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Suriname: Staff Report for the 2008 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
August 2008
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Annex I. Suriname: Fund Relations

(As of March 31, 2008)

I. Membership Status: Joined: April 27, 1978; Article VIII

II. General Resources Account:

SDR Million%Quota
Quota92.10100.00
Fund holdings of currency85.9893.35
Reserve Position6.126.65
Holdings Exchange Rate

III. SDR Department:

SDR Million%Allocation
Net cumulative allocation7.75100.00
Holdings0.516.56

IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements: None

VI. Projected Payments to Fund1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20082009201020112012
Principal
Charges/Interest0.150.200.200.200.20
Total0.150.200.200.200.20

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

B. Nonfinancial Relations with the Authorities

Exchange rate arrangements

The national currency is the Suriname dollar (SRD), which replaced the Suriname guilder in January 2004 at a conversion rate of 1,000 guilders per SRD. Suriname has a dual exchange rate regime, comprising an official and a commercial rate. The official rate of SRD 2.75 per U.S. dollar is used by the central bank for government external debt service and financing and for tax and royalty payments (in the case of the state oil company also dividend payments) by mineral sector companies. Over 80 percent of transactions take place at the commercial rate. In June 2004, the central bank removed the ceiling and the floor on this rate, which had previously been set at SRD 2.8 and 2.6 per U.S. dollar respectively. Since then, the commercial rate has traded between SRD 2.85 and 2.71 per U.S. dollar. Over the last year, the differential between official and commercial rate has been well under 2 percent. There is also a special rate of SRD 1.4 per U.S. dollar, used for imports of baby milk powder.

Last Article IV consultation

The last Article IV consultation was concluded by the Executive Board on March 21, 2007 (IMF Country Report No. 07/87). Suriname is on the standard 12-month consultation cycle.

Participation in the GDDS

In July 2004, the IMF officially announced Suriname’s formal participation in the General Data Dissemination System (GDDS).

Technical assistance since 2005

CARTAC

  • Mission in January 2008 on revenue forecasting issues.

FAD

  • A joint IDB-IMF needs assessment mission in May 2007 provided assistance in public financial management.

LEG

  • Missions in November 2006 and January and June 2007 provided advice on tax legislation.

STA:

  • A follow-up mission from the Money and Banking Division of the Statistical Department visited Suriname in February 2005 to address issues on reporting of commercial banks’ data.
  • GDDS mission visited Suriname in March of 2004 to assist authorities in preparing their meta-data.

Consents and acceptances: Quota increase approved.

Resident Representative: None.

Annex II: Suriname: Relations with the Inter-American Development Bank and the World Bank Group

A. Inter-American Development Bank

Suriname joined the Inter-American Development Bank (IDB) in 1980. Since then, the IDB has approved 16 loans to Suriname amounting to US$108.6 million and 100 technical cooperation operations totaling US$29.7 million.

The IDB is the major multilateral lender operating in Suriname at this time. The other main sources of financing for public sector investment are The Netherlands and the European Union. As of February 2008, Suriname’s outstanding debt to the IDB stood at US$53.2 million, mostly on Intermediate Fund Financing (IFF) terms.

Bank strategy in Suriname is outlined in the Suriname Country Strategy 2006-2010. The current version was approved in 2007 and is founded on three equally important pillars—development of the public sector, development of the private sector, and integration of the interior. The first two pillars consolidate the thrust of the former Country Strategy (2000 to 2005) by continuing to target weaknesses in the policy and institutional framework that constrain Suriname’s development, and thereby promote private-sector-led-growth. The third pillar focuses on integrating the indigenous and maroon communities living in the interior of Suriname more fully into national development and raising their living standards.

Structural reform projects

Public sector. In June 2004, the IDB approved a US$5 million loan to Suriname to support the strengthening of public sector management, which is considered a critical element of institutional reform in the country, given the large size and importance of the public sector. The loan is complemented by TC (technical cooperation) to elaborate a road map, which will help to guide implementation of the public sector reform project.

