## EXECUTIVE SUMMARY (1surea2021001)

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### Context and diagnosis
- Usable foreign reserves were depleted; fiscal deficits were monetized, leading to surging inflation and significant depreciation of the exchange rate.
- Public debt was 148 percent of GDP at end-2020 and is assessed as unsustainable.
- Important solvency problems are embedded in the domestic banking system.
- The prolonged COVID-19 pandemic further debilitated the economy and health system readiness.

### Recent policy actions
- Since July 2020 authorities:
  - Central Bank of Suriname (CBvS) floated the currency in June 2021 and adopted a reserve money target.
  - Reined in the fiscal deficit despite COVID-19 challenges.
  - Legislature passed a fiscal plan aligned with the program (spending and revenue measures).
  - Initiated negotiations for restructuring official bilateral and privately-held external debt.

### Fund-supported program strategy
- Proposed 36-month Arrangement under the Extended Fund Facility with access of 366.8 percent of quota (SDR 472.8 million or USD 688 million).
- Authorities’ plan aims to increase central government primary balance by 14 percent of GDP during 2021-24.
  - Requires discretionary fiscal consolidation of 10 percent of GDP; remainder expected from economic recovery and real depreciation effects.
- Social safety nets to be expanded to protect the vulnerable.
- CBvS to rely on reserve money as nominal anchor; domestic interest rates moved up to support quantity targets.
- Target: rebuild usable foreign currency reserves to 175 percent of the ARA reserve adequacy metric by end-2024.
- Program also targets tackling corruption, strengthening governance, improving institutional capacity, and restoring financial stability.

### Key economic developments and projections
- Real GDP:
  - Contracted by 15.9 percent in 2020.
  - Projected to contract by another 3.5 percent in 2021.
  - Medium-term growth could reach 3 percent.
- Fiscal outcomes:
  - Overall fiscal deficit: 13.4 percent of GDP in 2020 (primary deficit of 9.7 percent of GDP) on an estimated accrual basis.
  - Year-to-September cash basis: overall balance and primary balance rose to surplus of 1.1 percent of GDP and 2.6 percent of GDP, respectively.
  - Public debt: 148 percent of GDP at end-2020.
  - External arrears as of end-2021: around USD 90 million to official bilateral creditors and USD 181 million to private external creditors.
  - Arrears to domestic debt holders and suppliers: around SRD 3.4 billion by end-2021.
- Inflation and exchange rate:
  - Inflation: 61 percent year-on-year at end-2020; peaked at 74 percent in August 2021; 61 percent in October 2021.
  - USD/SRD rate depreciated a cumulative 180 percent since January 2020.
  - CBvS floated the currency in June 2021 after step devaluations in September 2020, March 2021, and May 2021.
- Reserves and external sector:
  - Usable international reserves fell to around two months of imports (even after SDR allocation of USD 175 million in August).
  - Current account expected to register a surplus of around 4 percent of GDP in 2021.
  - External position of 2020 assessed as broadly in line with medium-term fundamentals, with significant uncertainty.
- COVID-19 impacts:
  - As of end-November: about 50,800 people (8.5 percent of the total population) infected; about 1,170 deaths since early 2020.
  - As of end-November: 44 percent of the total population received at least one dose; 37 percent fully vaccinated.
  - Government included 1.1 percent of GDP in extra 2021 budget spending for pandemic-related expenses (about 0.4 percent of GDP for healthcare and 0.1 percent of GDP to support the most vulnerable).
- Inflation medium-term forecast:
  - Decline to 58 percent year-on-year by end-2021 due to base effects and CBvS liquidity restraint.
  - Adherence to CBvS reserve money goals should lower inflation to 12 percent by end-2024.

---

### FISCAL CONSOLIDATION, TAXES, AND REVENUE MEASURES

### Consolidation targets and composition
- Legislature-endorsed plan targets improvement in the primary balance of around 14 percentage points of GDP over 2021-2024.
  - Discretionary measures expected to generate around 10.5 percent of GDP in deficit reduction; remainder from higher mineral exports, real depreciation effects, and economic recovery.

### Main revenue measures and timing
- Sales tax and VAT:
  - Increase in sales tax on imported goods by 2 percentage points (to 12 percent) in January 2021 and on domestic goods and services in October 2021 by 4 percentage points (to 12 percent).
  - Plan to replace the sales tax with a new value-added tax (VAT) with full replacement targeted on July 1, 2022.
    - All accompanying laws to implement VAT to be passed by March 2022 (structural benchmark).
    - MoFP-led Steering Committee and full time Implementation Team to be named; detailed action plan and communications strategy to be developed.
- Gold royalties:
  - Increase royalty rate to 7.5 percent for all gold production; decree issued in January (implementation delayed).
  - Consideration of phased increase (including to 4.5 percent at beginning of 2022 before reaching 7.5 percent).
  - Government plans to raise royalty on large-scale gold exporters from 6.0 percent to 7.5 percent; if contractual constraints apply, technical assistance to develop equivalent revenue options (structural benchmark, March 2022).
- One-time solidarity tax:
  - 10 percent on household and business income in excess of SRD 150,000 in the 2021 calendar year.
- Withholding taxes:
  - Plans to levy withholding taxes on interest payments, royalty and services fee; required legislation expected approved by National Assembly by June 2022.

### Quantified contributions to fiscal adjustment (selected)
- Total annual change of Primary Balance: 8.4 (2021), 3.0 (2022), 1.8 (2023), 1.0 (2024), Total 14.2
- Adjustment from Policy Changes: 2.9 (2021), 2.5 (2022), 2.5 (2023), 2.6 (2024), Total 10.5
- Revenue measures: 0.2 (2021), 2.1 (2022), 1.7 (2023), 0.3 (2024), Total 4.2
- Royalties increase for gold miners: 0.0 (2021), 1.1 (2022), 0.4 (2023), 0.0 (2024), Total 1.5
- Income tax administration improvements: 0.0 (2021), 0.1 (2022), 0.1 (2023), 0.1 (2024), Total 0.3
- Corporate tax administration improvements: 0.0 (2021), 0.1 (2022), 0.1 (2023), 0.1 (2024), Total 0.3

### Expenditure restraint and wage bill
- Personnel costs: about 10.5 percent of GDP in 2020 (historical average 8.3 percent).
- Commitment: limit nominal increase of wages and benefits to 25 percent in 2021; lower wage bill to below 7 percent of GDP by 2024 via capping nominal growth below projected inflation and workforce reduction (including non-renewal of temporary contracts and eliminating ghost workers).
- Transfers and subsidies:
  - Rose from around 4 percent of GDP in early 2010s to 14 percent of GDP in 2019.
  - Government will review non-electricity transfers and subsidies to reduce allocation to around 3 percent of GDP by 2024 through better targeting and efficiency.

### Expenditure measures contributions (Percent of GDP)
- Expenditure measures: 2.8 (2021), 0.4 (2022), 0.8 (2023), 2.3 (2024), Total 6.3
- Wage bill restraint: 1.6 (2021), 1.3 (2022), 0.6 (2023), 0.3 (2024), Total 3.8
- Other transfer and subsidies restraint: 0.7 (2021), 0.2 (2022), 0.0 (2023), 0.4 (2024), Total 1.3
- Phased electricity subsidy elimination: -1.1 (2021), -0.2 (2022), 1.3 (2023), 1.7 (2024), Total 1.8

---

### ELECTRICITY TARIFFS, SUBSIDY PHASE-OUT, AND SUPPORT MEASURES

### Tariff and subsidy plan
- Average electricity tariffs currently USD 0.04 per KWH (around 30 percent of cost-recovery).
- Parliament approved phase-out of subsidies to Energie Bedrijven Suriname (EBS) by 2024.
- Tariff adjustments:
  - Average tariffs increased by 103 percent in July 2021.
  - Government committed to additional 25 percent average tariff increase by May 2022.
  - Universal lump-sum subsidy to households (SRD 260) and businesses (SRD 150) as part of monthly electricity bill to mitigate tariff increases; averages a 50 percent subsidy for smallest consumers.
  - Average tariffs to be periodically increased to achieve full cost recovery by end-2024 and then adjusted quarterly by the Suriname Energy Authority.
- Staff estimate: average tariffs would be increased by around 50 percent annually from 2022 to 2024 to achieve full-cost recovery (assuming no EBS restructuring or other cost savings).
- In 2021-22, tariff increases impact on electricity subsidies projected to be outweighed by exchange rate depreciation, higher oil prices and inflation, resulting in a negative contribution of phased electricity subsidy elimination to the fiscal adjustment.

---

### FINANCIAL SECTOR, BANKING VULNERABILITIES, AND CBvS REFORMS

### Banking sector vulnerabilities and indicators
- Reported aggregate capital adequacy ratio: 12.4 percent in September (reported Tier 1 capital ratio 11 percent).
- NPLs and exposures:
  - NPL to gross loans: 12.4 percent (September 2021).
  - Authorities’ data: 55.5 percent of bank lending is in foreign currency; around 50 percent of that amount to borrowers without a natural hedge.
  - Foreign currency loans reportedly represent 55 percent of non-performing loans.
  - Banking sector exposures to government mostly non-performing and amount to around 10 percent of total assets.
- Three banks have significant capital shortfalls and a fourth slightly below minimum requirement.
- Liquid assets: 55.4 percent of total assets and 109 percent of short-term liabilities.
- Banking system Net Open Position (NOP): 43.7 percent of capital (foreign currency assets exceed liabilities).

