Suriname: Staff Report for the 2007 Article IV Consultation—Informational Annex
Author: International Monetary Fund
Publication Date:
22 May 2007
eISBN:
9781451835311
Language:
English
Keywords:
ISCR; CR; government; overtime inflation expectation; Surinamese authorities; export base; CBvS; revenue stabilization fund; presentation methodology; exchange rate; bauxite company; Balance of payments statistics; Consumer price indexes
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This 2007 Article IV Consultation highlights that aided by favorable external conditions and an improvement in macroeconomic management, Suriname’s economic performance has improved in recent years. Since 2002, the central government deficit has declined sharply, leading to a substantial decrease in public debt as a share of GDP. Monetary policy has focused on reducing inflation, while the central bank has become more independent. In 2006, macroeconomic performance was better than anticipated, benefiting from a continued favorable external environment. The outlook for 2007 looks broadly positive.

Abstract

This 2007 Article IV Consultation highlights that aided by favorable external conditions and an improvement in macroeconomic management, Suriname’s economic performance has improved in recent years. Since 2002, the central government deficit has declined sharply, leading to a substantial decrease in public debt as a share of GDP. Monetary policy has focused on reducing inflation, while the central bank has become more independent. In 2006, macroeconomic performance was better than anticipated, benefiting from a continued favorable external environment. The outlook for 2007 looks broadly positive.

Annex I. Suriname: Fund Relations: (As of January 31, 2007)

Membership Status:

Joined: April 27, 1978

Status: Article VIII

A. Financial Relations

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Projected payments to the Fund: (SDR million; based on existing use of resources and present holdings of SDRs):

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B. Nonfinancial Relations with the Authorities

Exchange rate arrangements

The national currency is the Surinamese dollar (SRD), which replaced the Surinamese guilder in January 2004 at a conversion rate of 1,000 guilders per SRD. The central bank uses an official exchange rate of SRD 2.75 per U.S. dollar for government debt service and tax payments by mining companies and a special rate of SRD 1.4 per U.S. dollar for baby milk powder imports. Most transactions take place at a commercial bank/cambio 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 bank/cambio rate has traded between SRD 2.85 and 2.71 per U.S. dollar.

Last Article IV consultation

The last Article IV consultation was concluded by the Executive Board on February 24, 2006 (IMF Country Report No. 06/135). 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 2004

FAD

  • A mission is planned to provide assistance in public financial management.

LEG

  • Missions in November 2006 and January 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: Statistical Issues

The statistical information provided by Suriname can generally be considered inadequate for surveillance purposes. While the quality and timeliness of economic statistics has improved somewhat over the past two years, there are still serious shortcomings in the areas of the expenditure breakdown of national accounts, informal sector activity, and data on external services and capital inflows. These statistical inadequacies significantly hinder staff’s analysis and hampers the development of a reliable quantitative medium-term policy framework. In particular,

  • Real sector. Poor collection and presentation methodologies and long delays in the provision of data compound the lack of data on the informal sector and seriously undermine the accuracy of GDP estimates. As an expenditure breakdown of national accounts is unavailable, the estimate of saving and investment balances relies largely on balance of payments data, rendering problematic the estimation of private investment.

  • 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.

  • External sector. While trade data are relatively reliable, data on services and capital inflows suffer from poor compilation systems. Estimates of the components of the financial account (especially, private external debt) also need to be strengthened.

  • External users’ needs. In general, little is done to determine and meet external users’ needs. Users do not have access to readily available sources and methods, and there are no advanced release calendars to make the data more easily accessible.

In general, institutional arrangements need to be strengthened to facilitate improved reporting as well as collaboration between the Central Bank, the Bureau of Statistics, the Ministry of Finance, the Ministry of Planning and the Debt Management Office, and to avoid duplication of data production efforts and some inconsistencies across institutions.

Overview

The quality and timeliness of economic statistics in Suriname has improved somewhat over the past two years. The authorities have worked with STA to improve national accounts, monetary, and balance of payments statistics. Suriname started participating in the GDDS in June 2004, and its metadata are posted on the IMF’s Dissemination Standards Bulletin Board (DSBB). These metadata, which provide information on Suriname’s statistical practices as well as plans for improvement, now need to be updated.

