Cft warns of financial risks at Govt companies and social funds

GREAT BAY--The Board of financial supervision, Cft, has raised serious concerns about major risks to St. Maarten’s public finances, pointing to financial and governance challenges at several government-owned companies and growing pressure on the country’s social security and healthcare funds.

According to the Cft, several state-owned enterprises, including telecommunications company TelEm, utilities company NV GEBE and postal company PSS, are facing limited financial possibilities and increasing pressure. The Cft warned that these challenges could pose substantial risks to the country’s public finances if they are not addressed through clear action, stronger governance and a more effective policy for government participation in these entities.

The Cft noted that St. Maarten does not yet have an active participations policy in place, which has contributed to problems arising at government-owned companies. It stressed that distressed entities require clear agreements on financial sustainability or market-based solutions.

The Board also emphasized that complete and properly functioning Supervisory Boards and Management Boards are necessary if meaningful changes are to be implemented at these entities.

Looking ahead, the Cft is urging government to introduce and execute an effective participations policy as soon as possible, supported by the necessary capacity and expertise. Such a policy, the Cft said, is needed to prevent similar problems from recurring.

In addition to the risks at government-owned companies, the Cft also pointed to continued delays in St. Maarten’s budgetary process. The Board said the 2026 national budget is being adopted far too late and, at the earliest, will be adopted halfway through the year. This, according to the Cft, limits government’s ability to make policy, address financial risks and execute plans and investments in a timely manner.

The Kingdom Council of Ministers previously requested St. Maarten to prepare an improvement plan for the budgetary process. The Cft said government has responded actively to that request and has started preparing the 2027 budget on time. Government has also shared an extensive planning schedule with the Cft and reached early agreement on the expenditure framework.

However, the Cft said there are already delays in the process because not all ministries are submitting the required information on time. The Board is urging the Council of Ministers as a whole to take responsibility and ensure that every ministry contributes properly to the process.

According to the Cft, only with full cooperation from all involved can the 2027 budget be adopted before the start of the new budget year, in line with the stated objective.

The Cft also warned that the affordability of healthcare and pensions is now at stake. The healthcare funds managed by the Executive Organization Social and Health Insurances, SZV, are recording annual losses of approximately XCG 35 million. These deficits now amount to approximately XCG 500 million and have so far been absorbed through reserves from other funds, mainly the AOV pension fund.

The Cft warned that if no action is taken, these reserves will be depleted within a few years, placing the affordability of healthcare and pensions for St. Maarten residents under severe pressure.

The Board said it has repeatedly pointed out the seriousness of the situation and stressed that there is no more time to lose. Measures already identified by St. Maarten must now be implemented.

According to St. Maarten, the introduction of a General Health Insurance, GHI, should reduce the annual deficits in the healthcare funds. The Cft said it is essential that the legislation for the GHI be implemented by the latest target date of January 1, 2027.

In addition to the GHI, the Cft said other measures are needed to either increase income or reduce costs. St. Maarten is aiming to introduce a tourist tax as of January 1, 2027. Work is also ongoing to reform the tax system and tax administration, with the goal of improving tax collection and compliance.

The Cft said these reforms can give the country room to cover social security deficits and fund other priority expenses. However, the Board warned that the country’s liquidity remains too limited and the risks are too high, especially considering the current geopolitical environment.

The Cft concluded that St. Maarten must act now to address risks at government-owned companies, safeguard healthcare and pension affordability, improve the budget process and strengthen the country’s public finances.

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