### Asset quality reviews and recapitalization roadmap
- Complete comprehensive audit of CBvS and asset quality reviews (AQR) of commercial banks to determine exact recapitalization need.
- CBvS to undertake AQRs for all banks:
  - Expedited reviews for largest two banks (structural benchmark, September 2022).
  - Remainder of system by December 2022.
- Following AQRs, require banks to submit time-bound recapitalization and restructuring plans; CBvS to verify credibility and oversee implementation.
- Roadmap to triage banks, determine conditions for public funds use, and unwind regulatory forbearance (structural benchmark, May 2022).
- Strengthen CBvS crisis management:
  - Submit Credit Institutions Resolution Act to State Council (structural benchmark, January 2022) and adopt by National Assembly by September 2022.
  - Operationalize Bank Resolution Unit within CBvS (structural benchmark, February 2022).
  - Establish Financial Stability Committee (structural benchmark, January 2022).
  - Revise Banking and Credit Supervision Act and submit to State Council (structural benchmark, January 2022) for adoption by National Assembly by July 2022.
- Modernize financial sector management: drafts to improve supervision of insurance sector and pension/provident funds, centralized reporting of creditors’ obligations, and introduce deposit insurance once sector stabilized.

### CBvS governance, transparency, and recapitalization
- National Assembly to pass amendments to CBvS Act (structural benchmark, January 2022) to:
  - eliminate Government influence;
  - introduce collective decision-making;
  - provide adequate internal oversight;
  - revise CBvS mandate; and
  - prohibit monetary financing.
- Publish CBvS audits and financial statements:
  - FY 2019 audit by February 2022.
  - FY 2020–21 audited financial statements by June 2022 based on IFRS.
- MoFP and CBvS to develop plan to recapitalize CBvS:
  - Full financial audit by internationally reputable firm (structural benchmark, June 2022).
  - Recapitalization plan (structural benchmark, September 2022) to include target capital level, trigger point, and binding time frame.
  - Macroeconomic framework assumption: injection of government bonds of 5 percent of GDP to bring CBvS to reasonable capital level (actual need may be larger).

---

### DEBT SUSTAINABILITY, RESTRUCTURING STANCE, AND CREDITOR ENGAGEMENT

### Debt status and objectives
- Public debt: about 148 percent of GDP end-2020.
- Authorities’ objectives:
  - Reduce public debt to under 120 percent of GDP by 2024 and below 60 percent of GDP by 2035.
  - Lower gross financing needs (GFNs) to an average of 9 percent of GDP in 2023-35 (no more than 12 percent in any one year).
  - Ensure fiscal position fully financed during 2022-2024.
- Achieving sustainability requires significant debt relief from private and official creditors.
- Authorities engaged financial and legal advisors in September 2020 and engaged creditors early.

### Restructuring scenario assumptions and outcomes (selected)
- Restructuring perimeter: external commercial and official bilateral debt (including arrears), total about 65 percent of GDP as of end-2020.
- Timing: restructuring projected end-2022; commercial and official debt service due in 2021 and 2022 become arrears.
- Treatment parameters:
  - Face value of external commercial debt (including arrears) reduced by 40 percent at end-2022; amortization of remaining paused for 3 years.
  - ECA-backed commercial debt: no face value reduction; amortization paused for 8 years.
  - Official debt (including arrears): no face value reduction; amortization paused for 7 years.
  - Interest payments resume in 2023 with reduced average coupon rates:
    - 3.4 percent for non ECA-backed commercial debt and Eurobonds.
    - Around 1.1 percent for official and ECA-backed commercial debt.
- NPV reduction estimates (at 5 percent discount rate):
  - Around 36 percent for official bilateral creditors.
  - Around 45 percent for external commercial creditors.
- Restructuring scenario outcomes:
  - Public debt below 120 percent in 2024; 80 percent in 2030; 60 percent by 2035.
  - GFNs decline from 21 percent in 2021 to around 7 percent in 2024; rise temporarily to about 12 percent by 2030; decline to 10 percent thereafter.

### Program financing (Restructuring Scenario) — In millions of US$
- Financing gap by year:
  - 2021: 239
  - 2022: 572
  - 2023: 511
  - 2024: 449
  - Total: 1,770
- Official financing:
  - Total: 1,167 (2021: 36; 2022: 395; 2023: 396; 2024: 340)
- Of which IMF:
  - Total: 667 (2021: 36; 2022: 228; 2023: 230; 2024: 174)
- IMF purchases (SDR/US$):
  - Purchases total USD 688 (SDR 472.8 million); budget support total USD 200 (SDR 39.4 million in 2021; SDR 57.9 million in 2022; SDR 41.1 million in 2023; 0 in 2024).
- IFI financing:
  - IFIs total: 500 (2022: 168; 2023: 166; 2024: 166)
- Financing from external arrears accumulation (net) total: 340 (2021: 203; 2022: 176; 2023: -39; 2024: 0)
- Financing from external debt restructuring total: 263 (2023: 154; 2024: 109)

### Arrears and assurances (selected)
- Stock of external arrears estimated at 11 percent of GDP by end-2021, including arrears of:
  - USD 61 million to China;
  - USD 7 million to India;
  - USD 22 million to Paris Club creditors (France, Israel, Italy, The Netherlands, Sweden).
- Suriname expected to owe arrears of USD 181 million to private external creditors by end-2021.
- Authorities settled all multilateral arrears.
- Financing assurances:
  - IDB confirmed USD 168 million during the first 12 months of the program and USD 500 million in total over the course of the program.
  - Financing assurances received from the Paris Club in anticipation of an Agreed Minute.
  - China and India provided less specific assurances; China consented to Fund financing notwithstanding arrears; India requested more time.
- Staff assessment: authorities’ actions met the good-faith requirement of the Lending Into Arrears (LIA) policy with respect to private creditors.

---

### DEBT SUSTAINABILITY ANALYSIS (ANNEX II) — KEY FINDINGS AND RISKS

### Main findings
- Public debt is unsustainable under maximum feasible fiscal adjustment in next 15 years.
- Gross public debt: about 148 percent of GDP in 2020; external public debt end-2020: 94 percent of GDP.
- Domestic public debt end-2020: 53 percent of GDP (CBvS holds 26 percent of GDP; debt to commercial banks 14 percent; non-bank institutions 6 percent).
- Around 27 percent of public domestic debt in 2020 denominated in foreign currency.

### Macroeconomic assumptions (selected)
- Growth:
  - Real GDP declined by 15.9 percent in 2020.
  - 2021: staff expect growth to stay negative, at 3.5 percent.
  - Medium term: 2.5‒3 percent; long term steady at 3 percent.
- Inflation:
  - End-of-period inflation assumed 58 percent in 2021 and 26 percent in 2022.
  - Inflation declines to 12 percent by end of program period; long-run 5 percent.
- REER:
  - 19 percent depreciation in 2020 eliminated REER overvaluation.
  - 2021 REER projected to appreciate by 4 percent; medium-term appreciation about 0.6 percent per year.
- Fiscal balance:
  - Primary fiscal balance: -9.7 percent of GDP in 2020; projected -1.3 percent of GDP in 2021; improve to 4.5 percent of GDP over medium term under program.

### Stress tests and vulnerabilities
- Debt path under restructuring scenario remains vulnerable; debt-to-GDP exceeds emerging market benchmark of 70 percent in all shocks.
- Macro-fiscal shock: debt would increase by more than 180 percent of GDP by 2026 (compared to baseline).
- Real exchange rate shock: pushes up debt by about 25 percent of GDP by 2026.
- Larger recapitalization needs or lower commodity revenues: increase debt by 6-10 percent of GDP by 2026.
- Specific shocks:
  - Primary balance shock: debt to 123 percent of GDP by 2024.
  - GDP growth shock: debt to 139 percent by 2024.
  - Real exchange rate shock (30 percent depreciation): debt jumps to 149 percent in 2024.
  - Macro-fiscal (combined) shock: debt to 289 percent in 2024.
  - Additional CBvS/commercial bank recapitalization of 10 percent of GDP in 2022: debt to 129 percent by 2024.
  - Commodity revenue shock (50 percent reduction for 2 years): debt rises to 126 percent in 2024.

---

### MACROECONOMIC PROJECTIONS, EXTERNAL SECTOR, AND FINANCING INDICATORS

### Selected macro projections (Restructuring Scenario)
- Real GDP (percent change): -15.9 (2020), -3.5 (2021), 1.8 (2022), 2.1 (2023), 2.7 (2024), 3.0 (2025), 3.0 (2026)
- Consumer prices (period average): 34.9 (2020), 58.6 (2021), 37.9 (2022), 22.2 (2023), 14.1 (2024), 10.0 (2025), 7.9 (2026)
- Central government debt (percent of GDP): 147.7 (2020), 128.9 (2021), 128.5 (2022), 119.8 (2023), 119.4 (2024), 108.6 (2025), 101.9 (2026)
- Revenues (percent of GDP series shown across 2016-2026 in tables; selected values: 18.4 (2020), 24.1 (2021), 26.6 (2022), 27.6 (2023))

### External sector and reserves (selected)
- Current account: 259 (2020, Millions of USD), 115 (2021), -278 (2022), 0 (2023), -6 (2024)
- Gross international reserves (USD millions): 585 (2020), 968 (2021), 1,421 (2022), 1,786 (2023), 2,138 (2024)
- Usable gross international reserves (USD millions): 118 (2020), 501 (2021), 955 (2022), 1,320 (2023), 1,672 (2024)
- Usable reserves in months of imports: 0.7 (2020), 3.0 (2021), 5.2 (2022), 7.1 (2023), 8.7 (2024)
- Net international investment position (IIP): -119 percent of GDP in 2020.

