Cft raises concerns over St. Maarten’s budget process, liquidity and healthcare financing

GREAT BAY--The College financieel toezicht Curaçao en St. Maarten (Cft) has raised serious concerns about St. Maarten’s budget process, liquidity position, investment execution and the long-term financing of healthcare and social security, according to its half-year report for July to December 2025.

In the report, the Cft noted that St. Maarten’s 2025 budget was only adopted on July 10, 2025, after significant delays, including a technical error in the processing of amendments by Parliament. The Cft had advised St. Maarten to make several changes through a budget amendment before the end of 2025, a condition that would allow the country to proceed with a new loan request for investments. Although St. Maarten submitted the draft budget amendment on October 22, 2025 and sufficiently followed up on the Cft’s recommendations, the amendment was not approved before year-end.

The Cft said this was not helpful for confidence in the country’s financial management. It also pointed out that St. Maarten did not adopt a 2026 budget in 2025 and did not even submit a draft 2026 budget to the Cft for review. Because the budget was not adopted by the legal deadline of December 15, 2025, Parliament could not exercise its budgetary authority on time, while government’s ability to introduce new policy remained limited.

Despite these delays, St. Maarten recorded a positive balance on the ordinary service of almost XCG 50 million up to the third quarter of 2025. The Cft said this was mainly due to higher tax revenues compared to the previous year and delayed spending caused by lagging implementation. However, the Cft cautioned that final figures were not yet known and that St. Maarten has limited room for setbacks or new policy, leaving the risk of a deficit in place.

The Cft also expressed concern that St. Maarten’s liquidity position did not improve despite surpluses on the ordinary service. In fact, the country’s liquidity position worsened during the year compared to the budget. The Cft said this was worrying, especially given the risk of payment problems at several government-related entities, and requested further discussions with St. Maarten on the issue.

Investment execution also remained a concern. St. Maarten invested XCG 67 million up to the third quarter, but these were investments carried over from 2023 and 2024. New investments planned for 2025 were delayed because of the late adoption of the budget and the delay in the budget amendment. At the end of the third quarter, St. Maarten still had approximately XCG 211 million in planned investments on the books. The Cft stressed that timely implementation is important, both for the public interest and because loan-related interest costs place pressure on public finances.

On taxes, the Cft reported that St. Maarten’s revenues up to the third quarter were more than XCG 40 million higher than the same period in 2024 and almost XCG 30 million above budget. Much of this was attributed to a shift in receipts from late 2024 to early 2025, caused by the tax office being closed between Christmas and New Year. The Cft advised St. Maarten to clearly separate this one-time effect and factor it into future revenue estimates. It also noted that tax estimates and overviews remain a major area of concern, as St. Maarten’s tax system has not been modernized for a long time and the Tax Administration still relies heavily on manual and error-prone processes.

The report also warned that healthcare and social security financing are under pressure. Healthcare costs in St. Maarten were estimated at about 6.5 percent of GDP in 2023, relatively low compared to other countries in the Kingdom. However, even with those lower costs, the health funds continue to record large annual deficits. These deficits have so far been covered through reserves in other funds, especially the old-age pension fund, but the Cft said this is not sustainable.

The Cft pointed to the IMF’s September 2025 Article IV consultation, which projected that liquid reserves at SZV could be exhausted by 2029, potentially creating an acute payment problem for healthcare and social security. Following discussions in September, the Cft and St. Maarten agreed to intensify cooperation on the issue. Measures identified include cost savings and revenue increases at SZV, a general health insurance system and a tourist tax. The Cft said the next step is to determine whether these measures are sufficient to secure financial sustainability and to implement the already identified measures as quickly as possible.

According to the St. Maarten factsheet in the report, the country had 42,938 residents in 2023, unemployment of 8.0 percent in 2025 and average 12-month inflation of 3.3 percent in 2025. The Cft’s report also shows continued economic growth, while highlighting persistent concerns about budget discipline, liquidity, investment execution, tax modernization and the sustainability of social funds.

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