world attracted nearly 1.1 million visitors in 2017, about 65% of them from the USA. Hotel capacity has expanded fivefold since 1985.
Aruba is very close to oil-rich Venezuela and has a petroleum refining industry, based at the Citgo Aruba Oil Refinery. At the time of writing, this is an extremely sensitive issue. In February 2019, the USA imposed oil sanctions on Venezuela; these are in addition to the existing ideological sanctions. Oil production is dropping and is likely to be unreliable until the current crisis is resolved. This of course has an impact on production levels at the Aruban oil refinery and hence on the economy at large.
In other areas, however, the Aruban economy fares well. Manufactured exports have increased rapidly as a result of the opening of the Free Zone and the island's privileged access to the EU and other markets. Aruba has a series of fiscal incentives in place to attract offshore banks, insurance companies and business in general (see Offshore Legal and Tax Regimes). The island's financial services commissioner ensures a high level of regulatory supervision. After Aruba left the Dutch Antilles in 1986, it ceased benefit from double taxation treaties as the main impetus of the development of its financial services industry.
In early 2018, the Aruba government introduced a ‘crisis levy’, which amounted to an increase in the rate of turnover tax. In October 2018, the Aruban government consulted with the International Monetary Fund over how to implement tax reforms. The IMF recommended increasing tax on consumption and reducing it on business and also has plans to ‘streamline’ the tax system.
In June 2013, Standard and Poor's downgraded its 'A-/A-2' sovereign credit ratings for Aruba to BBB-plus; at the time it stated that the “outlook on the new rating is stable.” S&P’s rating for the island has remained unchanged since then, though the outlook has changed to negative. The local currency is the Aruba florin which since 1986 has been tied to the US dollar at a fixed rate of 1.79 Aruba florins to the dollar.