ORANJESTAD – Aruba recorded a strong budget performance during the first quarter of 2026, posting a financing surplus of AWG 118 million and remaining comfortably above the fiscal targets established under financial supervision rules. However, the College Aruba Financial Supervision (CAft) is warning that several important reforms and investment initiatives remain delayed, creating risks for the country's long-term financial position.
In its assessment of Aruba's first execution report for 2026, the CAft said the island currently meets the financing balance target of 1 percent of gross domestic product (GDP), with the surplus equivalent to 1.5 percent of GDP. The country is also complying with personnel expenditure limits, while its debt ratio declined to 61 percent of GDP.
Despite the positive figures, the supervisory body identified several concerns requiring urgent attention.
One of the main issues is the continued delay in establishing Aruba's investment fund. The fund was expected to become operational during the first quarter of 2026 but has yet to be formally established. According to the CAft, the delay prevents reserved investment resources from being deployed and could result in planned projects failing to materialize.
The watchdog is urging the government to formally establish the fund as soon as possible and develop a multi-year investment agenda that aligns both with national policy priorities and the country's implementation capacity.
The CAft also raised concerns about Aruba's collective sector finances. While the government, the General Health Insurance Fund (AZV), the Social Insurance Bank (SVb), and the Aruba Tourism Authority (ATA) all generated surpluses, the supervisory body noted that the collective sector has not yet been definitively established, making it difficult to obtain a complete picture of public debt levels.
According to the report, the AZV recorded an AWG 11 million surplus during the first quarter and expects a year-end surplus of AWG 72 million. The SVb generated an AWG 26 million surplus and projects AWG 62 million by year-end, while the ATA posted an AWG 29 million surplus.
Revenue collection continued to perform strongly. Government revenues reached AWG 439 million during the first three months of 2026, an increase of approximately 6 percent compared to the same period last year. The growth was driven largely by higher indirect tax revenues, tourist taxes, and other non-tax income.
At the same time, expenditures increased by AWG 20 million to AWG 390 million, primarily due to higher transfer payments linked to an increase in the so-called repair allowance. The CAft reiterated its concerns that Aruba has still not implemented the legally required income test associated with the allowance, despite previous recommendations to do so. The watchdog warned that failing to apply the income test increases budgetary costs and reduces the effectiveness of the measure.
The CAft further cautioned that geopolitical uncertainties could negatively affect tourism revenues, tax collections, and financing costs in the future. For that reason, it urged Aruba to continue controlling expenditures and strengthening financial reserves to withstand potential economic shocks.
Another area highlighted in the report is the financial oversight of government-owned companies. While the CAft welcomed Aruba's decision to include more information about state-owned enterprises in its financial reporting, it said additional transparency is needed regarding the financial risks these entities pose to public finances. The watchdog also stressed the importance of stronger governance and risk management within government companies.
Overall, the CAft described Aruba's first-quarter financial performance as positive but emphasized that sustained fiscal discipline, investment planning, and structural reforms will be necessary to maintain the country's progress and strengthen its long-term economic resilience.