Suriname’s officials are meeting with the IMF to discuss a new economic program following the expiration of a $688 million agreement. Finance Minister Stanley Raghoebarsing emphasized the need for a tailored successor program ahead of imminent elections, particularly with oil production set to begin in 2028. The government’s focus is now on maintaining public support while pursuing economic reforms.
Suriname’s government officials are currently in discussions with the International Monetary Fund (IMF) to establish a new framework for a successor program. This comes in light of an earlier $688 million agreement that expired back in March. Finance Minister Stanley Raghoebarsing shared these insights during a meeting in Washington, D.C., on the sidelines of the IMF and World Bank’s spring sessions.
Raghoebarsing highlighted that while the previous IMF deal improved governance and reduced national debt, it did not sufficiently set the nation on a sustainable growth trajectory. He mentioned that the upcoming successor program needs to be flexible and tailored to garner public support, especially in light of elections due in May. “No matter what the outcome will be of the elections over the whole political scale, politicians will be sensitized on the importance of continuation of what was done with the IMF,” he stated.
This follows a notable shift for Suriname, which is on the cusp of significant gains in energy production, with initial oil extraction projected for 2028—potentially generating up to $26 billion. The direction taken by the incoming government regarding a new IMF agreement will be crucial for the country’s economic future.
With a current GDP of about $4.5 billion, the IMF forecasts a growth rate of 3.2% for 2025, up from 3% in 2024. However, several obstacles are still present; for instance, last year’s target for a primary budget surplus of 2.7% of GDP narrowly missed due to adverse weather conditions and lower-than-expected non-tax revenues.
In light of this, the government executed a debt restructuring process in 2023, introducing innovative financial instruments that will enable investors to receive a portion of the revenue from forthcoming oil sales. Moreover, Suriname’s sovereign bonds have generated a 3.1% return this year, outstripping many other emerging markets, as reported by Bloomberg.
The past three years of IMF programming led to numerous fiscal and economic reforms, including a stringent monetary policy that successfully curbed inflation. Additionally, the debt-to-GDP ratio saw a significant decrease from 148% to 88%. Raghoebarsing stated that the government has also worked on restructuring public enterprises and pushing forward an anti-money laundering initiative. Changes to laws governing the sovereign wealth fund were made to ensure that the benefits from oil discoveries can be preserved for future generations.
Nevertheless, the challenges remain significant, particularly for Suriname’s population, where an estimated 17.5% live in poverty. Raghoebarsing noted the importance of keeping public support strong, particularly as reform measures often have adverse effects on citizens. “When we go for a successor program, it’ll definitely be a much more relaxed one,” he remarked, emphasizing the need to shift public perception surrounding reforms to alleviate what he called ‘reform fatigue’.
Suriname is at a critical juncture, engaging with the IMF for a new economic program after the previous agreement lapsed. With elections approaching and oil production on the horizon, the government must navigate the path forward carefully to ensure both economic stability and public support. The need for a new approach has been underscored by the Finance Minister, who stresses the importance of fostering a more supportive environment following past reforms.
Original Source: financialpost.com
