PARAMARIBO, Suriname, CMC – The Suriname government has announced plans to phase out subsidies for gas, electricity, and fuel as it seeks to reduce expenditure and keep within the guidelines of the International Monetary Fund (IMF).
The government said while a social program is being implemented to help the vulnerable groups, Finance Minister Stanley Raghoebarsing told a news conference late Monday that the reduction also has to do with the IMF program.
“It is not sustainable to continue the subsidies we give,” he told reporters, adding, “per month, there is a subsidy for fuel, mainly diesel, of SRD 350 million (One SRD=US$0.03 cents).
“That is something that we cannot afford. It costs more than two billion SRD a year. Our taxpayers and our state apparatus cannot afford that. That needs to be adjusted. The subsidy on diesel was SRD10. It was asked to phase it out in two steps. Today is the first step of five SRDs. The second step will come about a month later,” he added.
According to the government, diesel must be reduced by SRD10 per liter, with electricity SRD260 per connection and “gas bombs’ of 28 lbs, more than SRD400 each.
Raghoebarsing said that the government pays out SRD50 million to two gas companies, SOL and Rubis, every week, even as the two companies made limited deliveries over the last weekend because the suppliers now have to pay before fuel can be obtained.
The authorities say that discussions with the oil companies continue about payments and the details of prices at the pump, and the Finance Minister said there is no reason for long queues and hoarding.
He said the subsidy to the energy company, EBS, will cost the state SRD3.2 billion this year, as he responded to questions regarding the phasing out of support for power consumption.
“Everyone affiliated with EBS, rich or poor, receives a monthly subsidy of SRD260. That costs SRD42.5 million per month, more than half a billion per year. And not everyone has that (subsidy) needed. Give it to the poor people, not the rich.”
Natural Resources Minister David Abiamofo told reporters, “the IMF wants us to increase the price of electricity in several terms, four times 20 percent.
“But if we look at the social and political barometer, we have to hold on for a while and see whether we can use other instruments. The point is that the subsidy must be reduced.
“We looked at other instruments. Take the gas subsidy. That 28 lbs costs SRD48.50, while you have to pay between SRD530 and SRD535. A substantial backing on an annual basis. He said it could not go on like this, adding that the government is looking into how it will do that.
One proposal is to subsidize four “gas bombs” of 28 lbs per year per family. Commercial users pay the total price.
“Most of us buy a gas bomb of 28 lbs. In Guyana, such a gas bomb costs between US$15 and US$ 20. That is also the cost price in Suriname. That gas bomb costs the state SRD535. We pay SRD 48.50. This year it will cost us between SRD 800 and 900 million if you leave it that way. Those are subsidies that cannot be obtained,” said Raghoebarsing.
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