WASHINGTON, CMC – The International Monetary Fund (IMF) says Suriname is eligible to receive US$61.5 million in financial assistance following a successful review of the multi-million dollar Extended Fund Facility (EFF) it has with the Washington-based financial institution.
The IMF said that as a result, the funds allocated to Suriname so far is US$362.6 million and that in completing the review, its executive board approved the request from the Dutch-speaking Caribbean Community (CARICOM) country for a waiver of non-observance of the end-March 2024 performance criteria on the central government primary balance, the net international reserves and net domestic assets of the central bank based on the corrective actions the authorities have already taken and have committed to undertake.
It said Suriname is implementing an ambitious economic reform agenda to restore fiscal and debt sustainability through fiscal consolidation and debt restructuring, protect the vulnerable by expanding social protection, upgrade the monetary and exchange rate policy framework, address banking sector vulnerabilities, and advance the anti-corruption and governance agenda.
These policies are supported by the 36-month EFF arrangement for US$688 million.
In a statement following the review, IMF deputy managing director Kenji Okamura said Suriname’s reforms under the EFF-supported program are increasingly reflected in macroeconomic stability and improving investor perceptions.
He said the economy is growing, inflation is declining, donor support is increasing, and international bond spreads have reached historic lows.
“The authorities’ determination to carry out politically challenging reforms is commendable. Full removal of fuel subsidies, phasing out electricity, water, and gas subsidies, broadening the VAT base, and containing the public wage bill are politically costly but necessary reforms. Structural reforms are proceeding with a stronger impetus.”
Okamura said noteworthy progress has been made on debt restructuring and that bilateral agreements with all official creditors and most commercial creditors have been achieved. Domestic debt arrears have been cleared.
“The near-term priority is to ensure continuous fiscal consolidation while protecting the vulnerable. Phasing out subsidies and strengthening tax administration will help finance higher social assistance and infrastructure spending,” Okamura said.
He said implementing the recently finalized social assistance reform plan will promote a more efficient and effective allocation of social assistance spending. Strengthening commitment controls and addressing weaknesses in cash management will contain public expenditure and prevent the accumulation of supplier arrears.
“Monetary policy is supporting disinflation. The authorities’ demonstrated commitment to the flexible, market-determined exchange rate is supporting international reserves accumulation,” Okamura said. Finalizing the central bank recapitalization plan will help further strengthen its operational independence and financial autonomy.
He said timely implementation of recapitalization plans of weaker banks will bolster financial sector resilience. Additional steps to improve liquidity management, enhance risk-based supervision, and strengthen the AML/CFT framework would be necessary.
“The authorities should persevere with their ambitious structural reform agenda to strengthen institutions, address governance weaknesses, bolster climate resilience, and improve data quality, including with continued capacity development support from the Fund and other development partners,” Okamura said.
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