Suriname’s Government is breathing a sigh of relief following an agreement with its Paris Club creditors on restructuring its external public debt. According to an International Monetary Fund (IMF) report in 2021, Suriname’s external debt is projected to balloon to US$4 billion by the end of 2022.

Under the terms of the agreed debt treatment, Paris Club creditors will reschedule all amounts of principal and interest due in 2022 to 2024 as follows: Official Development Assistance (ODA) claims will be repaid over 20 years, including a seven-year grace period, and non-ODA claims over 15 years, including an eight-year grace period.

The period 2022-2024 coincides with the Extended Fund Facility (EFF) programme, agreed between the IMF and Suriname at the end of 2021.

During this period, servicing of debt concerned under the agreement will be limited to existing arrears as of the end of 2021.

The Government of Suriname has committed to seek comparable treatment from its other bilateral and private creditors.

To this end, the country’s Paris Club creditors has further committed to reschedule all maturities in capital due from January 1, 2025. But the Paris Club creditors warned that this is contingent on Suriname’s Government meeting its commitments under the agreement, and an IMF assessment of its continued commitment to EFF policy conditionalities and long-term debt sustainability before the end of 2024.

Suriname has been working aggressively to address the debt challenges faced by the country since November 2020 and to reach responsible and sustainable agreements with its creditors.

This includes substantive steps to improve debt transparency, strengthen its banking systems, public finances and regulatory frameworks for monetary and exchange rate policies.

Despite the Government’s equally clear commitment to strengthen social safety nets and shield the poorest from the impact of macroeconomic adjustment policies under the EFF programme, it is clear that, for example, a target improvement of 14 per cent in the central government’s primary balances by the end of 2024 will demand considerable adjustments from Suriname’s people.

According to the United Nations Conference on Trade and Development (UNCTAD), the provision of debt relief consistent with long-term debt sustainability and the achievement of Agenda 2030 in Suriname would set a valuable precedent and provide evidence of creditor leadership and commitment to finding sustainable solutions to debt distress in developing countries.

As noted by the United Nations Global Crisis Response Group on Food, Energy and Finance, developing countries are today facing an increasingly complex external environment marked by rising food and energy prices, as well as tighter global financing conditions.

The case of Suriname underlines the need for increased multilateral and concessional financial support in middle-income countries caught up in multidimensional crises of debt distress, climate change and geopolitical instability.

It also highlights the ever more urgent need for a multilateral legal framework for sovereign debt restructurings that facilitates a comprehensive approach to timely, balanced and orderly debt crisis resolutions and engages all official (bilateral and multilateral) and private creditors.