### Program financing and Fund role
- Proposed access: SDR 472.8 million (366.8 percent of quota or USD 688 million).
- Fund financing share in total financing: 38 percent.
- Intended uses: rebuild international reserves and meet fiscal financing needs; budget support allocations: USD 56.4 million (2021), USD 83.6 million (2022), USD 60.0 million (2023).
- Capacity to repay assessment:
  - Proposed access would bring Fund credit outstanding to a maximum of around 26 percent of exports of goods and services, 42 percent of usable reserves, and 22 percent of GDP in 2024.
  - Obligations to Fund would average 2.5 percent of exports of goods and services or about 6 percent of usable reserves during 2025-2034 (peaking at about 4 percent of exports in 2029 and about 10 percent of usable reserves in 2031).
- SDR allocation: global SDR allocation led to SDR123.5 million allocation for Suriname.

---

### GOVERNANCE, INSTITUTIONAL REFORMS, AND CAPACITY DEVELOPMENT

### Anti-corruption and governance actions
- Plan to ratify United Nations Convention Against Corruption (UNCAC) by end-January 2022 (structural benchmark).
- Amend 2017 Anti-Corruption Act to align with UNCAC (structural benchmark, June 2022).
- Amend legal framework to allow routine verification of income and asset declarations for high-level and high-risk public officials; make this information public and establish sanctions.
- Operationalize Anti-Corruption Commission (structural benchmark, March 2022).
- Procurement reforms:
  - Draft procurement law to be approved by National Assembly by end-June 2022 (structural benchmark).
  - State decree requiring mandatory publication of tenders and contracts including beneficial owners, names of awarding officials, and ex-post validation (structural benchmark, August 2022).

### Fiscal transparency and public financial management
- Resume monthly publication of central government liabilities on debt management office website within four weeks after month end; pass legislation to expand DMO mandate to include all nonfinancial public sector liabilities by June 2022 (structural benchmark).
- MoFP to publish monthly central government outturns and audited annual central government financial statements for FY2017-FY2021 by June 2022.
- Terms of reference for audit of domestic supplier arrears prepared (structural benchmark, January 2022); audit commencement structural benchmark April 2022.
- Adopt Treasury Single Account (TSA) recommendations and publish time-bound action plan (structural benchmark, January 2022).
- Establish large taxpayer unit (structural benchmark, June 2022).
- By December 2022 publish audited financial reports for FY2017-FY2021 for ten largest SOEs and a report identifying main fiscal risks (structural benchmark).

### Capacity development overview (Annex III)
- IMF and partners to provide technical assistance in:
  - fiscal policy (Treasury modernization, fiscal data, cash and debt management, tax and customs administration);
  - monetary policy and FX operations (governance, liquidity forecasting, market development);
  - financial sector (CB accounting, supervision, stress testing, correspondent banking);
  - central bank governance and recapitalization;
  - AML/CFT and beneficial ownership reforms.
- Other IFIs/donors engaged: Inter-American Development Bank, Caribbean Development Bank, UNODC, OAS, World Bank, Dutch Ministry of Finance, Dutch Central Bank.

---

### PROGRAM MONITORING, PRIOR ACTIONS, STRUCTURAL BENCHMARKS, AND REPORTING

### Prior actions (selected) — already completed
- Enactment by National Assembly of:
  - 2021 budget consistent with program parameters;
  - Key fiscal measures: raising sales tax to 12 percent; VAT implementation plan mid-2022; raising royalty on small gold miners to 7.5 percent; limiting nominal wage/benefit increase in 2021; timeline to phase out electricity subsidies.
- Unification of official and parallel exchange rates; official exchange rate based on unrestricted market transactions.
- MoU between CBvS and MoFP to end new gross CBvS financing of government.
- Conducted special audits of program monetary data.
- Co-sourcing internal audit function; adopted CBvS Governance Reform Implementation Plan.
- Engaged internationally reputable firm and finalized terms of reference for asset quality review for all banks.
- Requested National Assembly to ratify UNCAC.

### Structural benchmarks (selected deadlines)
- Passage of CBvS Act amendments — January 2022.
- Passage of laws to implement VAT — March 2022.
- Raise royalty on multinational gold mining corporations to 7.5 percent or equivalent measures — March 2022.
- Establish large taxpayer unit — June 2022.
- Publish audited FY2017-FY2021 financial reports for ten largest SOEs — December 2022.
- Asset quality reviews: two largest banks by September 2022; remaining banks by December 2022.
- Credit Institutions Resolution Act submission — January 2022; Bank Resolution Unit operational — February 2022.

### Performance criteria, continuous conditions, and indicative targets
- Quarterly performance criteria on:
  - net international reserves (floor);
  - net domestic assets (ceiling);
  - primary fiscal balance (cash basis) of central government (floor).
- Continuous performance criteria include:
  - no new gross credit to government from CBvS;
  - no new central government guaranteed debt;
  - no new government/SOE debt collateralized by natural resource revenues;
  - non-accumulation of external debt payment arrears by central government;
  - no direct purchases/sales of FX by CBvS/central government from/to SOEs/private sector (with permitted transparent auctions under conditions).
- Indicative target: spending level for specific social programs (targeted cash transfers) — floor.

### Reporting and data requirements (selected)
- Monthly reporting: CG operations in GFS format within six weeks; mineral tax and non-tax revenue within four weeks; CG domestic and external debt stock within four weeks; CBvS balance sheet within two weeks; monetary aggregates and reserve data within two weeks.
- Weekly/bi-weekly reporting: CBvS liquidity assistance, large exposures, liquidity forecasts, FX auction results, enhanced supervision templates.
- Quarterly: detailed balance of payments within 60 days; IIP within two months; full set of FSIs within 60 days.
- Annual: EBS financial statements within six months; nominal and real GDP within eight months.

---

### RISKS, MITIGATIONS, AND STAFF APPRAISAL

### Major risks identified
- Commitment risk: fiscal reforms not completed/fully implemented due to political pressure; need for passage of supplemental 2022 budget.
- Restructuring risk: creditors may provide insufficient debt relief or negotiations could break down, leading to litigation.
- Financial stability risk: flexible exchange rate and rising NPLs could affect corporate and bank solvency; large bank exposure to government is material risk.
- COVID-19: weak health system capacity raises risk of renewed lockdowns.
- Macroeconomic risks: potential for disorderly exchange rate overshooting, deposit outflows, bank runs, lower commodity prices, natural disasters, and external shocks.
- Data and implementation capacity risks: sizable statistical discrepancies and limited human capital.

### Mitigations and staff appraisal
- Staff view fiscal consolidation as clear and critical; measures considered realistic and underpinned by macro-fiscal framework.
- Program relies on continued exchange rate flexibility, reserve accumulation, monetary tightening, and credible debt restructuring.
- Strengthening governance, anti-corruption, and capacity development prioritized; technical assistance from IMF and partners planned.
- Staff strongly recommend approval of the requested Extended Fund Facility arrangement: "The government’s economic plan is ambitious and merits Fund support."

---

*Italic: Source — IMF staff and Surinamese authorities, content unit 1surea2021001 (excerpts from the IMF document).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and Diagnosis
- Usable foreign reserves were depleted and, in the absence of other sources of budget financing, fiscal deficits were monetized, leading to surging inflation and a significant depreciation of the exchange rate.
- Public debt was 148 percent of GDP at end-2020 and is assessed as unsustainable.
- Important solvency problems are embedded in the domestic banking system.
- The prolonged COVID-19 pandemic further debilitated the economy and health system readiness.

### Recent Policies and Actions
- Since taking office in July 2020, the government acted to tackle macroeconomic challenges:
  - The Central Bank of Suriname (CBvS) floated the currency in June 2021 and adopted a reserve money target.
  - The fiscal deficit was reined in despite COVID-19 challenges.
  - The legislature passed a fiscal plan aligned with the program that included spending and revenue measures.
  - The government initiated negotiations for a needed restructuring of official bilateral and privately-held external debt.

### Program Strategy (Fund-supported program)
- Staff propose a 36-month Arrangement under the Extended Fund Facility with access of 366.8 percent of quota (SDR 472.8 million or USD 688 million).
- The authorities’ plan aims for an increase in the central government primary balance of 14 percent of GDP during 2021-24.
  - This requires a discretionary fiscal consolidation of 10 percent of GDP; the remainder is expected from economic recovery and the impact of real depreciation on fiscal accounts.
- Social safety nets will be expanded to protect the vulnerable from the adjustment burden.
- Monetary policy: after the floating of the exchange rate, the CBvS will rely on reserve money as its nominal anchor; domestic interest rates have moved up to support CBvS quantity targets.
- Over the program, usable foreign currency reserves are expected to be rebuilt to 175 percent of the ARA reserve adequacy metric, with buffers to insure against terms of trade shocks and potential post-restructuring FX outflows.
- The authorities’ program also targets tackling corruption, strengthening governance, improving institutional capacity for macroeconomic policies, and restoring financial stability.

