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IMF Country Report No. 24/315

SURINAME

SEVENTH REVIEW UNDER THE EXTENDED ARRANGEMENT UNDER THE EXTENDED FUND FACILITY, REQUESTS FOR MODIFICATION OF PERFORMANCE CRITERIA, WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION, AND FINANCING ASSURANCES REVIEW—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR SURINAME

October 2024

In the context of the Seventh Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review, the following documents have been released and are included in this package:

• A Press Release including a statement by the Chair of the Executive Board.

• The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on September 18, 2024, following discussions that ended on August 9, 2024, with the officials of Suriname on economic developments and policies underpinning the IMF arrangement under the Extended Fund Facility. Based on information available at the time of these discussions, the staff report was completed on September 5, 2024.

• A Statement by the Executive Director for Suriname.

The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.

Copies of this report are available to the public from

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© 2024 International Monetary Fund

Press Release

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PR 24/334

IMF Executive Board Completes Seventh Review Under the Extended Fund Facility Arrangement for Suriname

FOR IMMEDIATE RELEASE

• The Executive Board of the International Monetary Fund completed the seventh review under the Extended Fund Facility (EFF) arrangement for Suriname, allowing for an immediate purchase equivalent to SDR 46.7 million (about USD 63 million) of which SDR 19.1 million or about USD 25.8 million would be for budget support.

• The authorities’ commitment to maintaining prudent macroeconomic policies and implementing difficult reforms are yielding positive results: the economy is growing, inflation is coming down, international bond spreads are at record lows, and investor confidence is returning.

• Building on the progress made thus far under the program, the authorities should entrench fiscal discipline, particularly in the run up to the elections while protecting the poor and vulnerable. Persevering with structural reforms to strengthen institutions and address governance weaknesses is also critical.

Washington, DC – September 18, 2024: The Executive Board of the International Monetary Fund (IMF) completed the seventh review under the Extended Fund Facility (EFF) arrangement for Suriname. The completion of the review allows the authorities to draw the equivalent of SDR 46.7 million (about USD 63 million), bringing total program disbursement to SDR 337.1 million (about USD 455 million). In completing the review, the Executive Board approved the authorities’ request for a waiver of non-observance of the end-June 2024 performance criteria on the central government primary balance based on the corrective actions the authorities have already taken.

Suriname is implementing an ambitious economic reform agenda to restore macroeconomic stability and debt sustainability, while laying the foundations for strong and more inclusive growth. The program includes policies to restore fiscal and debt sustainability, protect the poor and vulnerable, upgrade the monetary and exchange rate policy framework, address banking sector vulnerabilities, and advance the anti-corruption and governance reform agenda. These policies are supported by the EFF arrangement, which was approved by the Executive Board on December 22, 2021 (see Press Release No. 21/400), in an amount equivalent to SDR 472.8 million (366.8 percent of quota).

Following the Executive Board discussion on Suriname, Mr. Kenji Okamura, Deputy Managing Director, and Acting Chair, issued the following statement:

“The authorities’ reforms under the EFF-supported program are being increasingly reflected in macroeconomic stability and improving investor confidence. The economy is growing, inflation is declining, international bond spreads have reached historic lows, and donor support is increasing.

“The near-term priority is to reinforce the planned fiscal consolidation and protect the vulnerable from the burden of the adjustment. Phasing out electricity subsidies and strengthening tax administration will help create fiscal space for higher social assistance and infrastructure spending. Fully implementing the recently finalized social assistance reform plan will make social programs more efficient and effective. Strengthening commitment controls and addressing weaknesses in cash management will contain public spending and prevent accumulation of supplier arrears.

“The debt restructuring process is nearing completion. Bilateral agreements with all official creditors and most commercial creditors have been achieved. Domestic debt arrears have been cleared.

“A tight monetary policy is supporting disinflation. Implementing the recently-finalized plan for central bank recapitalization will strengthen the central bank’s operational and financial autonomy. The authorities’ demonstrated commitment to a flexible, market-determined exchange rate is supporting international reserve accumulation. Timely implementation of recapitalization plans for commercial banks that do not meet regulatory capital requirements will bolster financial sector resilience.

“The authorities should persevere with their ambitious structural reform agenda to strengthen institutions, address governance weaknesses, build climate resilience, and improve data quality. This important work will continue to be supported by capacity development from the Fund and other development partners.”

Title page

SURINAME

SEVENTH REVIEW UNDER THE EXTENDED ARRANGEMENT UNDER THE EXTENDED FUND FACILITY, REQUESTS FOR MODIFICATION OF PERFORMANCE CRITERIA, WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION, AND FINANCING ASSURANCES REVIEW

September 5, 2024

EXECUTIVE SUMMARY

Context. The authorities’ commitment to a range of policy reforms is showing results in terms of macroeconomic stability and investor perceptions. The economy is growing, inflation is declining, donor support is increasing, and international bond spreads are at historic lows.

Program implementation. The authorities’ missed the end-June primary balance target due to an overpayment to the electricity company (EBS); the overpayment has subsequently been returned to the state budget (a prior action for completion of this review). All other quantitative targets were met. The latest data indicates that the endMarch target on social assistance spending (reported as missed in the last review) was also met. Supply side and institutional reforms are moving ahead despite a challenging political environment.

Policy outlook. Monetary and fiscal restraint are continuing to support disinflation and a reduction in the public debt. Even with binding capacity constraints, progress continues to be made in tax administration, improving spending efficiency and budget management, phasing out untargeted subsidies, expanding the social safety net, addressing governance and corruption, preventing the accumulation of spending arrears, and bolstering financial sector resilience.

Approved By

Nigel Chalk (WHD) and Bergljot Barkbu (SPR)

Contents

• CONTEXT

• PROGRAM PERFORMANCE

• POLICY DISCUSSIONS

• A. Improving Fiscal Sustainability While Supporting the Vulnerable

• B. Bringing Down Inflation

• C. Addressing Banking Sector Risks

• D. AML/CFT and Governance

• E. Improving the Quality and Dissemination of Economic Statistics

• PROGRAM ISSUES

• STAFF APPRAISAL

• BOX

• 1. Oil Scenario

• FIGURES

• 1. Recent Economic Developments

• 2. Fiscal Developments, 2012–23

• 3. External Sector Developments

• 4. Monetary Developments

• TABLES

• 1. Selected Economic Indicators

• 2. Real Sector, by Expenditures

• 3. Central Government Operations (Millions of SRD)

• 4. Central Government Operations (Percent of GDP)

• 5. Balance of Payments (Millions of US$)

• 6. Balance of Payments (Percents of GDP)

• 7. Gross External Financing Requirements

• 8. Depositary Corporations Survey and Central Bank Accounts

• 9. Financial Soundness Indicators

• 10. Schedule of Reviews and Available Purchases

• 11. Program Monitoring—Indicators of Fund Credit Under the EFF the Supported Program

• 12. Quantitative Performance Criteria and Indicative Targets Under the EFF

• 13. Structural Benchmarks Under the EFF

• 14. Decomposition of Public Debt and Debt Service by Creditor

• ANNEXES

• I. Debt Sustainability Analysis

• II. Central Bank Recapitalization Plan

• III. Risk Assessment Matrix

• APPENDICES

• I. Letter of Intent

  • Attachment I. Memorandum of Economic and Financial Policies

  • Attachment II. Technical Memorandum of Understanding