Minister Gumbs outlines Cg 94 million borrowing plan for 2027 as debt set to rise

GREAT BAY--Minister of Finance Marinka Gumbs has outlined adjustments to the 2027 capital budget, including a revised borrowing requirement of approximately Cg 94 million to finance government investments, some of which were originally scheduled to be funded through a loan anticipated in 2026.

During Tuesday's parliamentary debate on the draft 2027 National Budget, Gumbs explained that the government had updated both the expenditure and financing sides of the capital budget to reflect changes in its investment plans, the treatment of the ENNIA resolution arrangements and borrowing requirements carried forward from the current year.

A major factor behind the adjustment is that the capital financing loan initially anticipated for 2026 will not be realized during that year. Consequently, investment requirements associated with that loan have been incorporated into the 2027 financing request.

The revised borrowing projection of approximately Cg 94 million includes the roughly Cg 53 million originally requested for 2027, financing requirements carried forward from 2026 and other adjustments to planned capital investments.

Major Government Buildings and Facilities

Non-residential buildings represent one of the largest areas of planned capital investment, with approximately Cg 59.2 million allocated to government accommodation and related facilities.

Among the principal investments is Cg 27.3 million for housing the tax administration, with the objective of bringing the tax administration and Receiver's Office together in one location.

The Minister explained that the current arrangement places the two services in separate buildings, while existing accommodation is insufficient to meet the organization's future staffing requirements.

A further Cg 10.5 million is allocated to a government office building, while Cg 10 million is reserved for a new apartment building.

Another Cg 9 million has been allocated to other government properties, including the acquisition of buildings currently being rented. According to Gumbs, acquiring such properties would reduce recurring rental expenditures while increasing government's asset holdings.

An additional Cg 2.4 million is intended for repairs and maintenance of critical public facilities.

Land, Infrastructure and Digital Investments

Beyond government buildings, approximately Cg 6.2 million is allocated for land acquisition associated with a future multipurpose facility for the Ministry of Education, Culture, Youth and Sport.

Infrastructure investments amount to approximately Cg 14.1 million, covering several projects, including cemetery and sewage infrastructure.

The capital budget also includes approximately Cg 2 million for information and communications technology investments, including the implementation of a digital building permit system.

The Minister indicated that the proposed system is intended to improve administrative efficiency, transparency and service delivery.

Ministry of Finance Capital Investments Increase

The Ministry of Finance itself has a capital investment allocation of approximately Cg 39.8 million for 2027, compared to Cg 10.1 million in the 2026 budget.

The largest component is the Cg 27.3 million allocation for accommodation for the tax administration, which is to be financed through borrowing.

Another Cg 11 million is reserved for renewal of the tax administration's ICT systems and development of the taxpayer portal. This investment is to be financed through the Temporary Work Organization (TWO), rather than through a capital service loan.

The Ministry has opted for a modular approach to the modernization project, introducing systems for taxpayer management, business taxes, personal taxes, collections and payments, supported by additional digital tools.

A further Cg 1.5 million is allocated to the final phase of the government-wide enterprise resource planning system, Microsoft Dynamics 365 Finance and Operations. The broader project has an estimated total investment of Cg 16.75 million.

Government Debt Projected to Reach Cg 1.076 Billion

Gumbs also presented updated projections for the country's outstanding debt.

Government expects to begin 2027 with approximately Cg 1.004 billion in outstanding loans, about Cg 43 million below the amount initially projected. This adjustment is primarily associated with the anticipated 2026 financing not materializing.

With approximately Cg 94 million in new borrowing and Cg 22 million in scheduled repayments, outstanding debt is expected to reach approximately Cg 1.076 billion by the end of 2027.

The Minister indicated that this would represent approximately 34.4 percent of gross domestic product.

Although she described the projected debt ratio as manageable, Gumbs warned that increasing borrowing obligations would place additional demands on future government budgets.

She specifically identified refinancing requirements in 2029 and 2030 as potential concerns, since existing loans could need to be refinanced at higher interest rates.

The Ministry has begun strengthening its debt management and cash forecasting capabilities, including discussions on technical assistance from the Committee for Financial Supervision and specialized staff training.

ENNIA Resolution Fund Reflected in Capital Budget

The adjusted capital budget also explicitly accounts for St. Maarten's commitments to the ENNIA Resolution Fund.

The Minister explained that the country provides an annual loan contribution of approximately Cg 2.082 million to the fund, at zero percent interest, under arrangements totaling approximately Cg 62.4 million.

This annual contribution is recorded as a capital expenditure and financed from government's own available liquidity, rather than through additional borrowing.

Gumbs also highlighted associated financial guarantees, which could create future obligations if called upon.

The Minister emphasized that the revised capital budget is intended to strengthen government institutions, modernize public services, improve infrastructure and support the country's long-term development.

However, she cautioned that responsible borrowing, financial planning and continued monitoring of debt obligations remain essential to protecting St. Maarten's financial position.

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