### Key Economic Developments and Indicators
- Real GDP:
  - Real GDP contracted by 15.9 percent in 2020.
  - Projected to contract by another 3.5 percent in 2021.
  - Medium-term growth could reach 3 percent.
- Fiscal outcomes:
  - The overall fiscal deficit was 13.4 percent of GDP in 2020 (a primary deficit of 9.7 percent of GDP) on an estimated accrual basis.
  - On a year-to-September cash basis, the overall balance and primary balance rose to a surplus of 1.1 percent of GDP and 2.6 percent of GDP, respectively.
  - Public debt was 148 percent of GDP at end-2020.
  - External arrears estimated as of end-2021: around USD 90 million to official bilateral creditors and USD 181 million to private external creditors.
  - Arrears to domestic debt holders and suppliers estimated around Surinamese Dollar (SRD) 3.4 billion by end-2021.
- Inflation and exchange rate:
  - Inflation reached 61 percent year-on-year at end-2020 and peaked at 74 percent in August 2021, then came down to 61 percent in October 2021.
  - The USD/SRD rate depreciated a cumulative 180 percent since January 2020.
  - The CBvS floated the currency in June 2021 after step devaluations in September 2020, March 2021, and May 2021.
- Reserves and external sector:
  - Usable international reserves fell to around two months of imports (even after the SDR allocation of USD 175 million in August).
  - The current account is expected to register a surplus of around 4 percent of GDP in 2021.
  - The external position of 2020 is assessed as broadly in line with medium-term fundamentals and desirable policies, with significant uncertainty.
- COVID-19 impacts:
  - As of end-November, about 50,800 people (8.5 percent of the total population) were infected and about 1,170 people have died since early 2020.
  - As of end-November, 44 percent of the total population received at least one dose of vaccine and 37 percent were fully vaccinated.
  - The government included 1.1 percent of GDP in extra spending in the 2021 budget for pandemic-related expenses (about 0.4 percent of GDP for healthcare and 0.1 percent of GDP to support the most vulnerable).
- Inflation and medium-term projections:
  - Inflation is forecast to decline to 58 percent year-on-year by end-2021 due to base effects and CBvS liquidity restraint.
  - Adherence to CBvS reserve money goals should lower inflation to 12 percent by end-2024.
- Banking sector:
  - Local banks have significant exposure to government debt and rising NPLs.
  - Authorities’ data indicate 55.5 percent of bank lending is in foreign currency and around 50 percent of that amount is to borrowers without a natural hedge.
  - Foreign currency loans reportedly represent 55 percent of non-performing loans.
  - Banking sector exposures to government are mostly non-performing and amount to around 10 percent of total assets.
  - Reported aggregate capital adequacy ratio was 12.4 percent in September; reported Tier 1 capital ratio was 11 percent.
  - Three banks have significant capital shortfalls and a fourth has slipped slightly below the minimum requirement.
  - Liquid assets represent 55.4 percent of total assets and 109 percent of short-term liabilities.
  - The banking system has a Net Open Position (NOP) of 43.7 percent of capital (foreign currency assets exceed liabilities).

### Objectives of the Authorities' Economic Plan
- Central objective: restore stability and eliminate macroeconomic imbalances via:
  - Significant reduction in the fiscal deficit.
  - End to monetary financing of the budget.
  - Move to a floating exchange rate.
  - Rebuilding international reserves and adopting a clear nominal anchor.
- Priorities include protecting the most vulnerable, ensuring banks meet capital and liquidity requirements (or be restructured/resolved), and forcefully addressing corruption and poor governance.

### Fiscal Consolidation Measures and Revenue Reforms
- The legislature-endorsed plan targets an improvement in the primary balance of around 14 percentage points of GDP over 2021-2024.
  - Discretionary measures expected to generate around 10.5 percent of GDP in deficit reduction; the remainder to come from higher mineral exports, real exchange rate depreciation effects, and economic recovery.
- Specific measures included in the 2021 program parameters:
  - Increase in the sales tax on imported goods by 2 percentage points (to 12 percent) in January and on domestic goods and services in October by 4 percentage points (to 12 percent).
  - Plan to replace the sales tax with a new value-added tax (VAT) with full replacement targeted on July 1, 2022.
    - All accompanying laws needed to implement the VAT to be passed by March 2022 (structural benchmark).
    - A MoFP-led Steering Committee to supervise VAT implementation; a full time Implementation Team (including Tax, Customs, and IT officials) to be named; develop a detailed action plan and time-bound communications strategy.
    - Complementary work includes developing regulations, IT systems, deploying a Taxpayer Advisory Team, and producing manuals for taxpayers; consultations with business and consumer groups have been ongoing.
  - Increase in royalty rate to 7.5 percent for all gold production; a decree to raise the royalty rate for small-scale gold exporters from 2.75 percent to 7.5 percent was issued in January, though implementation was delayed; consideration of a phased increase (including to 4.5 percent at the beginning of 2022 before reaching 7.5 percent) is underway.

*Source: EXECUTIVE SUMMARY (1surea2021001)*

### 7.5 percent by July 2022). The government also plans to raise the royalty on large-scale

### SURINAME

### Fiscal consolidation measures and revenue actions
- The government plans to raise the royalty on large-scale (multinational) gold exporters from 6.0 percent to 7.5 percent. If precluded by contractual agreements, the government will seek technical assistance to develop feasible options to achieve additional revenue equivalent to a 1.5-percentage point increase in the royalty rate (structural benchmark, March 2022).
- A one-time solidarity tax of 10 percent on household and business income in excess of SRD 150,000 in the 2021 calendar year.
- To curb tax base erosion, the government plans to levy withholding taxes on interest payments, royalty and services fee; public consultation is ongoing and required legislation is expected to be approved by the National Assembly by June 2022.
- Text Table Suriname: Contributions to Fiscal Adjustment (Percent of GDP) — selected entries:
  - Total annual change of Primary Balance: 8.4 (2021), 3.0 (2022), 1.8 (2023), 1.0 (2024), Total 14.2
  - Adjustment from Policy Changes: 2.9 (2021), 2.5 (2022), 2.5 (2023), 2.6 (2024), Total 10.5
  - Revenue measures: 0.2 (2021), 2.1 (2022), 1.7 (2023), 0.3 (2024), Total 4.2
  - Royalties increase for gold miners: 0.0 (2021), 1.1 (2022), 0.4 (2023), 0.0 (2024), Total 1.5
  - Income tax administration improvements: 0.0 (2021), 0.1 (2022), 0.1 (2023), 0.1 (2024), Total 0.3
  - Corporate tax administration improvements: 0.0 (2021), 0.1 (2022), 0.1 (2023), 0.1 (2024), Total 0.3

### Expenditure restraint, wage bill, and transfers
- Personnel costs rose to about 10.5 percent of GDP in 2020 (from a historical average of 8.3 percent of GDP).
- The government is committed to limiting the nominal increase of wages and benefits to 25 percent in 2021 and to lowering the wage bill to below 7 percent of GDP by 2024. The reduction will be achieved by capping nominal growth of individual compensation below projected inflation and by workforce reduction (including not renewing temporary contracts and eliminating ghost workers) to partially reverse the 14 percent increase in the size of the public workforce in 2020.
- Reducing untargeted and poorly targeted transfers and subsidies: transfers and subsidies rose from around 4 percent of GDP in the early 2010s to 14 percent of GDP in 2019 (driven by a 3.5 percent of GDP increase in electricity subsidies and a 4 percent of GDP increase in transfers to ministries).
- The government will review non-electricity transfers and subsidies with a view to reducing the budget allocation to around 3 percent of GDP by 2024 by improving spending efficiency and better targeting programs.
- Text Table: Expenditure measures contributions (Percent of GDP):
  - Expenditure measures: 2.8 (2021), 0.4 (2022), 0.8 (2023), 2.3 (2024), Total 6.3
  - Wage bill restraint: 1.6 (2021), 1.3 (2022), 0.6 (2023), 0.3 (2024), Total 3.8
  - Other transfer and subsidies restraint: 0.7 (2021), 0.2 (2022), 0.0 (2023), 0.4 (2024), Total 1.3
  - Phased electricity subsidy elimination: -1.1 (2021), -0.2 (2022), 1.3 (2023), 1.7 (2024), Total 1.8

### Electricity tariffs and subsidy phase-out
- Average electricity tariffs currently USD 0.04 per KWH (around 30 percent of cost-recovery).
- Parliament approved plan to phase out subsidies to Energie Bedrijven Suriname (EBS) by 2024.
- Average tariffs increased by 103 percent in July. Government committed to an additional 25 percent average tariff increase by May 2022.
- The government will provide a universal lump-sum subsidy to households (SRD 260) and businesses (SRD 150) as part of monthly electricity bill to mitigate tariff increases; this amounts to an average 50 percent subsidy for the smallest consumers.
- Average tariffs will continue to be periodically increased to achieve full cost recovery by end-2024 and then adjusted quarterly by the Suriname Energy Authority.
- Staff estimates: average tariffs would be increased by around 50 percent annually from 2022 to 2024 to achieve full-cost recovery (based on current projections and assuming no restructuring of the EBS or other cost savings).
- Note: In 2021-22, the impact of tariff increases on electricity subsidies is projected to be outweighed by exchange rate depreciation, higher oil prices and inflation, resulting in a negative contribution of phased electricity subsidy elimination to the fiscal adjustment.

