The IMF and Suriname reached a staff-level agreement on the final review of the economic recovery program under the Extended Fund Facility. Total access could be approximately USD 61.3 million, pending executive approval. Key successes include economic growth, reduced inflation, and strengthened governance, while challenges remain around fiscal discipline and social protection.
The International Monetary Fund (IMF) and Suriname have successfully reached a staff-level agreement on the ninth and final review of Suriname’s economic recovery program, supported by the Extended Fund Facility (EFF). This agreement is subject to approval by the IMF’s Executive Board, which will allow Suriname access to approximately USD 61.3 million (SDR 46.8 million).
Key achievements of the economic program include growth in the economy, a reduction in inflation, a decline in public debt, and strengthened governance of the central bank. The authorities are prioritizing fiscal discipline as they approach upcoming elections while also aiming to protect vulnerable populations. Their medium-term focus will involve enhancing governance and implementing a robust fiscal framework to manage oil revenues sustainably.
An IMF team, led by Ms. Anastasia Guscina, conducted discussions with Surinamese authorities from February 5 to 14, 2023. Ms. Guscina stated that all quantitative targets for the final review were mostly achieved, except for the primary fiscal balance target. The authorities are making policy adjustments to achieve a 2.7 percent of GDP primary surplus target for 2025 and have already implemented many essential structural reforms under the program.
Encouraging projections indicate that the economy will grow by about 3 percent this year, while inflation continues to decrease and donor support increases. Suriname’s international reserves have improved, and debt restructuring efforts have bolstered investor confidence. Nonetheless, there are significant risks, including capacity constraints and challenges in policy implementation following a complex socio-political climate.
Despite the challenges, the government is committed to maintaining fiscal discipline, although the primary balance target was missed due to underperformance in non-tax revenues and overspending on subsidies. Steps are being taken to realign fiscal policies with the 2025 budget, with amended laws aimed at enhancing public financial management and leveraging anticipated oil revenues effectively.
Social protection has been a priority, with spending on assistance more than doubling as a percentage of GDP. However, there remains a need for stronger efforts to ensure that social assistance effectively reaches vulnerable populations, particularly in remote regions. The government is urged to implement a strategic plan for enhancing social protection effectiveness with the support of development partners.
Suriname has made considerable progress in debt restructuring, signing a significant agreement with the Paris Club to facilitate negotiations with individual creditors. Timely repayment of domestic debt obligations has displayed a commitment to fiscal responsibility, resulting in improved credit ratings and reduced international bond spreads.
The Central Bank of Suriname has maintained a rigorous monetary policy, aiding in further inflation reduction. The CBvS has successfully met its monetary targets and is working toward enhancing the foreign exchange market’s efficiency. Moreover, vulnerabilities within the banking system are actively being addressed, including the completion of recapitalization plans.
Structural reforms are crucial for strengthening governance and institutions in Suriname. The IMF supports the authorities in amending the anti-corruption legal framework, which should be enacted promptly to enhance transparency regarding public officials’ assets. Cooperation between the government and international partners is essential to manage the risks associated with increasing oil revenues.
The IMF mission expressed gratitude to Suriname’s authorities for their collaborative dialogue, engaging with various stakeholders including government officials, civil society organizations, and the private sector. This partnership underscores the importance of collective efforts for effective economic recovery and governance reform in Suriname.
In conclusion, the recent staff-level agreement between the IMF and Suriname signifies a pivotal step in the country’s economic recovery, aiming to maintain growth and fiscal discipline. Although challenges persist, significant achievements in governance, debt management, and social protection have been made. Continued collaboration and implementation of structural reforms are essential for sustainable development and enhanced transparency as Suriname prepares to navigate its economic future.
Original Source: www.miragenews.com
