Press Release No. 23/210

IMF Executive Board Concludes Second Review of the Extended Fund Facility for Suriname

June 14, 2023

• The IMF Executive Board completed today the second review of the 36-month Extended Fund Facility (EFF) for Suriname, allowing for an immediate disbursement equivalent to SDR 39.4 million (about US$53 million), of which SDR 25.6 million would be for budget support.
• The authorities have made concerted efforts to bring their economic recovery program back on track and stabilize the economy, foremost by restoring fiscal discipline, while expanding social assistance programs to protect the poor. They have also reached important milestones in debt restructuring negotiations, which, alongside fiscal consolidation, will support Suriname’s efforts to restore debt sustainability.
• The authorities are continuing to make progress with their structural reform agenda. Structural reforms to strengthen institutions, governance, and data quality remain key priorities with continued capacity building support by the Fund and Suriname’s other development partners.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded today the second review of the extended arrangement under the Extended Fund Facility (EFF) for Suriname. The completion of the review allows the authorities to draw the equivalent of SDR 39.4 million (about US$53 million), bringing total disbursement to SDR 118.2 (about US$159 million). In completing the review, the Board also approved the authorities’ request for waivers of non-observance of performance criteria based on the corrective measures undertaken by the authorities. The Executive Board also approved the authorities’ request for rephasing of purchases under the arrangement, including the requested reduction of the total access under the arrangement to an amount equivalent to SDR 383.9 million (297.8 percent of quota; about US$516.4 million).

Suriname’s 36-month EFF arrangement was approved by the Executive Board on December 22, 2021 (see Press Release No. 21/400 ), for SDR 472.8 million (366.8 percent of quota). The objective of the program is to support the authorities’ economic recovery plan to restore fiscal and debt sustainability, protect the vulnerable by expanding social protection, upgrade the monetary and exchange rate policy framework, strengthen the financial system, and advance the anti-corruption and governance agenda.

Following the Executive Board discussion on Suriname, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:

“The shock of higher commodity and food prices in the second half of 2022 slowed the nascent economic recovery and eroded performance under the program. Fiscal slippages put pressure on the exchange rate and inflation, which have imposed a heavy burden on society, especially the most vulnerable.

“The authorities have made concerted efforts to bring their economic recovery program back on track and stabilize the economy, foremost by restoring fiscal discipline. The approved 2023 budget is appropriately conservative, underpinned by concrete measures on both expenditure and revenue side. The elimination of costly and distortive fuel subsidies, together with planned phasing out of electricity subsidies and broadening of the VAT base, will provide the fiscal space for expanding social assistance programs and growth-enhancing investment.

“The authorities have also reached important milestones in debt restructuring negotiations with private and official bilateral creditors. The recent agreements are in line with the program parameters and will support Suriname’s efforts to restore debt sustainability. The authorities’ commitments to transparently achieve a debt resolution, consistent with the program parameters and equitable burden sharing among all remaining creditors in a timely fashion, are welcome.

“Flexible, market-determined exchange rate remains essential to address Suriname’s external imbalances and ensure long-term adequacy of international reserves. To this end, the authorities have committed to refrain from direct FX interventions, except to address disorderly market conditions, while allowing for limited indirect FX sales to essential goods importers to mitigate disruptive FX shortages. To reduce stubbornly high inflation, the Central Bank of Suriname should continue to look at measures to absorb liquidity under its reserve money targeting framework and improve the effectiveness of the monetary transmission mechanism. Continued progress is also needed to address banking system vulnerabilities.

“Structural reforms to strengthen institutions, governance, and data quality remain key priorities with continued capacity building support by the Fund and Suriname’s other development partners. The authorities should continue taking measures to strengthen central bank governance and the anti-corruption and AML/CFT frameworks.

“Maintaining the restored policy discipline and reform momentum will be essential for the success of the authorities’ economic recovery program.”