### Budget targets and fiscal framework
- The draft 2022 budget envisages a further consolidation of the primary balance to a surplus of 1.6 percent of GDP. The budget includes a 2.4 percentage point of GDP consolidation in primary expenditure and revenues expected to improve by 0.5 percentage point of GDP. Capital expenditure expected to increase by 1.2 percent of GDP.
- Authorities plan to submit a supplemental budget by March 2022 to fully align the budget with the program.
- Memo: Primary Balance (Percent of GDP): -1.3 (2021), 1.7 (2022), 3.5 (2023), 4.5 (2024).

### Institutional and governance reforms (structural benchmarks)
- Debt management office: resume monthly publication of central government’s liabilities on the debt management office website within four weeks after month end; by June 2022, pass legislation to expand the legal mandate to include monitoring and reporting of all liabilities of the nonfinancial public sector (including suppliers’ arrears, guarantees, contingent liabilities) (structural benchmark).
- Begin monthly publication of the full scope of public sector obligations by December 2022.
- MoFP will publish monthly central government outturns and audited annual central government financial statements for FY2017-FY2021 by June 2022.
- Prepare terms of reference for hiring external experts (structural benchmark, January 2022) to conduct an audit of domestic supplier arrears; commencement of the audit is a structural benchmark for April 2022.
- Adopt recommendations to streamline treasury functions through a Treasury Single Account (TSA) and publish a time-bound action plan to monitor implementation (structural benchmark, January 2022).
- Establish a large taxpayer unit (structural benchmark, June 2022) and undertake comprehensive reviews of tax and customs administration with time-bound plans to monitor reform priorities.
- By December 2022, publish audited financial reports for FY2017-FY2021 for the ten largest state-owned enterprises by total assets and a report identifying main fiscal risks and mitigation steps (structural benchmark).
- Create a public investment and PPP unit by June 2023 to review all ongoing government investment projects and require cost and feasibility studies for new public investments and PPPs; introduce a gateway process for PPPs, establish limits on PPP stocks and flows, monitor guarantees, and publish beneficial ownership information for companies receiving contracts for new government capital projects and PPPs.

### Protecting the vulnerable and social spending
- Poverty rate estimated at 26 percent in 2017, with 48 percent in the country’s interior.
- Targeted cash transfers amounted to only 1.4 percent of GDP in 2020.
- Social assistance spending through cash transfer programs increased by 0.5 percent of GDP in 2021 by increasing transfer sizes.
- Total social spending budget for other social assistance programs (food assistance, low-income shelter, health insurance subsidies, school transport) is around 3.5 percent of GDP in 2021.
- Authorities are digitalizing records to better identify eligible recipients, eliminate duplication, and intend to review income thresholds for means-tested programs. The program proposes an indicative target: a spending floor for cash transfers to ensure they are fully protected over the next three years.

### Debt sustainability, restructuring stance, and creditor engagement
- Authorities’ objectives: (i) reduce public debt to under 120 percent of GDP by 2024 and to below 60 percent of GDP by 2035, (ii) lower gross financing needs to an average of 9 percent of GDP in 2023-35 (and no more than 12 percent of GDP in any one year), and (iii) ensure the fiscal position is fully financed during 2022-2024.
- Achieving debt sustainability will require important debt relief from private and official creditors. Authorities engaged financial and legal advisors in September 2020 and engaged creditors early.
- Since July, Suriname has been in arrears with private external bondholders and commercial loan holders; authorities have shared relevant, non-confidential information with creditors on a timely basis.
- Staff consider authorities’ actions to have met the good-faith requirement of the Lending Into Arrears (LIA) policy with respect to private creditors.
- Official bilateral creditors are expected to provide debt relief compatible with program parameters; Paris Club creditors have provided specific and credible financing assurances indicating debt relief in line with program parameters.
- China and India have provided assurances (China consented to Fund financing notwithstanding arrears; India requested more time). Staff expect debt to China and India will be treated on comparable terms with other bilateral creditors; arrears to these creditors constitute a form of financing contribution to the program.

### Domestic debt and financial sector considerations
- About 26 percent of GDP of debt is in the form of obligations to the CBvS; the program provides progressive repayment of some of these obligations by June 2024.
- 22 percent of GDP in debt is held on the balance sheet of local commercial banks and non-bank financial institutions; some banks are undercapitalized, and write-downs could require public recapitalization.
- Domestic debt restructuring could create instability (deposit runs, solvency problems in non-financial institutions holding 6 percent of GDP in domestic debt).
- As of September 2021, authorities cleared SRD 58 million of domestic debt arrears to commercial banks and SRD 127 million of supplier arrears. Outstanding domestic arrears include accumulation of about SRD 527 million, or 1 percent of GDP, of supplier arrears over the last 11 months.
- Government committed not to provide guarantees to debt contracted by other parties during the program; will not contract new public debt collateralized by natural resource revenues; CBvS will not issue new FX-linked or FX-denominated debt. Authorities provided Fund staff with all existing central government foreign and foreign currency domestic debt contracts and confirmed Staatsolie’s debt does not include central government guarantees or collateral. Authorities agreed to provide Fund staff all future public sector borrowing contracts.

*Source: IMF staff and Surinamese authorities (text extracted from the provided content).*

### Box 1. Selected Domestic Borrowing Arrangements in Foreign Currency

### Box 1. Selected Domestic Borrowing Arrangements in Foreign Currency

### Key findings on domestic borrowing arrangements
- Suriname has very few domestic debt contracts in foreign currency that legally could be considered as collateralized.
- Staff identified one arrangement with a fiduciary transfer of property rights to current and future, largely unspecified, moveable goods of the government authorities.
- Several domestic debt contracts in foreign currency contain non-standard borrowing arrangements, mostly in the form of tax exemptions provided to private contractors.
  - Four contracts contain exemptions such as set-off rights for future tax liabilities, exemptions on import and excise duties for goods purchased abroad, or sales and consumption tax exemptions.
  - These exemptions tend to be broadly formulated and are presumably tied to the expenses of contractors that were incurred while carrying out their obligations under the contract.
- A variety of other non-standard borrowing arrangements have been provided to commercial banks.
  - Two contracts contain guarantees either securing priority of repayment of the lender from new financing facilities entered into by the government or guaranteeing compensation to the lender for exchange rate risk.
  - One contract contains a letter of comfort that the government will repay the lender through the CBvS.
  - One contract contains a power of attorney that authorizes the CBvS to make monthly payments from government accounts.
  - One contract contains the assignation to the lender of funds in bank accounts used for central government tax collections.

### Fiscal and banking context linked to these arrangements
- Staff’s debt sustainability assessment already incorporates 10 percent of GDP in new debt to recapitalize the CBvS and commercial banks (although the exact size of this recapitalization need will be determined by a comprehensive audit of the CBvS and by asset quality reviews of the commercial banks).
- The government owns or partially owns three banks, representing 32 percent of total assets.
- Four banks fall below the minimum capital requirement of 10 percent, three of which have significant capital shortfalls.
  - The asset size of these three banks is around 7 percent of GDP and 8 percent of total bank assets.
- The banking sector is composed of nine banks; as of September, their size in total assets stood at 93 percent of GDP.
- The assets of the three largest banks represent 69 percent of GDP and 74 percent of total bank assets.
- Non-performing loans (NPL) are elevated and likely to deteriorate going forward; there are indications of issues with loan classifications preventing NPL recognition and delaying provisioning.
- The current NPL framework does not require banks to classify public sector exposures as non-performing; transition to IFRS9 will change this and increase the size of shortfalls in regulatory capital.
- Based on data provided by authorities, even without IFRS9 adjustments, almost half of the banks do not meet minimum capital requirements.

### Implications and recommended actions (as described in the source)
- Complete comprehensive audit of the CBvS and asset quality reviews of commercial banks to determine the exact recapitalization need.
- CBvS to undertake asset quality reviews for all banks; expedited reviews for the largest two banks (structural benchmark, September 2022) and remainder of the system shortly afterwards (structural benchmark, December 2022).
- Following asset quality reviews, require banks to submit time-bound recapitalization and restructuring plans for all institutions not in full compliance with regulatory requirements; CBvS to verify credibility and oversee implementation.
- Intensify CBvS supervision activities and be prepared to take appropriate action, including imposing prompt corrective actions, for banks experiencing difficulties.
- Develop a roadmap for restructuring and governance reform of commercial banks to:
  - Triage banks based on asset quality review outcomes.
  - Determine conditions for the use of public funds.
  - Outline steps to unwind regulatory forbearance currently in place (structural benchmark, May 2022).
  - Put governance reforms in place at government-owned banks to ensure they are run on a fully commercial basis.
- Strengthen CBvS crisis management capabilities through:
  - Submitting the Credit Institutions Resolution Act to the State Council (structural benchmark, January 2022) with a view to adoption by the National Assembly by September 2022, to increase CBvS powers and tools for early intervention, recovery, and resolution.
  - Operationalizing a Bank Resolution Unit within the CBvS with appropriate governance arrangements, staffing, funding, and clear internal guidelines (structural benchmark, February 2022).
  - Establishing and operationalizing a new Financial Stability Committee (composed of representatives from MoFP and the CBvS) to diagnose risks and develop plans to manage and mitigate them (structural benchmark, January 2022).
  - Revising the Banking and Credit Supervision Act to facilitate risk-based supervision and submitting it to the State Council (structural benchmark, January 2022) with a view to adoption by the National Assembly by July 2022.
- Modernize financial sector management via draft laws to improve supervision of the insurance sector and pension and provident funds, establish centralized reporting of creditors’ obligations, and introduce a deposit insurance scheme once the financial sector has been stabilized.
- Prepare a comprehensive plan to coordinate and integrate these initiatives and organize capacity development investments.

