FINANCIAL STATEMENTS 2017

CENTRALE BANK VAN CURAÇAO EN SINT MAARTEN

1. Balance sheet as of December 31

2. Profitandlossstatement

3. Notestothecondensedfinancialstatements

4. Independentauditor’sreport

CONTENT4

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2017 2016

ASSETS

Gold 975,625,374 872,230,907

Foreignreceivablesandinvestments 2,644,778,461 2,668,424,851

Domesticreceivablesandinvestments 341,560,349 350,984,038

Fixedassets 95,152,143 97,116,983

Othercurrentassets 45,684,121 41,316,799

Total assets 4,102,800,448 4,030,073,578

LIABILITIES & EQUITY

LIABILITIES

Banknotesincirculation 469,675,655 434,751,063

Nonresidents’currentaccounts

inguilders 68,061,854 67,833,406

inforeigncurrency 192,084,660 438,554,555

Residents’currentaccounts

inguilders 2,065,049,794 1,939,429,161

inforeigncurrency 181,634,165 69,358,505

Residents’timedeposits

inguilders 160,800,000 227,400,000

inforeigncurrency - -

Fundsinconsignment 15,623,444 15,569,411

Otherliabilities 15,237,598 14,773,189

Total liabilities 3,168,167,170 3,207,669,290

Balance sheet as of December 31 (in NAf.)

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2017 2016

PROVISIONS 27,467,183 29,192,000

EQUITY

Capital 30,000,000 30,000,000

Reservefund 30,000,000 30,000,000

Appropriatedreserves 828,086,236 724,819,898

Retainedearnings 19,079,859 8,392,390

Total equity 907,166,095 793,212,288

Total liabilities & equity 4,102,800,448 4,030,073,578

The December 31, 2017 and December 31, 2016 figures are extracted from the audited financial statements.

Balance sheet as of December 31 (in NAf.) cont.

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2017 2016

INCOME

Interestincome 62,247,987 55,242,930

Interestexpenses -2,931,459 -2,321,293

Net interest income 59,316,528 52,921,637

Capitalgain 66,398 85,522

Netunrealizedgain/lossrelatedtomarketvaluechanges 103,189,176 72,974,987

Realizedforeignexchangeresult 3,673,027 3,260,422

Netunrealizedforeignexchangeresult 77,162 -80,072

Managementandcustodyfee -572,625 -433,394

Net investment and foreign exchange result 165,749,666 128,729,102

Supervisionincome 10,868,600 9,287,870

Miscellaneousincome 1,098,126 1,224,238

Other income 11,966,726 10,512,108

Total income 177,716,392 139,241,210

EXPENSES

Depreciationoftangiblefixedassets 7,624,173 5,943,071

Depreciationofintangiblefixedassets 1,776,112 1,214,839

Generaloperatingexpenses 54,362,300 50,782,429

Total expenses 63,762,585 57,940,339

Netresultincludinggain/lossfrommarketvaluechangesand

unrealizedforeignexchangeresult113,953,807 81,300,871

Dotationunrealizedgainrelatedtomarketvaluechangesand

unrealizedexchangeresulttotheappropriatedreserves-103,266,338 -72,908,481

Net result 10,687,469 8,392,390

Profit and loss statement (in NAf.)

The 2017 and 2016 figures are extracted from the audited financial statements.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

GENERAL

TheaccountingprinciplesappliedbytheBankin this reportarederived from theFinancialReporting Principles of the Centrale Bankvan Curaçao en Sint Maarten1 (reference CBCS/2012/1) dated October 29, 2012,as approved by the Board of SupervisoryDirectors and stipulated by the Meeting ofthe Entitled Asset Holders on, respectively,June28,2013(Curaçao)andJuly31,2013(SintMaarten).

Thefollowingisasummaryofthesignificantaccountingprinciplesapplied.

The figures presented in these condensedfinancialstatementsarestatedinNetherlandsAntilleanGuilders(“NAf”).

Assets and liabilities are valued at nominalvalue unless otherwise stated. Income isrecognizedonanaccrualbasis.Expensesareincurredintheperiodtowhichtheyrelate.

