Budget 2027: Government expects growth, higher tax revenue and thin cash reserves

GREAT BAY--St. Maarten’s draft 2027 budget projects approximately Cg 670 million in income against Cg 662 million in expenditure, producing a positive budget result of about Cg 8 million, but the government’s own liquidity forecast shows that freely available cash could fall to just Cg 2 million by the end of the year.

The figures are contained in the Toelichting Begroting 2027, the detailed explanation accompanying the draft national budget submitted to Parliament. The document provides a broader picture of the government’s assumptions on economic growth, debt, taxation, spending and financial risks beyond the topline budget numbers.

Government says the 2027 budget continues its move toward policy-based budgeting, with ministries expected to show more clearly how public money connects to policy objectives, activities and expected results. The intention is to move away from simply showing how much is being spent toward explaining what government expects that spending to accomplish.

Of the Cg 662 million in expenditure, approximately Cg 634 million is allocated across the seven ministries, while roughly Cg 28 million is allocated to Parliament, the High Councils of State and special entities. Education, Culture, Youth and Sport has the largest ministerial allocation at approximately Cg 133 million, followed by Justice at Cg 114 million, Public Health, Social Development and Labor at Cg 104 million, General Affairs at Cg 101 million and Finance at Cg 98 million.

The expenditure projections also show that personnel remains government’s largest cost. Personnel expenditure is projected at approximately Cg 288 million in 2027, while goods and services are estimated at Cg 181 million. Subsidies are projected at Cg 106 million, social provisions at Cg 36 million, interest at Cg 31 million and study financing and allowances at Cg 4 million.

On the income side, government expects tax revenues to rise from approximately Cg 478 million in 2026 to Cg 497 million in 2027. The explanatory document says the increase is expected mainly from higher wage and turnover tax receipts as economic activity continues to grow. Government expects tax revenue to remain closely tied to the performance of the economy.

Notably, the projected revenues do not yet include anticipated income from the proposed tourist tax. Earlier budgets had included approximately Cg 18 million in anticipated revenue associated with the introduction of a tourist tax, but government says it has chosen not to include such policy-related additional income until the necessary legislation has moved further through the legislative process.

Government says work on the tourist tax continues, along with other initiatives aimed at strengthening tax compliance, enforcement and the overall tax base. Should those measures advance sufficiently during 2027, additional projected income would be incorporated through a budget amendment.

The economic outlook supporting the budget remains positive but moderate. International Monetary Fund projections used in the budget put real economic growth at approximately 2.7 percent in 2027, while the Central Bank of Curaçao and St. Maarten projects approximately 2.2 percent. CBCS expects growth to gradually slow to around 1.9 percent by 2029 and 2030.

Government identifies private consumption and tourism as important contributors to growth, while public investment is expected to decline in the near term before recovering as larger infrastructure projects move forward. The budget also warns that St. Maarten remains vulnerable to hurricanes, global geopolitical developments, inflation, fluctuations in tourism and other external shocks because of the country’s small and import-dependent economy.

Debt is also expected to increase. The explanatory document estimates current long-term government debt at approximately Cg 943 million, rising to around Cg 982 million in 2027, primarily because of anticipated borrowing for capital investments. With short-term debt estimated at approximately Cg 145 million, total government debt is projected to rise from roughly Cg 1.088 billion in 2026 to Cg 1.127 billion in 2027.

The government nevertheless considers the debt level manageable when measured against projected economic output. Depending on whether IMF or CBCS GDP estimates are used, the debt-to-GDP ratio is projected at roughly 32 to 33 percent in 2027.

The more immediate concern reflected in the budget is liquidity. Government expects to enter 2027 with approximately Cg 5 million in free liquidity. The forecast shows about Cg 599 million in cash receipts and Cg 602 million in expenditures, excluding capital-service activities, leaving an estimated Cg 2 million at the end of the year.

The document specifically notes that no meaningful liquidity buffer is expected to be built during 2027 or 2028 and says this underscores the need to implement measures aimed at raising government income. Government points to tax compliance initiatives and completion of the tourist-tax trajectory as measures being pursued.

The Cg 8 million projected budget result therefore does not mean government expects to have Cg 8 million sitting freely available in its bank accounts. The budget result is calculated according to government revenue and expenditure accounting, while the liquidity projection focuses on the actual movement and availability of cash.

Looking beyond 2027, government projects positive annual results of Cg 8 million in 2028, Cg 24 million in 2029 and Cg 20 million in 2030, assuming the projected economic and revenue trends materialize.

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