Suriname officials are in talks with the IMF for a successor program after the end of a previous $688 million agreement. Finance Minister Stanley Raghoebarsing emphasized the need for a customized program that garners public support, especially given the forthcoming elections. The discussions occur against the backdrop of Suriname’s potential oil production growth, expected to significantly boost the economy.
Suriname’s government officials are currently engaged in discussions with the International Monetary Fund (IMF) to establish a framework for a successor program. This meeting comes as the previous $688 million agreement expired in March, according to Finance Minister Stanley Raghoebarsing. The new negotiations are particularly crucial ahead of the elections scheduled for May, as they will have implications for the nation’s economic future.
Minister Raghoebarsing noted that while the prior IMF deal effectively strengthened governance and reduced debt levels, it did not set Suriname on a sustainable growth path. “We need a successor program to be flexible, tailor-made and one that can win the support of the people,” he stated during an interview in Washington, D.C., at the IMF and World Bank spring meetings. He expressed optimism that regardless of election outcomes, politicians would recognize the significance of a continued relationship with the IMF.
The government’s discussions coincide with Suriname’s emerging status as a potential key energy producer, with initial oil production anticipated by 2028 projected to generate up to $26 billion. Investors and markets are now looking closely at how the new government might approach any negotiations for a follow-up program with the IMF.
Suriname’s economy, estimated at $4.5 billion, is expected to see a growth of 3.2% by 2025, improving from forecasted 3% growth in 2024, according to the IMF. The government had aimed for a 2.7% primary budget surplus of GDP last year, but low non-tax revenues and drought conditions led to a narrower surplus of just 0.3% of GDP.
In 2023, Suriname successfully concluded a debt restructuring process which included value-recovery instruments that allow investors to share in oil revenues once production begins. This year, the country’s sovereign bonds have shown a return of 3.1%, surpassing many emerging markets.
Under the previous three-year IMF program, Suriname implemented various fiscal policies, notably a stricter monetary policy. This led to a decrease in the debt-to-GDP ratio, from 148% to 88%, and kept inflation rates in single digits. Additionally, efforts to restructure state-owned enterprises and enhance anti-money laundering measures were highlighted by Raghoebarsing, along with recent legal amendments aimed at securing future oil revenue for the sovereign wealth fund.
However, challenges remain. Significant reforms have placed a strain on the population, where 17.5% live in poverty. “When we go for a successor program, it’ll definitely be a much more relaxed one,” Raghoebarsing assured, emphasizing the importance of changing the public narrative to alleviate what he termed ‘reform fatigue.’
In summary, Suriname’s ongoing negotiations with the IMF for a successor program are critical as the nation prepares for upcoming elections. The need for a flexible, supportive program is more pressing now with the potential of becoming an energy powerhouse in the near future. Despite previous successes in governance and economic stabilization, the government must prioritize the welfare of its citizens, particularly as many continue to face poverty amid ongoing reforms.
Original Source: financialpost.com