NOTES TO THE BALANCE SHEET AS OF DECEMBER 31, 2017

GOLD

Goldisvaluedattheprevailingmarketpriceat balance sheet date. Unrealized gains/losses related to market value changesare credited/charged to the profit and lossstatement. Based on article 35, paragraph2, and article 40 of the Bank Statute, theunrealized result is subsequently credited/chargedtotheresultbeforeprofitdistributionand to the appropriated reserve regardinggold revaluation. If the balance of thisappropriated reservebecomesnegative, thenegativebalancewillbechargedtotheprofitandlossstatement.

1 “Grondslagen voor de financiële verslaggeving van de Centrale Bank van Curaçao en Sint Maarten.”

FOREIGN RECEIVABLES AND INVESTMENTS

The foreign receivables and investmentsrepresentcurrentaccountbalancesandtimedeposits with foreign financial institutions,securitiesinforeigncurrency,bondsissuedbytheformercountryoftheNetherlandsAntillesandtheIslandTerritoryofCuraçao,thedebtsofwhichweretakenoverbytheDutchStateaspartof thedebt relief in connectionwiththe constitutional changes, and receivablesfrom governments and institutions of othercountries.

Thesecuritiesrepresentinvestmentportfolios.Theinvestmentportfoliosmanagedinternallyare - except formonetary reasons that canmakemarketoperationsnecessary -held tomaturity and valued at amortized cost. Theinvestmentportfoliosmanagedexternallyarevalued at themarket price at balance sheetdate. Unrealized gains/losses from marketvaluechangeswithregardtotheinvestmentportfolios managed externally are credited/charged to the profit and loss statement.Basedonarticle35,paragraph2,andarticle40oftheBankStatute,theunrealizedresultis subsequently credited/charged to theappropriated reserve, which is accountedfor per each investment portfolio. If thebalanceoftheappropriatedreservebecomesnegative,thenegativebalancewillbechargedtotheprofitandlossstatement.

Realized gains and losses are immediatelyaccountedforintheprofitandlossstatement.

The accrued interest with respect to theinvestments is accounted for under thebalancesheetitem”Othercurrentassets”.

DOMESTIC RECEIVABLES AND INVESTMENTS

The domestic receivables and investments

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relatetoinvestmentsinbondsissuedbysemi-government institutions inCuraçaoandSintMaarten(incasuIntegratedUtilityHoldingN.V.andSintMaartenHarbourFinanceN.V.),andloansgrantedbasedonarticle10,paragraph3,subf,oftheBankStatute,collateralizedbyamortgageonrealestatelocatedinCuraçaoandSintMaartenorothercollateral.

Thebondsarevaluedattheiramortizedcostand the loans at their nominal value less aprovisionforpossiblelosses.

Theaccruedinterestwithrespecttothebondsandloansisaccountedforunderthebalancesheetitem“Othercurrentassets.”

FIXED ASSETS

Theseassets,whichalsoincludetheprintingcost of bank notes and the capitalized costprice or production costs of purchased andself-developed software applications, are -with the exception of land and art - valuedat cost after deduction of accumulateddepreciation, calculated on the basis of theexpectedusefullifeoftheassetsfollowingthestraight-linemethod.Landandartarevaluedatcost.Impairmentlosses,ifany,arechargeddirectlytotheprofitandlossstatement.

OTHERCURRENTASSETS

This item includes, among other things,license fee receivable, accrued interest,prepaid expenses, coins and currency heldaspettycash,accountsreceivable,andothershort-term receivables. These assets arevaluedattheirnominalvaluelessaprovisionforpossiblelosses.

BANKNOTESINCIRCULATION

This item represents the nominal value ofthebanknotesissuedbytheBankthatareincirculationatthebalancesheetdate.

NONRESIDENTS’CURRENTACCOUNTS

This itemrepresentsthebalances incurrentaccounts of foreign banks and/or foreigngovernment institutions. Foreign currencybalances are converted into guilders at theBank’s official mid-rates prevailing at thebalancesheetdate.Thebalancesaremostlynoninterest-bearing.

