SURINAME-Government announces new measures to deal with foreign exchange situation.

PARAMARIBO, SURINAME, CMC -Legislators will meet on Thursday to debate measures outlined by the Suriname government to deal with the “runaway’ foreign exchange situation in the Dutch-speaking Caribbean Community (CARICOM) country.

“The government has decided to take a package of urgent measures in the concise term to stabilize the exchange rate,” President Chandrikapersad Santokhi told the National Assembly (DNA) late Tuesday.

Santokhi told legislators that his administration was fully aware of the situation and that action had to be taken.

The measures will remain in force until December 31 this year. The government said there would also be a crackdown on illegal currency trading and bureaux de change operating without a valid license.

“We will not allow the Surinamese people to be impoverished by illegality. There will be a task force to deal with economic uncertainty,” Santokhi told legislators.

In addition to the monetary measures, provisions will also be made to strengthen the leadership of the Central Bank of Suriname (CBvS) with a view to a more active management and monitoring of monetary developments in the country.

The scope for extending credit by the banking sector is being reduced due to an adjustment of the Suriname dollar cash reserve, and banks’ credit growth is capped. The authorities said these measures would also curb massive private lending and take effect in April.

In addition to the regular open market operations, with time deposits and Central Bank Certificates, the option of an investment instrument with a stable value, such as the then Powisi certificates, is proposed so that citizens can have an attractive, durable option for investing.

Santokhi said the CBvS is working with the banking sector to improve interest rate transmission, making it more attractive for savers to save in SRDs instead of fleeing in foreign currencies.

He said supervision of banks and bureaux de change would be tightened.

Regulations regarding exchange rate margins, the explanation and substantiation of deviating exchange rates, and deposits from bank customers are being tightened.

The aim is to make currency transactions more efficient and curb foreign currency purchases from unauthorized persons. The CBvS will issue a circular on this at the end of March 2023.

Meanwhile, the CBvS has contacted the Public Prosecution Service (PPS) regarding actions against illegal currency trading.

President Santokhi told the National Assembly that the recent past has shown that those involved in the illegal currency trade are made aware of upcoming actions by the authorities. As a result, no one is arrested, and no charges are laid.

In addition to the enforcement measures, the free sale of foreign currency through commercial banks will also be restricted. Documentation must be submitted to purchase travel currency, foreign currency for imports, or transfer tuition fees for students abroad.

The government also said that this year there would also be a restriction on the import of cars. In addition, enforcement of compliance with the retention scheme will be tightened.

There has been an immediate reaction to the President’s statement, with the leader of the National Party of Suriname (NPS), Gregory Russia, saying, “we thought that the President would mainly focus on the exchange rate issues, but several other issues that are of course linked to that.”

Russia said, for example, the retention scheme still needs to catch up and that companies need more than 65 percent of their export earnings.

He said, in addition, there must also be trust. “Without trust, society will flee to foreign currencies.”

The leader of the Brotherhood and Unity in Politics (BEP), Ronny Asabina, said he thought the President, during his lengthy address, would share information that would appeal to the people.

He noted that most of what was said can be found in the Recovery Plan and approved budgets, adding, “we thought we were getting information that the price would start a downhill trend from tomorrow. Many things need to be done, but we have not heard them,”.

The faction leader of the main opposition National Democratic Party (NDP), Rabin Parmessar, said the current situation is alarming and that he had expected President Santokhi to change his tone and support the ordinary person.

According to him, the population has nothing to do with the President’s speech and the policy measures outlined when implementation and enforcement would be fragile.

Parmessar said that instead of building a bridge, the President spoke again about the previous administration and that “these are lies based on incorrect information.

He has promised that the NDP faction will answer on Thursday the allegations made by Santokhi in his statement.