The economy continues to recover at a steady pace, buoyed by strong activity in the oil and gold sectors, as well as public investment. In the wake of the January 2011 devaluation and concurrent increase in taxes, the fiscal balance shifted from a deficit of 3 percent of GDP in 2010 to a surplus of 1 percent in 2011. The balance of payment also strengthened significantly, boosting reserves to nearly US$1 billion (5¼ months of imports) at end-2011. With still-tight monetary conditions, 12-month inflation dropped to 3.6 percent in May 2012, from a peak of over 22 percent in April 2011.

Abstract

The economy continues to recover at a steady pace, buoyed by strong activity in the oil and gold sectors, as well as public investment. In the wake of the January 2011 devaluation and concurrent increase in taxes, the fiscal balance shifted from a deficit of 3 percent of GDP in 2010 to a surplus of 1 percent in 2011. The balance of payment also strengthened significantly, boosting reserves to nearly US$1 billion (5¼ months of imports) at end-2011. With still-tight monetary conditions, 12-month inflation dropped to 3.6 percent in May 2012, from a peak of over 22 percent in April 2011.

I. Fund Relations

(As of May 31, 2012)

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

II. General Resources Account:

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III. SDR Department:

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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):

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

VII. Implementation of HIPC Initiative: Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

IX. Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

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 1. On January 20, 2011, the authorities devalued the currency by 20 percent vis-à-vis the U.S. dollar in the official market. With the devaluation, the authorities set a band of SRD 3.25–3.35 per US$1, within which all official and commercial market transactions are allowed to take place. The de facto exchange rate arrangement is classified as “stabilized.” In conjunction with the devaluation, the authorities also did away with an existing multiple currency practice (MCP), in the form of a special exchange rate for imports of infant formula. Suriname maintains MCPs arising from the spread of more than 2 percent between the buying and the selling rates in the official market for government transactions and also from the possible spread of more than 2 percent between these official rates for government transactions and those in the commercial markets that can take place within the established band.

Last Article IV consultation

The last Article IV consultation was concluded by the Executive Board on May 2, 2011 (IMF Country Report No. 11/256). 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 2008

CARTAC

  • Mission in January 2008 on revenue forecasting issues.

  • Mission in October 2009 to discuss tax reform and other TA needs.

  • Several missions from September 2010 through early 2012 on VAT implementation.

  • Several missions from October 2010 through February 2012 on national accounts.

  • Mission in 2011 on improving insurance supervision.

  • Mission in early 2012 on pension fund supervision.

  • Missions in 2011 on PEFA assessment and developing a PFM Action Plan.

  • Missions in early 2012 on improving fiscal projection and budget preparation capacity.

FAD

  • Mission in November 2010 on tax policy.

  • Mission in February 2011 on revenue administration assessment.

LEG

  • Mission in August and November 2011 on fiscal law

MCM

  • Missions in November 2010 on foreign exchange market.

  • Mission in March 2011 on banking system assessment

  • Mission in June 2011 on the introduction of indirect monetary instruments

  • Mission in December 2011 on bank resolution

  • Mission in February 2012 on technical assistance results management

STA:

  • Mission in August 2008 improving external sector data.

Consents and acceptances: Suriname has consented to the Executive Board reform and 2010 quota increase.

Resident Representative: None.

II. Relations With the Inter-American Development Bank

(As of May 31, 2012)

In 1980 Suriname joined the Inter-American Development Bank (IADB), which at present is its largest multilateral lender. As of May 2012, Suriname’s outstanding debt to the IADB stood at US$177 million. Disbursements have increased markedly due to improved absorptive capacity and the use of new financing instruments.

Through the IADB Country Strategy with Suriname 2011–2015, the government of Suriname is expanding its partnership for development with the IADB. The Strategy proposes a notable increase in lending, from US$103 million (in the previous Country Strategy period, 2007–2010), to about US$300 million. The main focus is on supporting the transition to modern public governance structures, diversifying the economy, and expanding social benefits. The priority areas include: (i) agriculture, (ii) energy, (iii) education, (iv) financial sector development, (v) public investment management, (vi) social protection, and (vii) transport. Dialogue will continue on other areas in need of strengthening: water and sanitation, disaster risk management, tax administration, health, private sector development, and natural resources and environmental management with a view to possible additional lending support.

The portfolio has improved significantly, especially as four operations (Basic Education Improvement Project, Health Sector Facility, Strengthening of Public Sector Management, and Trade Sector Support Program) exited. The active loan portfolio consists of seven operations, totaling US$115 million. The average age of the loans in the entire portfolio is 2.5 years. In 2012, new operations will support (i) the rehabilitation of the Meerzorg-Albina road; (ii) improvements in public capital expenditure management; (iii) the education sector; and (iv) the energy sector.

The Technical Cooperation portfolio for Suriname comprises of 12 operations (US$6.5 million), of which 40 percent has been disbursed.

Pipeline and Portfolio Summary

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Net Flows Convertible Currencies

(US$ Millions)

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III. Relations With the World Bank Group

(As of March 31, 2012)

The World Bank Group is now in the process of re-engaging with the Surinamese authorities after a 30 years hiatus. Its involvement in Suriname has been limited to a few knowledge products and the last significant activity was a proposal for a hydropower plant in 1980. In September 2011, Suriname became the 183rd member of the IFC and 14th in the Latin America Region. At the request of the authorities, the World Bank Group conducted an Auditing and Accounting Report on the Observance of Standards and Codes (ROSC) and began activities towards Candidate status in the Extractive Industries Transparency Initiative (EITI). An Interim Strategy Note (ISN), which sets out the World Bank Group’s support to the government’s reform program, is expected to be approved by the Board in September 2011. It has been agreed with the government that initial World Bank support would focus primarily on providing knowledge services for institutional strengthening and capacity building for the Government and the Central Bank. The IFC support focus on advisory services for Public and Private Partnerships (PPPs).

IV. Statistical Issues

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Suriname: Table of Common Indicators Required for Surveillance

(As of March 31, 2012)

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Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

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.

Includes external gross financial asset and liability positions vis-à-vis nonresidents. The unavailability of international investment position data stems from the authorities’ lack of capacity to provide the information.

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