Press Release No. 24/74

Suriname and the IMF Reach Staff-Level Agreement on the Fifth Review of the Extended Arrangement Under the Extended Fund Facility

March 7, 2024

• The IMF staff team and the Surinamese authorities reached a staff-level agreement on the fifth review of the authorities’ home-grown economic recovery program supported by the Extended Fund Facility (EFF). The review is subject to approval by the IMF’s Executive Board.
• The authorities’ commitment to fiscal and monetary discipline helped restore macroeconomic stability. The economy is growing (3 percent expected this year), inflation is on a steady downward trend, and investor confidence is returning.
• A conservative 2024 budget was enacted, in line with the program fiscal targets. The priority ahead is to maintain fiscal discipline and avoid policy backtracking, while strengthening institutions and improving governance.

Washington, DC: An International Monetary Fund (IMF) team led by Ms. Anastasia Guscina conducted an in-person mission with the Surinamese authorities during January 29-February 9 to discuss policies to complete the fifth review of theExtended Fund Facility approved by the IMF Executive Board on December 22, 2021.

At the conclusion of the mission, Ms. Guscina issued the following statement:

“The IMF team reached a staff-level agreement with the authorities on the fifth review of Suriname’s economic reform program that is supported by the EFF arrangement. Program performance has been strong and all performance criteria for this review were met. This staff level agreement is subject to approval by the IMF’s Executive Board, contingent on the fulfillment of all relevant Fund policies. Upon completion of this review, Suriname will have access to SDR 46.7 million (about USD 62.5 million), bringing total program disbursements to date to SDR 243.7 million (about USD 326 million).

“The authorities’ efforts to stabilize the economy are bearing fruit. Growth is projected to return to its 3 percent potential in 2024, inflation is on a steady downward trend, investor confidence is returning, and international reserves are increasing. Maintaining prudent fiscal and monetary policies will help bring inflation to under 15 percent by end-2024. The authorities face important near-term risks, including policy implementation challenges stemming from a challenging socio-political climate and capacity constraints. Over the medium to long term, there are significant upside risks to growth due to the development of large new oil fields.

“Program performance during the fifth review has been solid. All quantitative performance criteria and indicative targets under the program were met, except for the spending floor on social assistance. The structural reform agenda is progressing, albeit with delays.

“Protecting the poor and vulnerable during this difficult time of economic adjustment is a priority. The increases in social transfers should be coordinated with phasing out of electricity subsidies. The authorities are doubling their efforts to meet the social protection targets in 2024, both by increasing the size of various cash transfer programs and expanding the social safety net to include all eligible beneficiaries. The authorities have recently published information on the number of beneficiaries and amounts spent on the social program in each district of the country, which is the right step in increasing fiscal transparency and accountability.

“Public sector reform is progressing. Promptly removing unregistered and chronically absent civil servants from public payroll will create fiscal space for a more meaningful increase in salaries for productive civil servants.

“Excellent progress has been made with debt restructuring. Agreements-in-principle have been reached with all major external creditors, including recently with China. Agreements with the Paris Club, India and bondholders have been finalized. Domestic debts to the central bank and commercial banks have been restructured. The authorities remain committed to finalizing the debt restructurings with the remaining external commercial creditors and to swiftly resolve all outstanding domestic debt arrears. Enhanced commitment controls are necessary to prevent accumulation of supplier arrears.

“The central bank is actively working to improve the monetary policy traction through improvement in processes and actively communicating with the banks on their monetary policy targets. The current monetary policy stance remains appropriate to anchor inflation expectations. The central bank has also demonstrated its commitment to a flexible, market-determined exchange rate while working to improve the functioning of the foreign exchange market.

“The central bank is committed to addressing vulnerabilities in the banking system. The authorities will ensure the timely completion of bank recapitalization plans. The central bank is also enhancing its supervisory capacity and its powers and tools for early intervention, recovery and resolution of banks. In January 2024, revisions to the Banking and Credit Supervision Act and the new Bank Resolution Act helped align legislation with international best practices in banking supervision and resolution.

“The central bank is continuing to make progress in clearing the backlog of financial statements audits and continues to conduct special audits of program monetary data. A recapitalization plan for the central bank is being prepared and governance reforms are well underway in various areas including anti-money laundering/combating the financing of terrorism, anti-corruption, and public sector procurement.

“The mission would like to thank the authorities for a collaborative and fruitful dialogue. A wide-ranging set of meetings was held with the President of the Republic of Suriname, the Minister of Finance and Planning, the Minister of Justice and Police, the Minister of Social Affairs and Housing, the Minister of Internal Affairs, the Minister of Spatial Planning and Environment, the Minister of Labor, the Minister of Natural Resources, the Central Bank Governor, members of parliament, other senior officials, representatives of the private sector, and development partners.”