*Source: Box 1. Selected Domestic Borrowing Arrangements in Foreign Currency (from the provided IMF document).*

### 38.      To strengthen the CBvS’ mandate, autonomy, and decision-making structures, the

### 1surea2021001 - 38.      To strengthen the CBvS’ mandate, autonomy, and decision-making structures, the

### Strengthening the CBvS mandate, autonomy, and governance
- National Assembly will pass amendments to the CBvS Act (structural benchmark, January 2022).
- Amendments will:
  - eliminate Government influence over the CBvS;
  - introduce collective decision-making for the executive management and policy decisions of the CBvS;
  - provide for adequate internal oversight;
  - revise the CBvS’ mandate; and
  - prohibit monetary financing.
- Amendments are currently being prepared in close cooperation with Fund staff.
- Publication of financial statements and audits (structural benchmarks):
  - The CBvS plans to publish the FY 2019 audit results by February 2022.
  - The FY 2020–21 audited financial statements will be published by June 2022 based on International Financial Reporting Standards.
- Note on recent monetary financing: The bulk of monetary financing during this period was undertaken by the previous government. The current government has largely refrained from monetary financing, except for SRD 250mn in June 2021 to finance additional spending on COVID-19 measures to deal with a renewed surge of the pandemic.

### Recapitalization of the CBvS
- MoFP and the CBvS will jointly develop a plan to recapitalize the CBvS.
- Authorities will undertake a full financial audit of the CBvS by an internationally reputable firm to establish the size of the capital shortfall (structural benchmark, June 2022).
- Following the audit, authorities will prepare a plan to recapitalize the CBvS (structural benchmark, September 2022) that will include:
  - a clear target level of capital;
  - a trigger point for recapitalization; and
  - a binding time frame to complete the recapitalization.
- Macroeconomic framework assumption: injection of government bonds of 5 percent of GDP to bring the CBvS to a reasonable level of capital (although the actual size of the recapitalization needs may be larger).

### Tackling corruption and improving governance
- Overview of corruption vulnerabilities:
  - Widespread corruption across many aspects of government.
  - Vulnerabilities include gaps in legal frameworks, institutional weaknesses, implementation challenges, capacity constraints, and lack of accountability, transparency and awareness.
- Legal and institutional actions planned:
  - Ratification of the United Nations Convention Against Corruption (UNCAC) with a view to finalizing the ratification by end-January 2022 (structural benchmark).
  - Amend the 2017 Anti-Corruption Act to ensure criminalization of all relevant corruption acts and to bring it into line with UNCAC requirements (structural benchmark, June 2022).
  - Amend legal framework to allow routine verification of income and asset declarations by high-level and high-risk public officials; make this information public and establish proportionate sanctions for non-compliance.
  - Operationalize an Anti-Corruption Commission to oversee efforts (structural benchmark, March 2022).

### Public procurement transparency and institutions
- Current procurement weaknesses:
  - No single agency with a mandate for procurement policy formulation, planning, or monitoring compliance.
  - Administration by Ministry of Public Works and MoFP; largely paper-based, low digitalization, limited transparency, weak contract and project management.
  - No central procurement database and limited public access to procurement information.
- Planned reforms and benchmarks:
  - Enhance transparency and accountability in procurement processes.
  - A draft procurement law submitted to the National Assembly for approval by end-June 2022 (structural benchmark) to:
    - expand the existing Integrated Financial Management Information System to cover procurement, audits, and controls;
  - Enact a state decree to require mandatory publication on a government website of all public procurement tenders and contracts, including:
    - names of awarded entities and their beneficial owners;
    - names of public officials awarding the contracts;
    - an ex-post validation of delivery of contracted services (structural benchmark, August 2022).

### Strengthening the AML/CFT framework
- Recent National Risk Assessment (started in 2019) identified several technical compliance gaps and effective implementation challenges.
- Suriname is being assessed by the Caribbean Financial Action Task Force; an on-site visit will take place in Q1 2022 and the AML/CFT assessment report is expected to be discussed by the CFATF Plenary in Q4 2022.
- Planned actions (structural benchmark, August 2022):
  - Enact amendments to the AML/CFT law (and other relevant laws and regulations) to align them with the FATF international AML/CFT standard, particularly on the treatment of politically exposed persons and beneficial ownership requirements.
- EITI and extractive industries:
  - Suriname joined the Extractive Industry Transparency Initiative (EITI) in 2017 and has published reports for fiscal years 2016 and 2017.
  - Authorities intend to address EITI recommendations regarding mining law improvements, strengthening the framework for mining titles, and ensuring publication of beneficial ownership information.
- Beneficial ownership:
  - Authorities should adopt a uniform approach to beneficial ownership by defining it clearly in the AML/CFT law in line with FATF international standards.

### Program modalities and financing highlights
- Type of arrangement: 3-year Extended Arrangement under the EFF.
- Proposed access: SDR 472.8 million (366.8 percent of quota or USD 688 million).
- Role of Fund financing:
  - Expected to play a catalytic role in attracting external financing.
  - Share of Fund financing in total financing (including exceptional financing from external arrears accumulation and expected debt restructuring): 38 percent.
- Intended uses of Fund access:
  - Rebuild international reserves and meet fiscal financing needs.
  - Budget support allocations: USD 56.4 million or SDR 39.4 million in 2021; USD 83.6 million or SDR 57.9 million in 2022; USD 60 million or SDR 41.1 million in 2023.
- Phasing: Access will be phased equally over the life of the arrangement.
- Capacity to repay assessment:
  - Proposed access of 366.8 percent of quota would bring Fund credit outstanding to a maximum of around 26 percent of exports of goods and services, 42 percent of usable reserves, and 22 percent of GDP in 2024.
  - Obligations to the Fund would average 2.5 percent of exports of goods and services or about 6 percent of usable reserves during 2025-2034 (peaking at about 4 percent of exports of goods and services in 2029 and about 10 percent of usable reserves in 2031).
- SDR allocation: global SDR allocation led to a SDR123.5 million allocation for Suriname to increase international reserves.

### Proposed program financing (Restructuring Scenario) — In millions of US$
- Financing gap by year:
  - 2021: 239
  - 2022: 572
  - 2023: 511
  - 2024: 449
  - Total: 1,770
- Official financing:
  - 2021: 36
  - 2022: 395
  - 2023: 396
  - 2024: 340
  - Total: 1,167
- Of which IMF:
  - 2021: 36
  - 2022: 228
  - 2023: 230
  - 2024: 174
  - Total: 667
- IMF purchases:
  - 2021: 56
  - 2022: 228
  - 2023: 230
  - 2024: 174
  - Total: 688
- Of which for budget support:
  - 2021: 56
  - 2022: 84
  - 2023: 60
  - 2024: 0
  - Total: 200
- Repurchases:
  - 2021: 21
  - Total repurchases: 21
- Of which IFIs:
  - 2022: 168
  - 2023: 166
  - 2024: 166
  - Total IFI: 500
- Financing from external arrears accumulation (net):
  - 2021: 203
  - 2022: 176
  - 2023: -39
  - 2024: 0
  - Total: 340
- Financing from external debt restructuring:
  - 2023: 154
  - 2024: 109
  - Total: 263

### Prior actions already completed
- Enactment by the National Assembly of:
  - a 2021 budget consistent with program parameters; and
  - key fiscal measures including raising the sales tax, putting in place a VAT in mid-2022, replacing the sales tax with the VAT starting July 1, 2022, raising the royalty rate on small gold miners to 7.5 percent, limiting the nominal wage and benefit increase in 2021, and instituting a timeline to phase out electricity subsidies.
- Unification of the official and parallel exchange rates and ensuring the official exchange rate is calculated based on unrestricted market transactions.
- Concluding a MoU between the CBvS and MoFP to end new, gross CBvS financing of the government.
- Conducting special audits of program monetary data to verify opening stocks used as performance criteria.
- Co-sourcing the internal audit function to a qualified expert firm based on Terms of Reference prepared in consultation with IMF staff.
- Adopting a bank-wide Governance Reform Implementation Plan at the CBvS.
- Engaging an internationally reputable firm and finalizing terms of reference for an asset quality review for all banks.
- Requesting the National Assembly to ratify the United Nations Convention Against Corruption.
- Note: While the decree raising the royalty rate on small gold miners was issued (satisfying the prior action), it has not been implemented; the authorities aim to implement the measure promptly.

### Structural benchmarks and program monitoring
- Structural benchmarks aim to:
  - strengthen monetary policy operations;
  - improve financial sector resilience;
  - strengthen fiscal frameworks;
  - address governance deficiencies and tackle corruption.
- Program monitoring:
  - Quarterly performance criteria (PCs) on:
    - net international reserves (floor);
    - net domestic assets (ceiling);
    - primary fiscal balance (cash basis) of the central government (floor).
  - Continuous PCs on:
    - no new gross credit to the government from the CBvS;
    - no new central government guaranteed debt;
    - no new debt contracted by government and/or SOEs that is collateralized by natural resource revenues;
    - the non-accumulation of external debt payment arrears by the central government;
    - no direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and the private sector (transparent purchases/sales to the market through competitive auctions permitted under certain conditions).
  - Indicative target on spending level for specific social programs, including targeted cash transfers (floor).