During the last mission in 2007, staff could attest to several improvements in the accuracy and methodological soundness of statistics in Suriname, as well as enhanced coordination across different institutions. For example, the newly created Suriname Debt Management Office (which started operations in 2004), has improved the quality of public debt data (though problems still remain in the compilation of internal and external debt). To address some of the weaknesses in the production of sectoral GDP data, the Bureau of Statistics (BoS) authorities have initiated a census of economic activities, including in its coverage tourism, financial businesses, and transport and communications. Finally, the Ministry of Planning (in charge of GDP estimates for the current year and GDP forecasts) has aligned its methodologies to the one used by BoS.

Notwithstanding recent efforts by Surinamese authorities to improve the quality of macroeconomic statistics compiled and disseminated, important weaknesses remain to be addressed, as detailed below.

Real sector

The latest national accounts data cover the reference period of 2002. Preliminary estimates for 2003 became available in late-2004, but without any details on informal sector activity. Some efforts have been made to improve the GDP data by production approach. The constant price series were rebased to 1990 and the estimates in the different economic sectors are now based on indicator variables. However, indicators of sectoral activities still suffer from poor response rates to questionnaires.

A lack of timely, reliable source data on price indices for tourism services, transportation and communication and bauxite production adversely affects production-based GDP estimates in nominal terms, and lead to frequent and substantial revisions of nominal GDP data. An analysis of revision patterns are generally absent or are not disseminated. For example, staff was given no advanced notice of major changes in the methodology to calculate sectoral GDP deflators, which lead to a revision of 30% in nominal GDP in 2005 with respect figures reported in the previous staff report.

There are no national accounts by expenditure approach and no consistent labor statistics. 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 General Statistics Bureau (ABS) due to a fire (June 2003–March 2004). The absence of data collection and processing has impeded publication of monthly or annual figures for 2003 and beginning 2004.

Fiscal sector

The only public sector finance statistics available are those for the central government. A substantial amount of additional information is needed to derive an accurate picture of the fiscal accounts. 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 is used by the Central Bank of Suriname (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 Ministry of Finance (MoF). Some capital expenditure items are recorded by the Central Paymaster, but the majority seem 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 begun the process of 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 for GFS compilation and reporting, as well as between the MoF and the central bank. 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 (for the blind, handicapped, etc.) and many of them are small enterprises.1 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.

Statistics on public external debt and external payment arrears suffer from non-transparent reporting procedures across ministries. However, the startup of the Suriname Debt Management Office in 2004 has helped centralize the flow and quality of data.

Financial sector

An STA mission visited Suriname in January 2001 to advise on the country’s reporting format on monetary data, to help prepare a template for more transparent accounting of the assets and liabilities of the CBvS, and to advise on ways to prepare and promote a faster and more accurate dissemination of monetary data. In response to the mission’s recommendations, data on central bank activities are reported with lags of less than a month since mid-2001. The quality of the accounts makes them suitable for publication in IFS.

To address remaining difficulties with the reporting of commercial banks’ data, STA missions visited Suriname in September 2001 and February 2005. The missions helped design 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

During October 2002, a STA technical assistance mission assessed progress in improving balance of payments compilation consistent with the Balance of Payments Manual Fifth Edition (BMP5), and to design new survey and reporting formats that would allow for detailed BPM5 classifications. A GDDS mission that visited Suriname 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.

Quarterly aggregate balance of payments estimates and annual balance of payments data are disseminated by the central bank in its national publications. 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 category. For example, STA missions have assessed the method for calculating FDI as incorrect and that new FDI (new investments from gold and bauxite companies) have not been captured. In this sense, the scope, classification, and basis for recording foreign direct investment 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 Central Bank. As a result, the CBvS uses data from the banking system on firms’ foreign exchange contracts, which differs from the Customs Union data used by ABS. As a result, export and import data compiled by these two institutions run the risk of data inconsistencies.

Finally, there are some discrepancies between the data reported by the central bank and those reported by the debt management office, particularly with respect to gross external disbursements and amortization of the central government. The Central Bank should expand its current debt reporting system to include comprehensive coverage of external loans and debt of the entire public sector, as well as publicly guaranteed debt.

Suriname: Table of Common Indicators Required for Surveillance: As of February 20, 2007

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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).

1

See a list of public enterprises in the accompanying Statistical Appendix paper.

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Cover IMF Staff Country Reports
Suriname: 2007 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Suriname
Author: International Monetary Fund
Volume/Issue:
Volume 2007: Issue 180
Publisher:
International Monetary Fund
ISBN:
9781451835311
ISSN:
1934-7685
Pages:
41
DOI:
https://doi.org/10.5089/9781451835311.002