THE International Monetary Fund (IMF) has given debt-ridden Suriname a passing grade for the reforms it has implemented since late December under a fund-approved economic reform programme.

The ‘pass’ was given in the fund’s first review of the 36-month External Fund Facility (EFF), and allows Suriname to draw down an additional US$55 million as a reward.

If Suriname implements all the reforms over the next 3 years it could access up to US$690 million.

The IMF, in a release on Wednesday, said its assessment found the authorities’ economic “recovery programme is on track”, despite citing difficult social and economic conditions. The fund added that Suriname’s economy is “showing signs of a nascent recovery” as the authorities implement reforms to address sytemic fiscal and external balances. The review also means the country has been implementing the reforms agreed to with the IMF.

The Government had also implemented austerity measures including cutting debt service expenses through restructuring of public debt; devaluing the Suriname dollar; cutting public sector expenses by 10 per cent; and cutting subsidies on electricity, water, cooking gas, fuel, and public transport by 25 per cent.

Suriname’s economic issues have been exacerbated by debt which, at the end of 2020, was equivalent to approximately 147.7 per cent of its US$3.8-billion GDP. IMF projections estimate that Suriname’s debt will fall to 125.3 per cent of GDP when the final figures are tallied for 2021. It also said it expects Suriname’s debt to rise this year to 132.2 per cent of GDP. That means the expectation is that Suriname’s debt will exceed US$5.5 billion at the end of this year. It’s GDP, which is expected to grow 1.8 per cent this year, will be roughly US$3.87 billion.

The debt-ridden country in late December reached an agreement on a 36-month EFF programme with the IMF. The aim of the programme is “to support Suriname’s authorities’ home-grown recovery plan to restore fiscal sustainability through a discretionary fiscal consolidation of 10 per cent of GDP during 2021-24, protect the vulnerable by expanding social safety net programmes, bring public debt down to sustainable levels, upgrade the monetary and exchange rate policy framework, stabilise the financial system, and strengthen institutional capacity to tackle corruption and money laundering, and improve governance”, according to the IMF.

The fund also praised the Government of the Caricom country of 600,000 people for remaining committed to fiscal consolidation while further strengthening the social safety net.

“Planned revenue and expenditure measures, including on social spending programmes, will be crucial to strengthen public finances while protecting the most vulnerable,” the IMF said in its review. It additionally pointed out that Surinamese officials are also advancing debt restructuring negotiations with private and official bilateral creditors. The envisaged debt relief, together with fiscal consolidation, are important for Suriname to restore debt sustainability.

Last April, ahead of IMF approval of the programme, Suriname had to secure assurances from members of The Paris Club about financing assurances. Suriname’s creditors then agreed to defer payments of principal and interest on its 2023 and 2026 bonds to help the country to stabilise its finances.

Before that, Suriname had defaulted on debt payments in July 2020 and December 2020.

In an interview with Global Capital, Suriname’s Finance Minister Armand Achaibersing said “under the programme we have committed to reducing public debt to 120 per cent of GDP by 2024 and 60 per cent by 2035, which should reduce gross funding needs to an average of 9 per cent of GDP between 2023 and 2035”.

Debt aside, Suriname has been dealing with rampant inflation; price increases averaged 59.1 per cent in 2021. In February alone, point-to-point inflation in Suriname reached 62.1 per cent. The expectation is that price increases will calm down enough for the average inflation rate to be 38.9 per cent this year.

“The Central Bank of Suriname is committed to achieving a downward path for inflation and maintaining a market-determined exchange rate.” The central bank has started to increase interest rates to tackle inflation by reducing how much money is available in the economy.

“Together with the programme’s catalytic effect on external financing, this will help address external imbalances and build up foreign reserves” the IMF said.

Suriname’s international reserves, which at the end of 2020 was US$585 million, rose to US$992 million at the end of 2021 and is expected to rise further to US$1.26 billion.

The fund also pointed to steps that have been taken to address vulnerabilities in the banking system, the measures to strengthen central bank governance and the anti-corruption and AML/CFT (anti-money laundering/combating the financing of terrorism) frameworks.

At the end of January a Surinamese court convicted Robert-Gray van Trikt, governor of the central bank from 2019 to 2020, of money laundering and corruption-related charges. The court sentenced van Trikt to eight years’ imprisonment on January 31, and a fine of SD$500,000 (US$23,900). The court also convicted and sentenced Ashween Angnoe, a partner in van Trikt’s former accountancy firm, Orion Assurance and Advisory; Faranaaz Alibaks-Hausil, the head of the central bank’s legal department; and Ginmardo Kromosoeto.

Despite the gains so far, the IMF points out that the EFF “continues to face considerable risks, both domestic and external” and said strong ownership and steadfast implementation of the economic programme, together with continued support from the international community, will be essential for its success.

Suriname has been struggling with debt for several years now.

The Inter-American Development Bank (IDB) in a report last April noted that Suriname’s economy has not recovered from the 2015 recession which resulted in increased government debt. The conditions were also worsened by the effects of the ongoing novel coronavirus pandemic.

A 2020 United Nations study on Suriname revealed that only 9.4 per cent of the population (53,000) who are multidimensionally poor, and an additional 4.5 per cent who are classified as vulnerable to multidimensional poverty (25,000), have access to the social protection net system.

The UN study highlighted that the current safety net system is challenged by a lack of sustainable financing mechanisms.