Banking system. The authorities have utilized IDB financing to develop a reform and rationalization of the state banks. To this end, the IDB approved in May 2003 a technical cooperation project (Financial Sector Strengthening and Rationalization—US$500,000) that supported a financial evaluation of the state banks and identification of reform options. The options open to the government have been presented to the Council of Ministers for consideration. It is not clear exactly when a decision will be taken. If authorities decide to pursue a reform strategy consistent with sound financial and public policy criteria, the Bank has indicated its willingness to finance the development of a detailed implementation plan.

Financial relations (as of end February 2008)

At present, 8 loan projects are in execution amounting to US$55.6 million in IDB contribution and 34 technical cooperation projects in execution with total IDB contributions of US$11.9 million. The undisbursed portion of the loan portfolio in execution is entirely on OC terms with IFF subsidy.

Pipeline and Portfolio Summary
Project CategoryNumberTotal (In millions of US$)Disbursed (In percent)
Loans in Execution855.654.8
TCs in Execution3411.929.2
Projects in Pipeline (2008)360.0Not applicable
TCs in Pipeline (2008)51.9Not applicable

Net cash flow

The total financing inflow has been positive during 2002-2007. Loan repayments from Suriname are projected to increase through 2009.

Net Flow of IDB Convertible Currencies(In millions of US$)
Proj.
200320042005200620072008
a. Loan disbursements15.73.34.97.716.814.2
b. Repayments (Principal)1.82.82.93.03.54.4
c. Net loan flow (a − b)13.90.62.04.713.39.8
d. Interest and charges1.22.31.81.92.53.8
e. Net cash flow (c − d)11.9-1.80.22.810.86.0

Annex III. Suriname: Statistical Issues

Overview

Data provided to the Fund can generally be considered inadequate for surveillance purposes. While the quality and timeliness of economic statistics have improved somewhat over the past two years, there are still significant shortcomings in the areas of the expenditure breakdown of national accounts, informal sector activity, and data on external services and private capital inflows. These inadequacies hinder staff’s analysis and hamper the development of a reliable quantitative medium-term policy framework. In particular,

  • Real sector. Deficiencies in data collection and presentation methodologies and long delays in the provision of source data for main economic activities affect GDP estimates from the production side. As an expenditure breakdown of national accounts is unavailable, the estimate of saving and investment balances relies largely on fiscal accounts and balance of payments data, rendering problematic the estimation of private savings and investment. The authorities, in consultation with the CARTAC are currently devising a plan to update the national accounts’ base year (dating from 1990).
  • Fiscal sector. A substantial amount of additional information on government finance statistics is needed to derive an accurate and timely picture of the fiscal position from above the line. The coverage of debt statistics needs to be broadened to include non-government guaranteed public debt.
  • External sector. While trade data are relatively reliable, data on services and private capital inflows suffer from poor compilation systems. Estimates of the components of the financial account (especially, private external debt) also need to be strengthened.

In general, institutional arrangements need to be strengthened to facilitate improved reporting as well as collaboration between the Central Bank (CBvS), the Bureau of Statistics (BoS), the Ministry of Finance (MoF), the Ministry of Planning (MoP) and the Debt Management Office, and to avoid duplication of data production efforts and some inconsistencies across institutions. Suriname participates in the GDDS since June 2004. However, information on statistical practices and plans for improvement (metadata) need to be updated.

To address some of the weaknesses in the production of sectoral GDP data, the BoS has initiated a census of economic activities, including in its coverage tourism, financial businesses, and transport and communications. Also, the MoP (in charge of GDP projections) has aligned its methodologies to the one used by BoS.

Real sector

Some efforts have been made to improve the GDP data from the production side. The constant price series were rebased to 1990 and sectoral estimates are now based on indicators which still suffer from poor response rates to questionnaires and exclude informal sector activities. Also, a lack of timely, reliable source data on price indices for tourism services, transportation and communication adversely affects production-based GDP estimates in nominal terms. There are no national accounts by expenditure, while consistency of labor statistics could be improved. There is also no reconciliation between the national accounts and the balance of payments data. The development of a supply and use table would lead to better estimates for all sectors of the economy.

The methodology used to compile the consumer price index (CPI) is sound. The production and dissemination of the consumer price index (CPI) was disrupted by the temporary cessation of work by the BoS in June 2003–March 2004 due to a fire. As a result, there are no CPI data for that period.

