PARAMARIBO, Suriname, CMC -An opposition legislator called the Suriname government to stop the agreement with the Oppenheimer bondholders, describing it as a “rip off.
“We now need coalition and opposition to stop this rip-off deal. Also, after three years of this policy, now more than ever, the need is for a new approach to critical guidance from the government that can no longer hide behind a ‘restructuring’ and, even worse, is secretly trying to make a whole new deal with the IMF,” Ashwin Adhin, of the main opposition National Democratic Party (NDP) told the National Assembly.
The IMF announced on Thursday that it had agreed with Suriname regarding resuming the US$ 690 million financial aid program.
The international lending institution said the government ran into difficulties in mid-2022, just after the start of the program that was financed under an Extended Fund Facility (EFF).
Earlier this month, Suriname said it had agreed in principle with its Eurobond creditor committee to restructure its debt.
The deal to restructure the country’s two outstanding dollar-denominated bonds includes a single, US$650 million 10-year bond with a 7.95 percent interest rate, amounting to a 25 percent “haircut on the total recognized claims,” the government said.
It said of the 7.95 percent interest rate, 4.95 percent is required to be paid off in 2024 and 2025, with the remainder added to the principal.
A value recovery instrument linked to future oil revenues and with an end date of December 31, 2050, is part of the deal.
“Suriname will allocate a certain portion of royalty income from Block 58 in the future to compensate bondholders for losses incurred due to debt restructuring,” said the government statement.
But Adhin told the National Assembly that repayment proposals are significant, noting that in 2027, the government would have to pay US$151 million in interest instead of the former $US52 million through 2037.
He said with the previous agreement, both bonds could be redeemed after 2037 and that the savings and stabilization fund would save ten years of extra income from oil and gas.
”Instead, with the government’s rip deal, we see the coming governments and society from 2027 being funneled into a calamity of US$100-150 million a year in interest until 2033 instead of US$52 million a year in interest per year until just 2037.
“As if that wasn’t bad enough, a Springing Security option in a Value Recovery Instrument (VRI) will be added until 2033. VRI can never make progress without Parliament,” he said.
“The introduction of a VRI entails that Parliament must be aware of the natural resources designated to use and that it also lies outside Staatsolie’s regular authority to act.
The opposition legislator also predicts that “this foolish adventure of the government with the IMF…would not end well from 2020 onwards….
“Not only has it proved useless against the previous Oppenheimer construction, but an infamous backroom deal has been made, and the question is, who are the stakeholders who will receive bounties, will receive finder fees, and will receive VRI spin-off? Who, who, who in return wants to push through this shady deal?”
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