Gumbs presents 2026 budget as roadmap for fiscal discipline

GREAT BAY--Minister of Finance Marinka Gumbs presented the main details of the draft 2026 National Budget to Parliament, describing it as a policy-based financial framework aimed at strengthening fiscal discipline, improving public financial management and linking government spending more directly to national priorities.

The Minister said the 2026 budget is intended to guide the remainder of the fiscal year while also marking a change in how St. Maarten prepares and evaluates its national budget. She explained that the country has been caught in a cycle of trying to complete one budget process while already needing to prepare amendments or begin work on the next budget year.

According to Gumbs, a conscious decision was made not to pursue a 2025 budget amendment, in order to avoid placing additional strain on limited technical and financial personnel and to prevent further delays in the preparation of the 2026 and 2027 budgets.

The Minister said budget amendments should be used to address material policy changes, unforeseen circumstances, new priorities or necessary reallocations, rather than becoming an exercise in adjusting the budget simply to mirror actual results.

“A budget is by its nature a financial plan and an estimate of what we expect to achieve during a given year,” Gumbs told Parliament.

She said there is merit in government and Parliament jointly examining whether the current approach to budget amendments remains fit for purpose, or whether a more focused and efficient methodology should be adopted.

The Minister emphasized that the 2026 budget is the first national budget in St. Maarten’s history structured under a policy-based budgeting approach. Under this system, government is no longer focusing only on how much money is allocated, but also on the objectives those funds are intended to achieve and the results expected from that spending.

Gumbs said this represents an important step toward greater transparency, more effective governance and stronger accountability, allowing Parliament and the public to better understand how public funds contribute to broader development goals.

The 2026 budget projects total revenues of approximately Cg. 647 million and total expenditures of approximately Cg. 636 million, resulting in a projected budget surplus of about Cg. 11 million. The Minister said the figures reflect government’s commitment to fiscal discipline and responsible financial management.

Compared to the 2025 budget, total revenues have increased by approximately Cg. 61 million. The Minister said this growth is mainly driven by stronger tax revenues, reflecting continued economic activity, as well as project-related grant funding through programmes such as the TWO, BAK and the Trust Fund.

Tax revenues remain the foundation of government’s financial position. For 2026, tax revenues are projected at approximately Cg. 478 million, representing about 74 percent of total budgeted revenues. The Minister said projected growth in tax revenue is driven primarily by wage tax and turnover tax collections, reflecting continued economic activity and government’s efforts to strengthen compliance, modernize tax administration and improve revenue collection.

Other revenues are projected at approximately Cg. 91 million and include around Cg. 69 million in project grants. Gumbs stressed that these grants are project-specific and temporary in nature, and should not be considered structural or recurring sources of revenue.

License revenues are projected at approximately Cg. 16 million, while fees and concessions are expected to contribute approximately Cg. 62 million to government revenues.

On the expenditure side, the Minister said the 2026 budget reflects the cost of maintaining essential public services, implementing externally funded projects and investing in national priorities. She said expenditures connected to externally funded projects are accompanied by corresponding revenues and therefore do not place additional pressure on the country’s overall budget balance.

Gumbs also outlined how government expenditures are distributed across ministries. The Ministry of Education, Culture, Youth and Sport remains the largest spending ministry, with an allocation of approximately Cg. 126 million, or 21 percent of total government expenditure. A significant portion of this allocation is dedicated to education subsidies and educational services.

The Ministry of Justice follows with a budget of approximately Cg. 114 million, representing 19 percent of total expenditure. The Minister said these costs reflect the labor-intensive nature of law enforcement, border protection, public safety and the administration of justice. She also noted that the anticipated opening of the new prison facility in 2027 is expected to increase costs in the justice chain.

The Ministry of Public Health, Social Development and Labor accounts for approximately Cg. 109 million, or 18 percent of total expenditure. Gumbs said this ministry remains central to healthcare, social assistance and the well-being of residents, especially as demographic developments and an aging population place more pressure on public services.

The Ministries of Finance and General Affairs each account for approximately 15 percent of total government expenditure. The Ministry of Finance carries several central financial obligations, including interest expenses and depreciation, while General Affairs provides central support functions across government.