Fiscal sector

The only public finance statistics available are those for the central government. With respect to revenue, data are collected on a cash basis by the Inland Revenue Department and the Non-tax Revenue Division. There is a Central Paymaster Department that also provides revenue and expenditure data on a cash basis, which are used by the CBvS to furnish a statement of central government operations (produced daily, weekly, and monthly) and these, in turn, are the basis for the liquidity report on revenue and expenditure prepared by the MoF. Some capital expenditure items are recorded by the Central Paymaster, but the majority seems to be recorded only at the ministerial level. As there are also no centralized records for receipts of external grants, capital expenditure has to be inferred from partial donor information.

As the estimates for revenue and expenditure components can differ significantly among the MoF, the Treasury Department, the CBvS, and the Central Paymaster data, the authorities have been streamlining the system of fiscal reporting, improving the reconciliation process and standardizing the reporting format. There is a pressing need for standardization of expenditure by economic classification and more coordination between the MoF and other ministries, as well as between the MoF and the CBvS. Available public debt statistics cover only debt contracted or guaranteed by the central government. Since 1986, no data on central government operations have been published in the IFS, and no data are reported for publication in the Government Finance Statistics Yearbook (GFSY).

For the rest of the public sector, the collection of comprehensive and consistent financial data remains a challenge. The Netherlands has recently provided technical assistance in this area. The actual number of public enterprises remains unknown, and is estimated to amount to 120 companies, but some are dormant, others are social associations and many of them are small enterprises. Most of these enterprises do not produce accounts on a timely basis and their impact on fiscal operations, domestic credit and employment is not known with any certainty.

Financial sector

STA missions visited Suriname in September 2001 and February 2005 to help in the design of new report forms to allow a proper sectorization of the accounts. The quality and periodicity of the reported data has improved significantly as a result of these missions and the time-lag was reduced to two months. Suriname migrated to the new standardized report forms (SRFs) early in 2006, and its data are being published in the quarterly IFS Supplement since its first issue in September 2006.

External sector

In October 2002, a STA technical assistance mission assessed progress in improving compilation consistent with the Balance of Payments Manual Fifth Edition (BMP5), and designing new survey and reporting formats for detailed BPM5 classifications. A GDDS mission in March 2004 found that little progress had been made in implementing the recommendations, although a proposed revision to the CBvS Act on compulsory reporting of statistical information to the CBvS was approved by Parliament on May 20, 2005.

The balance of payments data are prepared on a cash basis. While trade data are relatively reliable, data on services and capital inflows suffer from poor compilation systems and poor procedures of reconciliation, which result in a substantial errors and omissions item. For example, STA missions have assessed the method for recording FDI as incorrect. The scope, classification, and basis for recording FDI could be made more transparent and better aligned with current international methodologies.

Lags in the compilation of merchandise trade data from the BoS limit the timeliness of quarterly estimates of the external current account balance produced by the CBvS. As a result, the CBvS uses data from the banking system on firms’ foreign exchange contracts, which differ from the Customs Union data used by BoS. There is thus a risk of data inconsistencies. Also, there are some discrepancies between the data reported by the CBvS and those reported by the DMO for gross external disbursements and amortization of the central government. The CBvS should expand its current debt reporting system to include comprehensive coverage of external loans, including for the private sector.

Suriname: Table of Common Indicators Required for SurveillanceApril 16, 2008
Date of

latest

observation
Date

received
Frequency

of

Data6
Frequency

of

Reporting6
Frequency

of

publication6
Exchange Rates3/084/08DMD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1
Reserve/Base Money2/083/08DMonthly Less than 1 month lagQ
Broad Money2/084/08MMonthly 2 month lagQ
Central Bank Balance Sheet2/083/08DMonthly Less than 1 month lagW
Consolidated Balance Sheet of the Banking System2/084/08
Interest Rates22/084/08MMonthly 2 month lagQ
Consumer Price Index10/0712/07MMonthly Less than 1 month lagM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4
Revenue, Expenditure, Balance and Composition of Financing3– Central Government
Stocks of Central Government and Central Government-Guaranteed Debt5
External Current Account BalanceQ4/0610/07QQA
Exports and Imports of Goods and ServicesQ4/0610/07
GDP/GNP200404/06AAA
Gross External Debt

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

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