Budget projects health and social fund reserves could fall by more than Cg 100 million by 2029

GREAT BAY--The combined reserves of health and social insurance arrangements administered by SZV are projected to fall by more than Cg 100 million between 2025 and 2029, according to government’s own 2027 budget projections, as persistent annual deficits continue to erode the financial cushion supporting healthcare and social insurance obligations.

The figures concern the ZV, OV, FZOG, AVBZ and OZR arrangements referenced in the budget. Government projects their combined reserves declining from Cg 279.8 million at the end of 2025 to Cg 178.3 million by the end of 2029, a reduction of Cg 101.5 million, or approximately 36 percent.

The projected annual drain also worsens over the period. The budget estimates a negative impact of Cg 19 million in 2025, Cg 22 million in 2026, Cg 23.8 million in 2027, Cg 26.8 million in 2028 and Cg 28.8 million in 2029. If those projections materialize, the reserve position will continue weakening every year through the end of the forecast period.

For 2026, the combined reserve position is projected at approximately Cg 257.8 million. It then falls to Cg 234 million in 2027, Cg 207.1 million in 2028 and Cg 178.3 million in 2029.

The budget makes clear that this is not simply a future concern. Government states that the health-related funds have recorded average annual deficits of approximately Cg 50 million over the past five years, indicating that the system has already been relying heavily on accumulated reserves to absorb recurring shortfalls.

The historical figures included in the budget show combined negative results of approximately Cg 43.4 million in 2020, Cg 56.1 million in 2021, Cg 61.9 million in 2022 and Cg 47.3 million in 2023 for the ZV, OV, FZOG, AVBZ and OZR arrangements.

That distinction matters. The issue is not that the funds are expected to run out in 2027 or even by 2029. The concern is that a system which repeatedly spends more than it takes in must continue drawing down its reserves unless revenue, expenditure or the financing structure changes.

Government acknowledges that problem in the budget and states that immediate action is essential to secure the long-term financial sustainability of the funds.

The budget also links the pressure on the system to the rising cost of healthcare and St. Maarten’s changing population.

Census figures cited by government show that people aged 65 and older represented 5.33 percent of the population in 2011, increasing to 12.84 percent by 2022. Government says the aging population is expected to place additional pressure on social provisions and healthcare expenditure.

As a larger share of the population reaches retirement age, demand for medical care and income support can increase while the number of working-age contributors financing the system may not grow at the same pace.

The issue therefore reaches beyond SZV’s balance sheets and directly into questions about how St. Maarten will finance healthcare and social protection in the years ahead.

Government says strategic discussions on healthcare reform are taking place with SZV and refers to recent analysis from the International Monetary Fund in assessing the sustainability of the system. The budget indicates that structural measures will be necessary rather than continued dependence on reserves.

The projections themselves do not specify exactly what those reforms will ultimately look like.

Possible changes to a social insurance system can involve contributions, government transfers, eligibility rules, benefits, healthcare expenditure, cost controls or changes in how individual funds are financed. The 2027 budget does not establish which combination of measures will eventually be adopted.

What it does establish is the size and direction of the financial problem.

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