Finance Minister clarifies ENNIA costs, fiscal risks and SZV fund pressures

GREAT BAY--Minister of Finance Marinka Gumbs has provided Parliament with a detailed explanation of St. Maarten’s financial obligations related to the ENNIA resolution, while also acknowledging that several major fiscal risks, including healthcare fund deficits and other contingent liabilities, are not yet fully reflected in the 2027 national budget.

Gumbs was responding to questions from MP Ludmila de Weever during the continuation of the 2027 budget debate.

One of the main issues raised was the Cg. 3 million included in the 2027 budget for ENNIA, even though the agreement governing St. Maarten’s contribution provides for an annual payment of Cg. 2.082 million.

The Minister explained that the Cg. 2.082 million represents St. Maarten’s expected annual contribution to the ENNIA Resolution Fund for 30 years, beginning in 2027. The first contribution is scheduled for March 15, 2027, with the final contribution due in March 2057.

Government, however, has budgeted Cg. 3 million annually as a precaution rather than limiting the budget to the Cg. 2.082 million base contribution. Gumbs said the higher amount provides room in the event that the final financial requirement exceeds the currently assumed annual payment.

She confirmed that the 2024 outline agreement governing the arrangement has not been amended.

The ENNIA arrangement also includes what is known as a Peak Facility, which acts as an overdraft mechanism if the regular annual contributions are insufficient in a given year. The total facility amounts to Cg. 500 million, with St. Maarten responsible for guaranteeing 6.49 per cent, or Cg. 32.45 million.

Based on current calculations, approximately Cg. 7.756 million could eventually need to be drawn for St. Maarten’s share over the 50-year life of the arrangement. Gumbs stressed that this does not mean the full Cg. 32.45 million will necessarily be called upon. It represents the maximum guarantee attached to St. Maarten’s share of the Peak Facility.

St. Maarten has not established a separate insurance arrangement to cover that potential liability. However, under the agreement, Government has the option to make voluntary contributions to the Peak Facility to build up reserves against possible future shortfalls.

The Minister also explained that Central Bank of Curaçao and St. Maarten dividend income forms part of the wider funding arrangement. The 2026 budget includes Cg. 6 million in anticipated CBCS dividend income. Government currently has no indication that those dividends will be insufficient to support the arrangement.

Gumbs acknowledged that the manner in which the ENNIA obligation is currently presented in the budget should be improved. The 30-year commitment is presently shown under a general heading for projects and activities rather than being clearly identified as a recurring long-term financial obligation.

She agreed with the concern raised in Parliament and said Government will correct the presentation so that the obligation is more transparent. The same approach is expected to be applied to the multi-year estimates for 2028 through 2030.

The Minister also addressed broader concerns about the strength of the 2027 budget surplus.

She confirmed that not all identified financial risks have been incorporated into the budget result. These include potential costs associated with ENNIA, healthcare, social funds, Government-owned companies and other contingent liabilities.

According to Gumbs, the 2027 budget is based on the best available information and assumptions at the time it was prepared. If significant financial risks materialize during the year, Government would have to address them through budget amendments or changes in expenditure.

She said Government is not yet in a position to provide Parliament with a complete calculation showing what the 2027 budget result would look like if all outstanding risks were included, because several of those risks cannot yet be reliably quantified.

Healthcare and social insurance funds administered by SZV were also highlighted as a major area of concern.

Government’s projections show that the healthcare-related funds remain under significant financial pressure. Combined SZV fund revenues for 2027 are projected at approximately Cg. 318.3 million, against expenses of about Cg. 332 million, resulting in an overall projected deficit of approximately Cg. 13.7 million.

Several individual funds are already projected to carry negative reserves and to deteriorate further through 2030 if the current structure remains unchanged.

Gumbs said the projections reinforce the urgency of healthcare reforms being pursued by Government together with SZV and other stakeholders. The goal, she said, is to strengthen the financial sustainability of the funds while protecting access to healthcare.

Government has not yet completed a formal stress test showing the potential impact on the national budget if SZV reserves deteriorate faster than projected.

The Minister acknowledged that the financial condition of the social and healthcare funds represents a potential fiscal risk to the country. Discussions with SZV are continuing to determine the size of that exposure and how quickly the funds could deteriorate under current conditions.

Gumbs also confirmed that no specific provision has yet been included in the 2027 budget for settling outstanding amounts between Government and SZV. The Ministry is still compiling and verifying the amounts owed between the two parties before determining whether a specific budget allocation will be required.

On Government liquidity, Gumbs clarified that the projected closing cash balance for 2027 is approximately Cg. 2 million. She also confirmed that the correct total loan repayment amount for 2027 is Cg. 22 million.

The Minister said the different liquidity tables contained in the budget are consistent, with some presenting a multi-year overview and others providing the same information on a quarterly basis.