THE HAGUE, ORANJESTAD – The College Aruba financieel toezicht (CAft) has concluded that Aruba’s 2026 budget meets the required surplus norm, but warns that structural risks remain — particularly in public spending, investment levels and long-term sustainability .
In its formal advice dated January 21, 2026, the financial watchdog states that Aruba projects a financing surplus of 2.6 percent of GDP for the collective sector in 2026, comfortably above the required minimum of 1 percent under the Landsverordening Aruba financieel toezicht (LAft).
However, behind the surplus figures, the Cft signals several areas of concern.
Surplus Used for Debt Reduction — But Investments Lag
Aruba’s public debt is projected to fall from 56 percent of GDP in 2026 to 47 percent by 2028 — ahead of the legally mandated debt reduction path that aims for a maximum of 50 percent by 2040 .
While the Cft welcomes the debt reduction trajectory, it notes that available fiscal space is largely being used for:
- Structural policy intensifications
- Nominal debt reduction
- Social transfers
But not for public investments.
Public investment levels remain low. In fact, capital expenditures for 2026 were revised sharply downward from AWG 50 million in the draft budget to just AWG 7 million in the adopted budget .
The Cft links this to limited execution capacity and questions whether simply establishing an investment fund will solve structural implementation problems.
Investment Fund Must Be Established in Q1 2026
The watchdog urges Aruba to formally establish its Development and Investment Fund no later than the first quarter of 2026 .
But it emphasizes that without:
- A clear multi-year investment agenda
- Transparent reporting
- Strong execution capacity
the fund risks becoming a bookkeeping mechanism rather than a growth instrument.
Social Transfers Continue to Rise
One of the biggest budget pressures comes from transfers, particularly the repair allowance (reparatietoeslag) for pensioners.
As of January 1, 2026, the allowance increases by AWG 150 per month per pensioner. The structural impact on the budget is estimated at at least AWG 140 million annually, and rising further due to aging demographics .
The Cft points out that a legally required income test for this allowance is still not being applied, increasing its fiscal burden.
This mirrors demographic and pension pressures seen elsewhere in the Caribbean part of the Kingdom, including Curaçao.
Personnel Costs and Multi-Year Credibility
From 2027 onward, personnel expenses must remain below 10 percent of GDP.
While Aruba’s projections show compliance, the Cft notes that this assumes personnel costs remain nominally flat — without clearly explaining which policy measures will ensure that outcome .
The watchdog again stresses that the realism of the multi-year budget remains a concern.
Risk Around Health and Social Funds Surpluses
Aruba assumes that surpluses from the AZV (health insurance fund) and SVB (social security bank) will be used for debt reduction.
However, the Cft notes that formal agreements to secure those funds for debt reduction have not yet been legally established, creating implementation risk .
Why This Matters for Curaçao
Although this advice concerns Aruba, the fiscal discipline framework under the Kingdom’s financial supervision structure closely resembles Curaçao’s oversight regime.
The themes raised by the Cft — structural transfer growth, investment execution weakness, demographic pressure, reliance on optimistic revenue projections — are issues Curaçao also faces.
The letter highlights a broader Kingdom-wide challenge:
How to maintain fiscal discipline while simultaneously investing in economic growth and managing aging populations.
As financial oversight continues across the Caribbean parts of the Kingdom, the Aruba case offers insight into the delicate balance between surplus compliance and structural reform.