PARAMARIBO, Suriname, CMC – A delegation from the International Monetary Fund (IMF) Friday said it had reached a staff-level agreement with Suriname following a review of the economic reform program that is supported by the Extended Fund Facility (EFF) arrangement.
“All quantitative targets for the eighth review except the primary fiscal balance target were met. The authorities are taking corrective actions to meet the end-year primary balance target. Structural reforms are progressing with a strong impetus,” said Anastasia Guscina, who led the mission on its two-week visit to the Dutch-speaking Caribbean Community (CARICOM) country.
She said that the staff-level agreement is subject to approval by the IMF’s Executive Board and is contingent on the fulfillment of all relevant Fund policies.
“Upon completion of this review, Suriname will have access to US$61.3 million, bringing total program disbursements to US$503.8 million.”
Guscina said the authorities’ commitment to maintaining prudent macroeconomic policies and difficult reforms is showing results in terms of macroeconomic stability and investor confidence.
“Economic growth is projected to reach three percent this year, inflation is on a steady downward trend, donor support is increasing, investor confidence is returning, and international reserves are increasing.”
She said that the authorities face important near-term risks, including capacity constraints and policy implementation challenges, which reflect the increasingly difficult socio-political environment.
Suriname’s medium-term outlook has improved significantly since the announcement of the final investment decision (FID), which will pave the way for offshore oil production beginning in 2028.
“The fiscal path for 2024-25 has been loosened to accommodate unanticipated fiscal needs against the backdrop of the improving medium-term debt dynamics arising from the FID,” Guscina said, adding that the end-September primary balance target was missed because the electricity company (EBS) transferred insufficient resources to the state budget and an overrun on social assistance spending.
She said that the EBS has been hit hard by the ongoing drought, which has forced a switch from hydroelectric to more expensive thermal generation and weak bill collection. Rice farmers who have lost their crops due to the drought also needed help.
Guscina said the government is implementing new fiscal rules and supporting institutional arrangements to enable the country to manage the upcoming oil wealth efficiently and transparently. Broader structural reforms are necessary to increase efficiency, transparency, and accountability in the energy sector.
“Protecting the poor and vulnerable remains high on the agenda. The government met the indicative target on social assistance spending for September 2024. Stronger efforts are needed to address the challenges in executing the social beneficiary program to ensure the benefits reach the intended beneficiaries, particularly in the country’s interior regions.”
Guscina said Suriname should promptly implement the recently completed strategic plan to enhance the effectiveness of social protection with the support of development partners.
“Excellent progress has been made with debt restructuring. All official and most commercial creditors have reached agreements, and negotiations with the remaining commercial creditors are ongoing.
“An umbrella agreement with the Paris Club for the second phase of the debt treatment was signed in October, and negotiations with individual creditors are ongoing. Domestic debt arrears have been repaid, and Suriname should be ready to re-access the domestic debt market in the second half of 2025. The authorities are strengthening commitment controls to prevent accumulation of supplier arrears.”
Guscina said the continued restrictive monetary policy stance has further reduced inflation. The Central Bank of Suriname (CBvS) monitors monetary developments and will diligently implement open market operations to maintain the reserve money path consistent with the program targets.
“The CBvS remains committed to a flexible, market-determined exchange rate and is working to improve the functioning of the foreign exchange market, including through the launching of an electronic foreign exchange trading platform.”
Guscina said vulnerabilities in the banking system are being addressed, and timely completion of recapitalization plans for banks with capital shortages and prudent monitoring of capital adequacy, liquidity, and asset quality are essential to preserve stability in the banking sector.
She said the CBvS also needs to increase its monitoring of non-bank financial institutions, particularly their interconnectedness with the banking system.
“The authorities must push ahead with their ambitious structural reform agenda to strengthen institutions and governance. A strong CBvS balance sheet is crucial for operational independence and the robust implementation of monetary policy. The central bank recapitalization plan, as the Central Bank Act requires, should be implemented as planned.
“Looking ahead, it is also important to push ahead with the broader governance reforms in anti-money laundering/combating the financing of terrorism (AML/CFT), anti-corruption, and public sector procurement to prepare the country for the oil wealth,” Guscina added.
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