Finance Minister Gumbs: Cft has not indicated 2027 loan request would be rejected

GREAT BAY--Minister of Finance Marinka Gumbs has clarified that the Committee for Financial Supervision (Cft) has not indicated that St. Maarten's proposed borrowing to finance capital investments in 2027 would be rejected, despite concerns raised by the financial supervisory body about the country's investment planning, liquidity position and supporting financial documentation. However, the Minister emphasized that including capital investments in the national budget does not guarantee that the loans required to finance those projects will ultimately be secured.

Gumbs made the statements during the continuation of Parliament's 2027 national budget debate on Monday, November 9, responding to questions from Member of Parliament Ardwell Irion and other MPs concerning the government's reliance on borrowing, the Cft's assessment of the country's finances and the potential consequences for infrastructure and development projects if the requested financing is not obtained.

Irion specifically questioned whether the Ministry of Finance had received any positive indication from the Cft that the proposed financing for capital investments in 2027 would be approved, referencing the supervisory body's advice on the national budget.

In response, Gumbs said the Ministry has maintained ongoing discussions with the Cft concerning the proposed borrowing and the information required to support the financing request.

"The ministry has been in continuous discussions with the CFT and at no point has the CFT indicated that the 2027 loan request would not be approved," the Minister stated.

She explained that the discussions have concentrated on how the financing request should be submitted and what supporting information government must provide to enable its assessment.

According to Gumbs, the Cft's continued engagement with the Ministry on the content and structure of the request indicates that the discussions are focused on the documentation and justification for the proposed financing.

The Minister did not announce that the loan had been approved or that financing commitments had been secured. Her comments concerned the status of the discussions and the absence of an indication from the Cft that the 2027 request would be rejected.

Capital Budget Approval Does Not Guarantee Loans

Addressing questions about government's continued reliance on loans to finance capital investments, Gumbs explained that borrowing has been a longstanding component of St. Maarten's national budget financing arrangements.

Larger infrastructure and development projects, she said, frequently require financing that cannot be provided directly from government's ordinary revenues.

The Minister explained that Parliament's approval of capital expenditures establishes the investments government is authorized to pursue and provides the basis for submitting the corresponding financing requests.

She emphasized that the inclusion of a capital project in the national budget should not be interpreted as confirmation that the money required to execute the project is already available.

According to Gumbs, government must first obtain parliamentary authorization for its intended investments before proceeding with the necessary financing arrangements.

This means that capital expenditures approved in the 2027 budget may remain dependent on the availability of loans or other financing sources before they can be implemented.

Projects Could Be Postponed or Rephased if Financing Is Not Secured

The Minister also outlined the potential consequences if government is unable to obtain the loans required to finance its capital investment program.

Gumbs explained that the absence of loan financing would not automatically invalidate the national budget. Instead, government would have to review the specific capital projects dependent on that borrowing.

Depending on the circumstances, projects could be postponed, implemented over a longer period or financed through alternative arrangements.

In response to Irion's questions about ministerial accountability and the availability of funding, Gumbs further explained that individual ministers remain responsible for managing and executing their approved budgets, including the capital expenditures assigned to their ministries.

Should the requested loans not materialize, the government would have to reassess its investment plans, establish priorities and determine which projects could proceed using available financial resources.

The Minister maintained that including loan authorization in the budget is part of the process required to pursue financing for capital expenditures.

Cft Wants Progress on Financial Risks and Investment Planning

The Minister also addressed concerns raised by the Cft about the country's financial position and the information required to assess its proposed investments.

Among the matters identified were financial risks associated with government-owned entities, the sustainability of social and health insurance funds, the country's limited liquidity position, the absence of a sufficiently developed multi-year investment agenda and the information required to assess compliance with the applicable interest burden limit.

Gumbs explained that the Cft does not expect government to resolve every outstanding issue immediately but expects demonstrable progress.

She indicated that the Ministry intends to share an update on that progress with Parliament and the Cft before the end of November, following approval by the Council of Ministers.

The Minister said Council approval was important to demonstrate that the measures and commitments presented to the Cft reflected the government's collective position.

Concerning the sustainability of the social and health insurance funds, Gumbs explained that the matter had been discussed with the Cft and that government was preparing a separate proposal outlining measures to address the funds' long-term financial challenges.

A similar approach is being taken regarding financial risks associated with government-owned entities, with particular attention given to TelEm and the postal service.

According to the Minister, these matters were not fully addressed within the 2027 budget itself because government is developing separate proposals and strategies to assess their potential impact on public finances.

Gumbs also acknowledged that improvements remain necessary in the preparation of multi-year investment plans, particularly in identifying when projects will begin, how long implementation will take and whether budgeted amounts can be reallocated or reprioritized.

The Minister said the government remains committed to strengthening long-term investment planning, monitoring and the allocation of public resources.

Financial Reporting Remains Part of Cft Requirements

Another issue concerned the documentation necessary to assess whether St. Maarten remains within the legal limits governing interest costs on government borrowing.

Gumbs explained that work is continuing on the financial reports required for that assessment, including collective-sector reporting.

She indicated that a draft multi-year investment report covering 2020 through 2023 had been finalized, while additional reporting was being prepared.

The Minister also addressed the need to substantiate significant changes in government revenue and expenditure estimates and to improve the accuracy and consistency of the budget's financial information.

These reporting requirements form part of the information government must provide to support its financial planning and borrowing requests.

The Cft previously indicated in its assessment of the approved 2026 budget that it could not provide positive advice on the proposed borrowing for that year without sufficient supporting information on the investment program. That assessment concerned the 2026 borrowing request and is separate from the Minister's latest statements about discussions concerning financing for 2027.

Road Projects Also Depend on Borrowing

The Minister provided a practical example of how capital investments in the 2027 budget will depend on a combination of available revenues and borrowing.

Responding to questions concerning the Road Fund and financing for road works, Gumbs explained that approximately Cg 5 million in motor vehicle tax revenues has been allocated.

Of that amount, Cg 1.5 million is included in the operational budget, while Cg 3.5 million is intended to contribute toward a Cg 9 million capital expenditure program for road projects.

The remaining Cg 5.5 million is expected to be financed through a loan.

Gumbs clarified that the Cg 3.5 million allocation is available within the proposed budget arrangements, while the additional Cg 5.5 million depends on securing the required capital financing.

The arrangement demonstrates how the execution of planned road investments could be affected by the availability and timing of government borrowing.

The Minister also addressed the proposed restructuring of the Road Fund into a foundation, explaining that the necessary legislative and regulatory framework had not yet been established when the 2027 budget was prepared. Consequently, the proposed structure could not be fully incorporated into the budget in its intended form.

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