WASHINGTON, CMC—The International Monetary Fund (IMF) says Suriname will have access to US$61.8 million after its executive board reviews the staff-level agreement reached with an IMF delegation that ended a visit to the Dutch-speaking Caribbean Community (CARICOM) country last month.
In a statement, the Washington-based financial institution said that if the review is successful, the funds disbursed would bring to US$384.3 million, the amount of funds provided to Suriname under the 36-month Extended Fund Facility (EFF) approved by the IMF in December 2021.
Anastasia Guscina, who led the IMF mission, said that while some quantitative targets were missed, Suriname authorities are taking corrective actions and that structural reforms are progressing with a more decisive impetus.
“The authorities’ commitment to a range of complex policy reforms is showing results with three percent potential this year, inflation is on a steady downward trend, donor support is increasing, investor confidence is returning, and international reserves are increasing.
“The authorities face important near-term risks, including policy implementation challenges stemming from a difficult socio-political environment and capacity constraints. Over the medium to long term, there is potential for growth to accelerate owing to the development of large new oil fields,” she said.
The IMF official said that the authorities remain committed to achieving the 2024 primary surplus target of 2.7 percent of gross domestic product (GDP).
She said budget execution in the year’s first quarter was characterized by overspending on electricity subsidies and weak revenue collection.
“To correct the fiscal underperformance, the authorities have capped the settlement with the state oil company for the oil it sells to the electricity company. They are implementing more stringent measures to strengthen VAT revenue collection.
“Public sector reforms are also proceeding with unregistered and chronically absent civil servants getting removed from public payroll to create fiscal space for salary increases for those civil servants who are working hard.”
Guscina said protecting the poor and vulnerable remains a priority. Coordinating electricity tariff adjustments with increased social assistance payments is essential to preserve susceptible households while energy subsidies are phased out.
“Stronger efforts are needed to address the challenges in the execution of the social program to ensure the benefits reach the intended beneficiaries, including in the country’s interior regions. The authorities’ recently finalized action plan to enhance the effectiveness of social protection will drive the reforms in this area.”
She said excellent progress has been made with debt restructuring, noting that agreements have been reached with all major creditors, and Suriname is in active negotiations with the remaining private creditors.
“Suriname’s spreads have fallen to record lows, marking significant progress towards restoring market access. Domestic debts to the central and commercial banks have been restructured, and all outstanding domestic debt arrears have been paid,” she said, adding, “The authorities are strengthening commitment controls to prevent accumulation of supplier arrears.”
Guscina said implementing a restrictive monetary policy stance has helped reduce inflation.
However, she noted that the Central Bank of Suriname (CBvS) needs to continuously monitor monetary developments and diligently implement open market operations to maintain the reserve money path consistent with the program.
The CBvS remains committed to a flexible, market-determined exchange rate and is working to improve the functioning of the foreign exchange market.
“The central bank is addressing the vulnerabilities in the banking system. Banks with capital shortfalls have submitted their recapitalization plans to the central bank. Timely completion of these plans is important to preserve banking sector stability. The CBvS also needs to increase its monitoring of non-bank financial institutions, particularly concerning their interconnectedness with the banking system,” Guscina said.
Suriname authorities should persevere with their ambitious structural reform agenda to strengthen institutions and governance.
She said that to strengthen central bank governance, the authorities have constituted the CBvS’s executive council and board.
“The CBvS is continuing to progress in clearing the backlog of financial statement audits and conducting special audits of program monetary data. The Ministry of Finance and the CBvS are developing a plan to recapitalize the central bank.
“Broader governance reforms are well underway in various areas, including anti-money laundering/combating the financing of terrorism (AML/CFT), anti-corruption, and public sector procurement,” Guscina added.
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