Cft notes 47 mil surplus for St. Maarten, warns about liquidity and investments

GREAT BAY--The Board of Financial Supervision for Curaçao and St. Maarten (Cft) has issued its reaction to St. Maarten’s third execution report for the 2025 budget. The Cft concludes that St. Maarten is on course to meet the central budget norm and required deficit compensation, with a surplus of XCG 47 million on the ordinary service up to and including the third quarter. At the same time, the Cft expresses concern about the further deterioration of the country’s liquidity position, the unclear nature of part of the higher tax revenues, and persistent delays in the execution of the budget and investment agenda.

On 13 November 2025 the Cft received the third execution report for 2025 from the Government of St. Maarten, two days after the legal deadline of six weeks after the end of the quarter. In a letter to the Minister of Finance, Marinka Gumbs, the Cft provides its assessment and a detailed numerical explanation in annex.

Stronger revenues, driven mainly by taxes

According to the execution report, total revenues on the ordinary service reached XCG 446 million by the end of the third quarter of 2025. This is XCG 39 million higher than in the same period in 2024 and XCG 6 million above the amount budgeted for this point in the year. The increase is largely the result of higher tax revenues.

Tax income amounted to XCG 365 million up to and including the third quarter, which is XCG 28 million more than budgeted. Higher collections of wage, turnover and profit taxes compared to 2024 explain much of this increase. The report clarifies that the tax office was closed between Christmas and New Year at the end of 2024, which caused part of the 2024 receipts to shift into early 2025. The Cft notes that this timing effect is incidental, and that St. Maarten must still provide a clearer distinction between structural and incidental tax revenues in its projections for 2026.

Other revenue categories did not all meet expectations. Income from permits stood at XCG 12 million, around XCG 6 million below budget, with both business licenses and building permits lagging behind projections. The Government has not yet provided an explanation, but indicates that it intends to improve future estimates by cleaning up and updating underlying data. The category of contributions and subsidies came in XCG 12,1 million lower than budgeted due to delays in the implementation of a new Enterprise Resource Planning system.

Expenditures below budget due to vacancies and postponed projects

Total expenditures on the ordinary service reached XCG 396 million by the end of the third quarter of 2025, which is XCG 34 million less than budgeted and XCG 9 million higher than in the same period of 2024.

Personnel costs amounted to XCG 168 million, XCG 16 million below the budget for this point in the year. The execution report shows that personnel expenditures are lower because many planned vacancies have not been filled. Out of 98 budgeted positions for 2025, only 42 had been filled by the end of the third quarter. The Cft notes that this is a recurring structural problem that has also occurred in previous years.

Spending on goods and services totalled XCG 84 million, XCG 23 million below budget. Various projects and activities have not yet been started or implemented, partly due to capacity constraints and the late adoption of the 2025 budget. The Cft concludes that these patterns point to shortcomings in budget execution and in the Government’s ability to implement planned policies on time.

Investments lag behind, large backlog remains

On the capital account, St. Maarten invested XCG 67 million up to and including the third quarter of 2025. This is only 26 percent of the XCG 260 million in investments foreseen in the draft budget amendment for 2025. A large share of the realized investments relates to projects that were originally planned for 2023 and 2024.

In 2023 and 2024 St. Maarten received a total of XCG 193 million in loans from the Netherlands for investments. For 2025 the country initially budgeted XCG 52 million in additional investments, including for the prison and the purchase of land for social housing. Following Cft advice, St. Maarten has reassessed this amount on the basis of realistic implementation capacity and has reduced the new loan request to XCG 30 million. The country expects to contract this loan from the Netherlands by the end of 2025.

According to the Cft, it remains unclear when the remaining investment backlog, estimated at around XCG 200 million, will actually be implemented. The Board asks the Government to present a clear and realistic overview of already committed and planned investments in the 2026 draft budget, including timing and prioritization.

Liquidity under pressure and payment arrears remain high

Despite the positive result of XCG 47 million on the ordinary service, St. Maarten’s free liquidity remains limited. At the end of the third quarter of 2025, the free liquid assets for the ordinary service amounted to XCG 18 million and are expected to decline to only XCG 3 million by year end. The Cft is concerned about this trend and wishes to discuss the liquidity position with the Government at technical level.

The total payment arrears to public entities stood at XCG 143 million at the end of September 2025. The majority of this amount relates to arrears owed to the Social and Health Insurance Implementing Body (SZV), around XCG 114 million. Compared to the end of 2024, only XCG 0,5 million of these arrears has been reduced.

The execution report also signals uncertainty about the liquidity position of electricity and water company GEBE, which has been identified as a potential financial risk for the country. The Cft calls on St. Maarten to provide better insight into these risks as soon as possible and is prepared to discuss this further.

In line with International Monetary Fund guidelines, the Cft advises St. Maarten to build up a liquidity buffer at least equal to one month of expenditures, which for St. Maarten would be approximately XCG 50 million.

Financial management and collective sector

The Cft acknowledges progress in the timeliness of the third execution report for 2025 compared to previous reports. At the same time, the Board notes that annual budgets are still adopted too late each year. This undermines the budget right of Parliament and negatively affects policy execution, since intended measures and projects are again being postponed.

St. Maarten is also obliged to report annually before 1 April on expenditures, revenues, deficits and debt figures for the collective sector for the previous calendar year, and to establish the collective sector for the upcoming budget year. The Cft is still waiting for these reports for 2021 through 2024 and for the formal establishment of the collective sector for the years 2024 through 2027. As long as this information is missing, the Board cannot assess whether the interest burden norm is being respected.

The Government has indicated that it is taking steps to correct this and has engaged the Government Accountants Bureau (SOAB) to assist in preparing the necessary overviews and reports.

Public debt

Based on its calculations, the Cft estimates St. Maarten’s public debt at XCG 1 440 million as of 30 September 2025. This corresponds to approximately 45 percent of the country’s gross domestic product.

Recommendations and follow up

In its letter the Cft asks the Minister of Finance to:

• Continue steering actively during the remainder of 2025 to maintain a positive result on the ordinary service and improve the liquidity position
• Clearly distinguish the incidental effect of the high tax revenues early in 2025 from structural revenues and reflect this distinction in the projections for the 2026 draft budget
• Include, starting with the 2026 draft budget, an explanation of the progress of both realized and outstanding investments, including their allocation and a realistic multi-year planning

The Cft will continue its dialogue with the Government of St. Maarten on these points, with the aim of strengthening public finances, improving execution capacity and safeguarding sustainable and responsible budget policy in the coming years.

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