Statement by the Staff Representative on Suriname Executive Board Meeting February 3, 2010

This 2009 Article IV Consultation highlights that economic activity weakened in Suriname in 2009 in the context of lower alumina and oil prices and a sharp output decline in the alumina sector. However, economic growth is estimated to have remained positive at 2.5 percent, supported by buoyant activity in the gold and construction sectors. Inflation has fallen sharply. Executive Directors have welcomed the authorities’ decision to postpone the reduction in the corporate tax rate, as this would adversely affect tax collections.

Abstract

This 2009 Article IV Consultation highlights that economic activity weakened in Suriname in 2009 in the context of lower alumina and oil prices and a sharp output decline in the alumina sector. However, economic growth is estimated to have remained positive at 2.5 percent, supported by buoyant activity in the gold and construction sectors. Inflation has fallen sharply. Executive Directors have welcomed the authorities’ decision to postpone the reduction in the corporate tax rate, as this would adversely affect tax collections.

January 28, 2010

The following information was made available to staff after the staff report (SM/09/308) was circulated to the Executive Board in late-December 2009. This information does not change the thrust of the staff appraisal.

  • CPIdata. Inflation ended the year 2009 lower than staff had projected, with the 12-month increase at 1.3 percent, and average inflation for the year at -0.1 percent. These compare with projections in the staff report of 5.7 percent and 0.7 percent, respectively, as staff had expected higher food and fuel prices in the last quarter.

  • Foreignreserves. Net international reserves stood at US$763 million at end-2009, broadly in line with staff projections (US$778 million).

  • Monetarydata. Data through November 2009 indicate that private sector credit growth has continued to moderate to 16.1 percent, from 17 percent in September (y/y). However, broad money growth picked up from 22 percent in September 2009 to 29 percent in November (y/y).

  • CLICOSuriname. The Surinamese insurance company Self Reliance has acquired the shares of CLICO Suriname’s general and life insurance companies. The Minister of Finance has provided a general commitment that the government would provide financial support to Self Reliance, if the need arises. The specifics of this commitment have not been made available.

  • FISO-2. As of this week, the new wage structure has not yet been implemented. A final decision on whether, or in what way, further wage reforms should be implemented now rests with the President of the Republic.

  • Creditratings. Standard and Poor’s has just issued a new ratings report, reaffirming its foreign currency rating of B+ and local currency rating of BB-, both with positive outlooks. S&P’s praised Suriname for its achievements in strengthening the country’s institutions and improving macroeconomic fundamentals. It confirmed that Suriname fares significantly better than peer countries with similar ratings on a number of indicators, including GDP growth, public finances, and public debt. S&P’s noted that Suriname’s foreign currency rating could be raised in the future, if the country’s economic policies remain stable after the elections.

Suriname: 2009 Article IV Consultation—Staff Report; Statement by the Staff Representative; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director
Author: International Monetary Fund