The Ministries of Tourism, Economic Affairs, Transport and Telecommunication, and Public Housing, Spatial Planning, Environment and Infrastructure each account for approximately six percent of total expenditures. Gumbs said these ministries remain important to economic development, infrastructure, public works, transportation and environmental management.

The Minister said the distribution of spending shows that government resources continue to be directed toward core functions, including education, public safety, social protection, public health, infrastructure and the effective operation of government.

Looking beyond 2026, Gumbs said the multi-year outlook projects continued positive budget results. She said the projected surpluses are modest but important, reflecting government’s commitment to maintaining fiscal discipline, preserving financial stability and creating room to address future challenges.

The Minister said the multi-year projections are based on conservative assumptions and do not include revenue-generating initiatives that are still under consideration. She said government will only include such measures in future forecasts once there is greater certainty about implementation and timing.

Gumbs also addressed St. Maarten’s public debt and liquidity position. As of January 2026, public debt stood at approximately Cg. 1 billion. Government anticipates securing a new capital loan of approximately Cg. 42 million at an interest rate of 3.5 percent, while scheduled repayments are expected to amount to approximately Cg. 16.9 million.

The Minister said borrowing must remain affordable, sustainable and directed toward investments that create long-term value. She also said government remains committed to pursuing innovative financing solutions, including debt swap initiatives that could redirect resources toward sustainability, renewable energy, climate resilience and other development priorities.

Based on estimates from the Central Bank of Curaçao and St. Maarten, St. Maarten’s debt-to-GDP ratio stands at approximately 41 percent. Gumbs said this remains manageable by international standards, but cautioned that the country must borrow carefully and ensure that investments produce tangible economic and social returns.

The Minister also warned that projected free liquidity at the end of 2026 is expected to amount to approximately Cg. 5 million. While government is expected to meet its obligations, she said this leaves limited room to absorb unforeseen events, emergencies or economic disruptions.

Gumbs said this narrow liquidity position requires strict cash flow management, careful expenditure prioritization and stronger compliance. She said every tax obligation paid on time, every fee collected when due and every receivable recovered contributes directly to strengthening the country’s liquidity.

The presentation also addressed government-owned companies and institutions. The Minister said several entities continue to perform well and contribute to the economy, particularly in aviation, tourism and maritime services. However, she said others require continued attention and decisive action, particularly where governance, financial reporting, operational performance and long-term sustainability are concerned.

Gumbs identified NV GEBE, TelEm and PSS as entities requiring close monitoring due to their strategic importance and potential fiscal implications for government. She also noted that a dividend policy for government-owned entities is being developed to create a clear and consistent framework for shareholder returns where circumstances permit.

The Minister said government-owned companies are not merely assets on paper, but provide critical services, support economic activity and, in some cases, carry significant risks for public finances. She said government remains committed to strengthening governance, improving accountability, enhancing oversight and ensuring that these entities operate in a sustainable and financially responsible manner.

Gumbs further highlighted major risks facing the country, including hurricanes and natural disasters, healthcare financing, demographic changes, economic dependence on tourism and vulnerabilities within certain government-owned companies. She said the establishment of a disaster risk fund is part of efforts to strengthen financial resilience and reduce dependence on emergency financing after major disasters.

The Minister also warned that St. Maarten’s aging population will increase pressure on healthcare, elderly care, social support programmes and the AOV pension system. She said long-term planning and reform are needed to protect both public finances and social security systems.

On economic vulnerability, Gumbs said St. Maarten remains heavily dependent on tourism, exposing the country to factors beyond its control, including airline capacity, fuel prices, geopolitical developments, natural disasters and global downturns. She said economic diversification remains essential to strengthening resilience and reducing exposure to external shocks.

The Minister concluded that the 2026 budget represents more than a financial document. She said it reflects government’s priorities, challenges and ambitions, while setting a foundation for stronger public finances, better policy execution and long-term national development.

Gumbs said the budget demonstrates government’s commitment to responsible financial management while investing in the people, institutions and infrastructure that will shape St. Maarten’s future.

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