### Arrears, assurances, and creditor engagement
- Stock of external arrears estimated at 11 percent of GDP by end-2021, including arrears of:
  - USD 61 million to China;
  - USD 7 million to India;
  - USD 22 million to Paris Club creditors (France, Israel, Italy, The Netherlands, Sweden).
- Suriname expected to owe arrears of USD 181 million to private external creditors by end-2021.
- Authorities have settled all multilateral arrears.
- Financing assurances:
  - IDB confirmed USD 168 million during the first 12 months of the program and USD 500 million in total over the course of the program.
  - Financing assurances received from the Paris Club in anticipation of an Agreed Minute.
  - China and India provided less specific assurances of intent to work towards a debt restructuring that will restore sustainability.
- Staff assessment:
  - On the basis of assurances and authorities’ commitment, staff expect China and India debts to be treated on comparable terms with other bilateral creditors.
  - Fund support is considered essential; staff consider Suriname’s program fully financed with firm commitments for the first 12 months and good prospects for adequate financing for the remaining period.
  - Staff assess debt to be sustainable on a forward-looking basis, contingent on implementation and restructuring progress.

### Program risks
- Major risks identified:
  - Commitment to key fiscal policy measures:
    - Risk that key fiscal reforms are not completed or fully implemented due to political pressure.
    - Need for passage of a supplementary 2022 budget to fully align fiscal policy with programmed measures.
    - Risks to implementation of the budget and delays in implementing gold royalty increases due to capacity constraints.
  - Finalizing a restructuring agreement with non-Paris Club and private creditors:
    - Risk that creditors provide insufficient debt relief to restore sustainability, or negotiations break down leading to litigation that hampers access to external capital.
  - Implications of a floating exchange rate and financial sector vulnerabilities:
    - Uncertain impact of a flexible exchange rate and increased non-performing loans on corporate and bank solvency, financial stability, and fiscal risks.
    - Large exposure of banks to the government is a significant source of risk to financial stability.
  - COVID-19:
    - Very weak domestic health system capacity raises the risk of renewed lockdowns, undermining growth and increasing fiscal and external financing gaps.
  - Macroeconomic risks:
    - Potential for disorderly and greater-than-expected exchange rate overshooting, deposit outflows and bank runs, lower commodity prices, fiscal costs from natural disasters/climate change, and other external risks.
  - Data reporting and capacity:
    - Quality of data reporting and sizable statistical discrepancies (particularly on fiscal and debt data and inconsistencies with monetary data) pose a risk of misreporting during the program.
    - Fund staff working to build capacity with the Fund’s statistics department and other partners.
  - Implementation capacity:
    - Technical capacity shortcomings may be mitigated by capacity development and long-term advisers, but the broad scope of reforms and limited human capital pose risks to implementation.

*International Monetary Fund (IMF) staff summary of program and policy measures as presented in the source content.*

### 57.      There are some meaningful upside risks. The program takes a conservative approach in

### 1surea2021001 - 57.      There are some meaningful upside risks. The program takes a conservative approach in

### Upside risks
- Program takes a conservative approach in estimating future oil and gold prices and production.
- International oil companies (Total, Apache, and very recently Exxon) have announced potentially large oil and gas discoveries in Suriname, in locations close to the known large oil reserves of Guyana.
- Program projections do not take into account any of these findings because available information does not include assurances about the economic viability of these reserves (especially in the absence of clear private sector investment plans to extract these resources).
- Oil discoveries create a meaningful upside risk to economic outcomes and the country’s payment capacity.
- Potential for existing gold mine concessions to be expanded, which would increase gold exports and budget revenues.

### Staff appraisal — overall assessment
- Suriname is facing challenging conditions: large fiscal imbalances, no access to market financing, high inflation, and a near-exhaustion of usable international reserves.
- Authorities have put forward an ambitious reform program with important and politically challenging up-front actions intended to stabilize the economy and set the stage for recovery.

### Fiscal consolidation and public finances
- Intended fiscal consolidation is described as a clear and critical step toward restoring stability.
- Consolidation is based on realistic revenue and expenditure measures underpinned by an appropriate macro-fiscal framework.
- Spending restraint that started in 2020 and the fiscal consolidation planned for 2021-2024 will place the public finances on a sustainable path.
- Prudent public wage policies will be needed in the months and years ahead to preserve stabilization objectives.
- Completion of the phased elimination of electricity subsidies approved by the legislature is crucial.

### Social protection and distributional measures
- To mitigate negative impacts on the poor, the authorities’ recovery plan envisages significant measures to strengthen the social safety net.
- Authorities have increased targeted social support programs to protect the most vulnerable.
- Prospective increases in electricity prices will be structured so that the biggest consumers bear relatively more of the adjustment.

### Exchange rate policy and monetary framework
- Essential for the CBvS to allow the currency to move flexibly, driven by market conditions.
- Recent CBvS actions have put in place a market-determined exchange rate (as evidenced by the elimination of the parallel market premium).
- Continued exchange rate flexibility will help adjust to external shocks while preserving scarce international reserves.
- A unified market-determined exchange rate will strengthen commercial banks’ role and increase FX market liquidity.
- Credible, parsimonious foreign currency intervention should be limited to correcting periods of disorderly market conditions.
- The external position of Suriname in 2020 is assessed to be broadly in line with fundamentals and desirable policy settings, albeit with significant uncertainty given significant shifts in the external position and real exchange rate over the past couple of years.

### Monetary policy implementation and inflation
- Authorities committed to adhering to conservative targets for reserve money growth to stabilize inflation expectations.
- Open market operations auctions have recently started to support this goal.
- Interest rates will need to be able to fully react to market conditions to establish clear transmission from monetary aggregates to the real economy.
- Financial system is adapting to the new framework and greater volatility in interest rate and exchange rate.
- Staff anticipate that, as capacity is built, the CBvS will be able to establish and then achieve the reserve money targets needed to disinflate the economy.
- CBvS is prepared to tighten monetary conditions further if the outlook for inflation does not decline at the targeted pace.
- CBvS is prepared to act decisively should deeper problems be revealed in the banking system.

### Debt restructuring and creditor engagement
- Country faces difficult restructuring negotiations ahead.
- Paris Club creditors have provided financing assurances.
- China and India have provided assurances, although less specific than Paris Club creditors, that they intend to work with Suriname towards a debt restructuring that will restore sustainability.
- China has consented to Fund financing notwithstanding these arrears.
- India has requested more time to consider consenting to Fund financing notwithstanding these arrears.
- Fund support is considered essential for successful implementation of the adjustment program.
- Surinamese authorities are pursuing appropriate policies and making a good faith effort to reach a collaborative agreement with private creditors.
- Expected debt restructuring, combined with fiscal consolidation, is expected to restore debt sustainability.
- Progress on restructuring private and official claims will be re-examined at each program review in the context of a financing assurances review.

### Capacity, governance, and data
- Strengthening capacity and coordination within government, enhancing governance, and improving data quality will be critical.
- Significant efforts should be made to improve data quality and develop institutional capacity.
- Authorities intend to strengthen their anti-corruption and AML/CFT framework.
- Technical support from the Fund and other partners will be deployed to build capacity in fiscal statistics, public financial management, debt management, monetary policy, financial sector surveillance, AML/CFT, and governance.
- Some capacity development efforts are already well underway.

### Program risks and mitigation
- Substantial risks include:
  - Effects of the exchange rate adjustment on corporate and bank balance sheets.
  - Impact of non-performing exposures on bank asset quality and solvency.
  - Ownership of and capacity to implement key fiscal and monetary policies.
  - Data reporting quality.
  - Potential for external shocks.
- Risks of not having a Fund-supported program: spending pressures could build, lead to monetization of the deficit, and trigger a wage-price spiral; scarce foreign currency reserves could lead to currency overshoot, combined with high inflation and low growth, threatening financial stability; social consequences of proceeding without international support would be highly destabilizing.
- Program success depends on the government’s willingness to implement politically challenging measures and to maintain close social dialogue with civil society.
- Risks are mitigated by the evident strong commitment to the program, demonstrated by completion of a challenging set of prior actions.

*Source: STAFF APPRAISAL — SURINAME, INTERNATIONAL MONETARY FUND.*

### 66.      The government’s economic plan is ambitious and merits Fund support. The Fund’s

### 1surea2021001 - 66.      The government’s economic plan is ambitious and merits Fund support. The Fund’s

### Fund assessment and recommendation
- "The government’s economic plan is ambitious and merits Fund support."
- "The Fund’s support will help provides a framework for needed policies, catalyze broader international financial support, and help the authorities chart a course toward macroeconomic stability and economic recovery."
- "As such, staff strongly recommend the approval of the requested Extended Fund Facility arrangement."

