The IMF and Suriname’s authorities have reached a staff-level agreement for the final review of an economic program supported by the Extended Fund Facility, pending approval by the Executive Board. Suriname is projected to receive USD 61.3 million. Economic indicators show growth and reduced inflation, but fiscal discipline and effective social protections are required going forward.
The International Monetary Fund (IMF) and Suriname’s authorities reached a staff-level agreement concerning the final review of Suriname’s economic recovery program supported by the Extended Fund Facility (EFF). This review must be approved by the IMF’s Executive Board, granting Suriname access to approximately USD 61.3 million (SDR 46.8 million).
Significant progress has been made under this program, with the economy exhibiting growth, declining inflation, and reduced public debt. Moreover, the autonomy and governance of the central bank have been bolstered, contributing to renewed investor confidence. Maintaining fiscal discipline remains a priority as elections approach, with a focus on protecting vulnerable populations.
The IMF team, led by Ms. Anastasia Guscina, conducted discussions with Surinamese authorities from February 5-14. During these discussions, it was confirmed that all quantitative targets were met, barring the primary fiscal balance target. The Surinamese government is actively pursuing measures to achieve the target for a 2.7% primary surplus by 2025. This agreement is contingent upon the fulfillment of relevant IMF policies.
Projected economic growth for this year stands at 3%, with inflation decreasing steadily. Donor support has been increasing, investor confidence is on the rise, and international reserves are at satisfactory levels. The authorities acknowledge near-term risks related to capacity constraints and policy implementation challenges amid a challenging socio-political environment.
Although the primary balance target for end-December was not met due to non-tax revenue shortfalls and increased spending on electricity subsidies, the government is implementing corrective actions to align with budget expectations. New fiscal rules and a Savings and Stabilization Fund have been established to better manage anticipated oil revenues and strengthen fiscal governance.
The government has successfully met its social assistance spending target for end-December 2024. Throughout the program, social protection spending has significantly increased, benefiting the vulnerable population. However, efforts are required to enhance the effectiveness of these social programs, particularly in reaching the intended beneficiaries in less accessible regions.
Debt restructuring efforts have largely concluded, positively impacting investor confidence. An agreement with the Paris Club was established in October, streamlining negotiations with individual creditors. The government has repaired domestic debt arrears and is managing all obligations effectively, leading to upgraded credit ratings.
The Central Bank of Suriname (CBvS) has maintained a restrictive monetary policy, contributing to further inflation reduction. The bank has successfully met monetary targets and remains dedicated to a flexible and market-determined exchange rate. Improvement efforts in the foreign exchange market are ongoing, including the implementation of a new electronic trading platform.
Key vulnerabilities in the banking sector are being addressed through timely recapitalization and monitoring of asset quality. Moreover, the authorities aim to implement an ambitious structural reform agenda focused on enhancing institutional integrity and governance.
The IMF mission expressed gratitude for the cooperative discussions with various government officials and civil society representatives. Collaborative efforts included meetings with the President and Vice President of Suriname, allowing for thorough dialogue concerning necessary reforms and economic strategies.
The IMF and Suriname’s authorities have successfully negotiated the final review of Suriname’s Extended Fund Facility program, reflecting significant economic progress and building investor confidence. Nevertheless, challenges remain regarding fiscal discipline, social assistance effectiveness, and governance structures. A focused approach on implementing structural reforms will be essential for sustainable economic management, particularly in navigating upcoming oil revenues and ensuring equitable support for vulnerable populations.
Original Source: www.miragenews.com
