The IMF and Suriname have reached a staff-level agreement on the final review of the Extended Fund Facility (EFF), allowing potential access to USD 61.3 million. Key achievements include economic growth and improved governance, although challenges persist in fiscal discipline and social assistance. Ongoing structural reforms are necessary to prepare for future oil revenues and ensure comprehensive development.
The International Monetary Fund (IMF) and Suriname have reached a staff-level agreement regarding the ninth and final review of the country’s economic recovery program, supported by the Extended Fund Facility (EFF). Approval from the IMF’s Executive Board is necessary for Suriname to access approximately USD 61.3 million (equivalent to SDR 46.8 million).
Significant achievements have been made under the program, including economic growth, declining inflation, and a reduction in public debt. The central bank’s autonomy and governance have been enhanced, and there is a noticeable return of investor confidence. The Surinamese authorities aim to maintain fiscal discipline leading up to the upcoming elections while supporting vulnerable populations.
In discussions held between February 5 and 14, Ms. Anastasia Guscina led an IMF team to finalize the review, following a three-year EFF approved by the Executive Board in December 2021. Ms. Guscina noted that while most targets were met, the primary fiscal balance was not achieved, prompting authorities to adopt measures to reach a 2.7 percent of GDP primary surplus target for 2025.
The program’s broad goals have largely been accomplished, forecasting 3 percent economic growth, further declining inflation, a boost in donor support, and increased international reserves. Despite these advances, challenges remain, including capacity constraints in implementing policies due to a difficult socio-political environment. Positive developments such as the final investment decision for offshore oil production slated for 2028 bode well for Suriname’s medium-term outlook.
The government recognizes the importance of fiscal discipline, with the missed primary balance target attributed to lower non-tax revenue and increased electricity expenses. Corrective actions are being implemented to align with the 2025 budget. Recent amendments to public financial management legislation and new laws governing fiscal rules are steps toward properly managing forthcoming oil revenues.
Social assistance has been prioritized, with expenditures in this area significantly increasing over the program’s duration. The government met its end-December 2024 target for social assistance spending, although further efforts are required to ensure effective distribution of aid, especially in rural regions. Implementation of a strategic plan to improve social programs is encouraged.
Debt restructuring efforts are nearing completion, enhancing investor confidence. An agreement with the Paris Club and ongoing negotiations with commercial creditors are facilitating progress. The government has addressed domestic debt arrears and has received upgrades from credit rating agencies, while international bond spreads have reached historical lows.
A strict monetary policy has contributed to reduced inflation rates. The Central Bank of Suriname (CBvS) successfully met all monetary targets and is committed to a flexible exchange rate while enhancing foreign exchange market operations. Recapitalization of the CBvS aligns with the regulatory framework outlined by the Central Bank Act.
The banking system’s vulnerabilities are being managed through meticulous monitoring of capital adequacy and liquidity to ensure stability. Additionally, oversight of non-bank financial institutions must be strengthened due to their links with the banking sector.
The authorities are urged to maintain their ambitious structural reforms to bolster governance and institutional strength. Collaborative steps have been taken toward amending anti-corruption laws while transparency regarding public officials’ asset holdings remains crucial in mitigating corruption risks associated with oil revenues.
The IMF mission expressed gratitude to Suriname’s authorities for their cooperative efforts during discussions, which involved high-level meetings with various government officials, civil society representatives, and development partners.
The staff-level agreement between the IMF and Suriname marks a critical milestone in the country’s economic recovery program, optimizing resource management while strengthening governance. While significant progress has been made with positive macroeconomic indicators, challenges such as fiscal discipline, social assistance distribution, and structural reforms remain imperative as Suriname prepares for future economic developments, particularly with the impending offshore oil production. Continuous collaboration between the authorities and international partners is essential for sustainable growth and resilience in Suriname’s economic landscape.
Original Source: www.miragenews.com