RESIDENTS’CURRENTACCOUNTS

These accounts include the noninterest-bearing balances in the current accountsof domestic banks, the governments ofCuraçaoandSintMaarten,othergovernmentinstitutions in Curaçao and Sint Maarten,and the reserve requirement of domesticbanks.Mostofthebalancesaredenominatedin guilders. Foreign currency balances areconverted into guilders at theBank’sofficialmid-ratesprevailingatthebalancesheetdate.

RESIDENTS’TIMEDEPOSITS

These deposits include the balances intime deposits and certificates of deposit ofdomesticbanksandgovernmentinstitutions.Foreign currency balances are convertedinto guilders at the Bank’s officialmid-ratesprevailing at the balance sheet date. Thesebalancesareinterest-bearing.

FUNDSINCONSIGNMENT

ThisitemrepresentsthenominalvalueoftheBank’sliabilityformoneyreceivedincustodyfrom third parties in conformity with theOrdinance on Money held in Consignation(P.B.1886,no.22).

OTHER LIABILITIES

This item includes, among other things,license fee payable, accrued interest, andaccountspayable.

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PROVISIONS

The balance of the provisions refers to,among other things, provisions for earlyretirement (VUT), cost-of-living allowance(“duurtetoeslag”), compensation AOV/BVZand medical expense premiums SZGBNA.These provisions are periodically calculatedbyanactuary.

CAPITAL

Underarticle34oftheBankStatutethecapitalamountstoNAf30million.

RESERVEFUND

This fund concerns a reserve to be formedfrom the profit up to an amount of NAf 30million.Underarticle34oftheBankStatute,this reserve is intended to cover potentiallossesonthecapitaloftheBank.

APPROPRIATED RESERVES

The appropriated reserves relate to theunrealized gains/losses from market valuechangesandforeignexchangeresultsonthebalancesheetitemsthatcomprisetheforeignexchangereserves(gold,foreignreceivables,andinvestments).Theappropriatedreservesare accounted for separately for gold,investmentportfolios, and foreignexchangeresult.

The unrealized gains/losses from marketvalue changes and foreign exchange resultsare credited/charged to the profit and lossstatement when they originate. Based onarticle 35, paragraph 2, and article 40 ofthe Bank Statute, the unrealized results aresubsequently credited/charged to the resultbeforeprofitdistributionandtotherespectiveappropriated reserve. If the balance of therespective appropriated reserves becomesnegative,thenegativebalancewillbechargedtotheprofitandlossstatement.

The revaluation of the foreign exchangereservesasofDecember31,2017resultedina net increase of the appropriated reservesof NAf 103.266 million, consisting of anunrealizedgainongoldofNAf103.394million,anunrealizedlossoninvestmentsofNAf205thousand,andanunrealizedgainonforeignexchangeofNAf77thousand.

RETAINED EARNINGS

This item represents the accumulatedearningsoftheBanklessprofitdistributionspaidtothegovernmentsofCuraçaoandSintMaarten.

NOTES TO THE PROFIT AND LOSS STATEMENT 2017

INTEREST INCOME

Interest income is generated mainly fromcurrentaccounts,timedeposits,bondsoftheformercountry theNetherlandsAntillesandthe IslandTerritoryofCuraçao (thedebtsofwhichweretakenoverbytheDutchStateinconnectionwith the constitutional changes),domesticbondsandloans,goldinvestments,andsecuritiesinforeigncurrency.

NETUNREALIZEDGAIN/LOSSRELATEDTOMARKETVALUECHANGES

The net unrealized gain/loss related tomarket value changes fluctuates based onthe prevailing market prices at month-endofgoldandthesecuritiesinforeigncurrencymanagedexternally.

REALIZEDFOREIGNEXCHANGERESULT

These earnings result from the marginbetweenthebuyingandsellingratesappliedbytheBankwhentradinginforeigncurrencies

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and from the differences in exchange ratesarisingfromconversions.

CONTINGENT LIABILITIES

TheBank has a repurchase agreementwithrespecttotrancheAofthe5%bondissueofSint Maarten Harbour Finance (SMHF) N.V.2012 – 2033, issued on February 15, 2012,which contingent liability amounts to NAf137.16millionasperDecember31,2017.

SUBSEQUENTEVENTS

Therehavebeennosubsequentevents thatwouldrequireadjustmenttoordisclosureinthefinancialstatementsasofDecember31,2017.

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