2027 budget balances investment, debt and fiscal risks, Gumbs tells Parliament

GREAT BAY--Minister of Finance Marinka Gumbs presented the draft 2027 national budget to Parliament’s Central Committee on Monday, outlining projected revenues of approximately XCG 670.3 million against expenditures of XCG 662.2 million and stressing that the resulting XCG 8.1 million surplus does not depend on new revenue measures that have yet to receive legislative approval.

Gumbs described the budget as a prudent attempt to balance Government’s policy priorities with fiscal responsibility, while continuing the shift toward policy-oriented budgeting. She said the 2027 budget links ministries’ policy objectives, planned activities and required resources to the National Development Vision 2030 and the Governing Program 2025-2028.

The Minister also highlighted the earlier handling of the budget compared with previous years, but said she would reserve celebration until Parliament formally approves and the budget is published before the December 15 deadline. She stressed that timely submission is only part of the process, with credibility, execution and accountability equally important.

For 2027, Government expects moderate economic growth. Gumbs cited projections of approximately 2.7 percent real GDP growth from the International Monetary Fund and approximately 2.2 percent from the Central Bank of Curaçao and St. Maarten. Inflation is projected at approximately 2.1 percent, while average unemployment over the 2027-2030 period is expected to remain around 6.4 percent.

She cautioned that nominal economic growth continues to outpace real growth, indicating that part of the increase in economic activity reflects higher prices rather than a substantial increase in actual production. For this reason, she said sustainable economic growth, diversification, productivity, innovation and improvements to the business climate remain important Government priorities.

Tax revenue remains Government’s largest source of income, projected at approximately XCG 497 million, or roughly three quarters of total revenue. Other revenue is estimated at XCG 84 million, fees and concessions at XCG 65 million, and licenses and permits at approximately XCG 25 million.

Tax revenue is expected to increase by approximately XCG 19 million compared with the 2026 budget, driven mainly by expected increases in wage and profit tax collections as economic activity grows. Revenue from licenses and permits is projected to rise by approximately XCG 6 million, largely from business license and residence permit applications.

Gumbs emphasized that the budget does not include anticipated revenue from measures that have not yet completed the legislative process. These include the proposed tourist tax, revisions to certain Government fees, legislative changes aimed at improving tax assessment and collection compliance, and the possible introduction of a gaming tax framework.

According to the Minister, excluding those measures avoids overstating Government’s financial position before Parliament has approved the necessary legislation and the initiatives can actually be implemented.

On expenditure, personnel costs remain the largest category at approximately XCG 288 million. Gumbs said the increase is partly related to filling longstanding vacancies, particularly at management level, as Government attempts to address capacity shortages across several ministries.

She noted that the organizational structures and function books of most ministries have not been comprehensively reviewed since 2010, even as demand for Government services has increased. Goods and services are projected at approximately XCG 181 million, subsidies at XCG 106 million, social provisions at XCG 36 million, interest expenses at XCG 31 million, depreciation at XCG 16 million, and scholarships and allowances at approximately XCG 4 million.

The Ministry of Education, Culture, Youth and Sport receives the largest ministerial allocation at approximately XCG 133 million, accounting for about 21 percent of ministry expenditure. Justice follows at approximately XCG 114 million, including preparations connected to the operation of the new prison facility and other public safety and justice initiatives.

The Ministry of Public Health, Social Development and Labor is allocated approximately XCG 104 million, General Affairs XCG 101 million and Finance XCG 98 million. Tourism, Economic Affairs, Transport and Telecommunication is budgeted at approximately XCG 44 million, while Public Housing, Spatial Planning, Environment and Infrastructure receives approximately XCG 40 million on the ordinary service.

Gumbs said the ministry allocations support priorities including stronger governance and public service delivery, transformation of the tax administration, prison reform, crime prevention, quality education, youth development, mental health services, social resilience, healthcare financing reform, economic diversification, consumer protection, housing and infrastructure.

The Government’s multi-year outlook projects budget surpluses through 2030. Gumbs presented projected surpluses of approximately XCG 8 million in 2027, XCG 8 million in 2028, XCG 24 million in 2029 and XCG 20 million in 2030, while again stressing that these projections do not include revenue from proposed measures that remain subject to legislation and implementation.

The 2027 capital program includes several major investments. Approximately XCG 27.3 million is earmarked for facilities for the Tax Administration, which Gumbs said forms part of efforts to modernize tax administration, improve service and strengthen collection and compliance.

Another XCG 10.5 million is allocated for a new Meteorological Office building, while XCG 10 million is included for a new Parliament building. Approximately XCG 9 million is allocated for roads, with an additional XCG 5.1 million for other infrastructure including cemetery and sewage-related works.

Government also plans approximately XCG 2 million in ICT investment for a digital building permit system, aimed at reducing processing times, improving compliance with legal deadlines and making permitting more efficient.

The Minister said outstanding Government loans are expected to stand at approximately XCG 1.047 billion at the start of 2027. Government anticipates requiring approximately XCG 53 million in new capital borrowing while repaying approximately XCG 22 million on existing loans, resulting in an estimated year-end loan balance of XCG 1.078 billion.

Despite the increase, Gumbs said Government debt is projected at approximately 32 percent of GDP and described the level as manageable under current projections. She nevertheless warned that two existing loans will require refinancing in 2029 and 2030 and could face higher interest rates, placing additional pressure on future budgets and liquidity.

Government-owned companies also featured prominently in the presentation. Gumbs said delays and gaps in financial reporting among several entities continue to limit Government’s ability to fully assess fiscal risks, and said finalization of a participation policy remains a priority.

On N.V. GEBE, she said available information indicates that the company’s liquidity and equity positions remain stable, but profitability declined significantly due largely to higher operational expenses associated with emergency repairs and supplemental power-generation leases. She also pointed to increasing pressure from outstanding trade receivables.

TelEm continues to face financial challenges but is projected to record a modest profit of approximately XCG 0.5 million for 2025, following losses of XCG 7.6 million in 2024 and XCG 38.4 million in 2023. Postal Services St. Maarten remains financially challenged and dependent on additional Government contributions while pursuing measures intended to improve its long-term viability.

Gumbs also highlighted stronger results elsewhere. Port St. Maarten projects a profit of approximately XCG 24 million for 2025 and maintains a strong liquidity position, while WINAIR reported a draft profit of approximately XCG 10 million for 2025 and a positive equity position. Princess Juliana International Airport has also shown revenue growth following the opening of the terminal building.

The Minister acknowledged that the budget remains exposed to significant risks, including hurricanes and natural disasters, inflation, an aging population, slower-than-expected economic growth, higher debt-servicing costs and international economic and geopolitical uncertainty.

She also addressed the Article 11 advice from the Committee for Financial Supervision, CFT, acknowledging that the advice is critical in several areas. These include liquidity and outstanding obligations, risks related to healthcare and Government-owned entities, the substantiation and consistency of certain budget figures, and planning and execution of capital investments.

Gumbs said Government accepts that improvements are required, while also pointing to the CFT’s recognition of the significantly earlier preparation of the 2027 budget. She said the advice should form part of the process of strengthening public financial management rather than being treated simply as criticism.

Concluding her presentation, Gumbs said the 2027 budget is not built around extraordinary promises, but around responsible choices and the recognition that Government cannot fund every request made by every ministry.

She challenged ministries not only to seek additional expenditure, but also to improve revenue collection within their areas of responsibility, reduce unnecessary costs and identify opportunities for greater efficiency.

The Minister said the objective remains to complete the parliamentary process before the start of the new budget year, establishing a standard under which national budgets are submitted, debated, approved and in place before January 1.

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