### Fiscal developments (findings and dynamics)
- Revenues:
  - "Total revenues have been relatively stable..."
  - "largely due to revenues from the gold sector."
- Expenditures:
  - "But expenditures expanded in 2019 ahead of elections in 2020..."
  - "subsidies to the electricity sector also increased due to very low tariffs and rising costs of generation."
- Fiscal outcomes:
  - "As a result, fiscal deficits increased substantially..."
  - "and public debt increased sharply in 2020, driven by exchange rate depreciation and large fiscal deficits."
- Selected fiscal statistics (Restructuring Scenario, percent of GDP unless noted):
  - Revenues: 17.7 (2016), 20.1 (2017), 20.9 (2018), 20.4 (2019), 18.4 (2020), 24.1 (2021), 26.6 (2022), 27.6 (2023), 26.3 (2024), 25.6 (2025), 24.9 (2026)
  - Total expenditure: 27.1 (2016), 27.2 (2017), 26.2 (2018), 42.3 (2019), 31.8 (2020), 32.0 (2021), 30.8 (2022), 27.4 (2023), 24.8 (2024), 24.0 (2025), 23.6 (2026)
  - Overall balance (net lending/borrowing): -9.3 (2016), -7.1 (2017), -5.2 (2018), -21.9 (2019), -13.4 (2020), -7.9 (2021), -4.1 (2022), 0.2 (2023), 1.5 (2024), 1.6 (2025), 1.3 (2026)
  - Primary balance: -6.8 (2016), -4.6 (2017), -2.5 (2018), -19.0 (2019), -9.7 (2020), -1.3 (2021), 1.7 (2022), 3.5 (2023), 4.5 (2024), 4.0 (2025), 3.5 (2026)
  - Non-resource primary balance: -11.6 (2016), -11.2 (2017), -9.6 (2018), -25.2 (2019), -16.2 (2020), -12.5 (2021), -10.9 (2022), -9.2 (2023), -7.3 (2024), -7.0 (2025), -6.7 (2026)
  - Central government debt (percent of GDP): 74.8 (2016), 71.5 (2017), 66.1 (2018), 85.2 (2019), 147.7 (2020), 128.9 (2021), 128.5 (2022), 119.8 (2023), 119.4 (2024), 108.6 (2025), 101.9 (2026)
  - Domestic debt (percent of GDP): 20.2 (2016), 22.5 (2017), 21.2 (2018), 31.6 (2019), 53.4 (2020), 40.6 (2021), 38.8 (2022), 27.2 (2023), 18.0 (2024), 14.8 (2025), 14.6 (2026)
  - External debt (percent of GDP): 54.6 (2016), 48.9 (2017), 45.0 (2018), 53.6 (2019), 94.3 (2020), 88.2 (2021), 89.7 (2022), 92.6 (2023), 101.4 (2024), 93.7 (2025), 87.3 (2026)
- Central government operations (millions of SRD, Restructuring Scenario):
  - Revenues: 3,662 (2016), 5,411 (2017), 6,234 (2018), 6,434 (2019), 7,066 (2020), 13,560 (2021), 20,778 (2022), 26,697 (2023), 29,407 (2024), 31,959 (2025), 34,536 (2026)
  - Taxes: 2,566 (2016), 3,580 (2017), 4,365 (2018), 4,717 (2019), 5,133 (2020), 9,260 (2021), 13,710 (2022), 17,750 (2023), 19,462 (2024), 21,234 (2025), 23,208 (2026)
  - Non-tax revenues: 1,096 (2016), 1,831 (2017), 1,868 (2018), 1,718 (2019), 1,934 (2020), 4,300 (2021), 7,068 (2022), 8,947 (2023), 9,945 (2024), 10,725 (2025), 11,328 (2026)
  - Expenditures: 5,592 (2016), 7,315 (2017), 7,799 (2018), 13,325 (2019), 12,197 (2020), 18,025 (2021), 23,999 (2022), 26,519 (2023), 27,769 (2024), 30,017 (2025), 32,780 (2026)
  - Overall balance (net lending/borrowing, millions of SRD): -1,930 (2016), -1,904 (2017), -1,565 (2018), -6,891 (2019), -5,131 (2020), -4,465 (2021), -3,221 (2022), 178 (2023), 1,638 (2024), 1,942 (2025), 1,756 (2026)

### External sector developments (findings and statistics)
- Current account and reserves:
  - "Suriname is undergoing a substantial current account correction, following the deterioration in 2019."
  - "However, the financial account weakened in 2020 largely due to other investment outflows."
  - "REER (based on a weighted average exchange rate) depreciated significantly."
  - "International reserves increased recently, partly due to SDR allocation. However, usable reserves are just at around two months of imports."
  - "A significant part of the current account adjustment is born by import compression..."
  - "...while the surge in gold price has also contributed to ease the adjustment process."
- Balance of payments (Millions of USD, Restructuring Scenario):
  - Current account: -161 (2016), 69 (2017), -119 (2018), -448 (2019), 259 (2020), 115 (2021), -278 (2022), 0 (2023), -6 (2024), -15 (2025)
  - Exports of goods and services: 1,606 (2016), 2,143 (2017), 2,236 (2018), 2,287 (2019), 2,447 (2020), 2,550 (2021), 2,647 (2022), 2,633 (2023), 2,660 (2024), 2,670 (2025), 2,712 (2026)
  - Imports of goods and services: 1,702 (2016), 1,780 (2017), 2,070 (2018), 2,413 (2019), 1,846 (2020), 2,019 (2021), 2,201 (2022), 2,216 (2023), 2,295 (2024), 2,390 (2025), 2,492 (2026)
  - Trade balance, goods: 238 (2016), 775 (2017), 662 (2018), 532 (2019), 1,061 (2020), 942 (2021), 887 (2022), 884 (2023), 832 (2024), 764 (2025), 706 (2026)
  - Gross international reserves (USD millions): 381 (2016), 424 (2017), 581 (2018), 648 (2019), 585 (2020), 968 (2021), 1,421 (2022), 1,786 (2023), 2,138 (2024), 2,222 (2025), 2,183 (2026)
  - Usable gross international reserves (USD millions): 236 (2016), 279 (2017), 436 (2018), 505 (2019), 118 (2020), 501 (2021), 955 (2022), 1,320 (2023), 1,672 (2024), 1,756 (2025), 1,716 (2026)
  - Usable reserves in months of imports: 1.6 (2016), 1.6 (2017), 2.2 (2018), 3.3 (2019), 0.7 (2020), 3.0 (2021), 5.2 (2022), 7.1 (2023), 8.7 (2024), 8.8 (2025), 8.3 (2026)
- External debt and financing:
  - External debt (USD millions): 2,959 (2016), 3,164 (2017), 3,519 (2018), 3,779 (2019), 3,642 (2020), 4,033 (2021), 4,051 (2022), 4,299 (2023), 4,543 (2024), 4,532 (2025), 4,387 (2026)
  - External debt (percent of GDP): 106.3 (2016), 87.7 (2017), 88.0 (2018), 99.7 (2019), 164.6 (2020), 161.9 (2021), 156.8 (2022), 149.5 (2023), 153.1 (2024), 140.6 (2025), 129.5 (2026)
  - Financing from external debt restructuring (Millions of USD): 154 (2021), 109 (2022), 105 (2023), 54 (2024) — as shown in Table 5 row "Financing from external debt restructuring 3/"

### Macroeconomic projections (selected)
- Real and nominal GDP (Restructuring Scenario):
  - Real GDP (percent change): -4.9 (2016), 1.6 (2017), 4.9 (2018), 1.1 (2019), -15.9 (2020), -3.5 (2021), 1.8 (2022), 2.1 (2023), 2.7 (2024), 3.0 (2025), 3.0 (2026)
  - Nominal GDP (percent change): 18.0 (2016), 30.2 (2017), 10.9 (2018), 5.6 (2019), 21.8 (2020), 46.7 (2021), 38.6 (2022), 23.9 (2023), 15.6 (2024), 11.8 (2025), 11.1 (2026)
  - GDP at current prices (SRD billions): 20.7 (2016), 26.9 (2017), 29.8 (2018), 31.5 (2019), 38.4 (2020), 56.3 (2021), 78.0 (2022), 96.6 (2023), 111.7 (2024), 125.0 (2025), 138.9 (2026)
- Inflation and prices:
  - GDP deflator (percent change): 24.1 (2016), 28.1 (2017), 5.7 (2018), 4.4 (2019), 49.4 (2020), 52.1 (2021), 36.1 (2022), 21.3 (2023), 12.6 (2024), 8.6 (2025), 7.9 (2026)
  - Consumer prices (period average): 55.5 (2016), 22.0 (2017), 6.9 (2018), 4.4 (2019), 34.9 (2020), 58.6 (2021), 37.9 (2022), 22.2 (2023), 14.1 (2024), 10.0 (2025), 7.9 (2026)
  - Consumer prices (end of period): 52.4 (2016), 9.3 (2017), 5.4 (2018), 4.2 (2019), 60.7 (2020), 58.3 (2021), 25.8 (2022), 17.6 (2023), 12.1 (2024), 9.6 (2025), 5.9 (2026)
- Labor market:
  - Unemployment rate: 10.0 (2016), 7.0 (2017), 9.0 (2018), 8.8 (2019), 11.1 (2020), 11.2 (2021), 10.9 (2022), 10.6 (2023), 10.3 (2024), 10.0 (2025), 9.9 (2026)

### Sectoral and financial indicators
- Money and credit (percent change / ratios):
  - Broad money (percent change): 53.8 (2016), 9.0 (2017), 8.1 (2018), 4.7 (2019), 65.0 (2020), 49.6 (2021), 28.0 (2022), 15.5 (2023), 16.6 (2024), 12.5 (2025), 11.1 (2026)
  - Broad money (percent of GDP): 75.6 (2016), 63.3 (2017), 61.7 (2018), 61.2 (2019), 82.9 (2020), 84.5 (2021), 78.1 (2022), 72.7 (2023), 73.4 (2024), 73.8 (2025), 73.8 (2026)
  - Private sector credit (percent change): 25.3 (2016), 1.2 (2017), -4.5 (2018), 0.4 (2019), 27.1 (2020), 38.5 (2021), 26.9 (2022), 24.8 (2023), 20.9 (2024), 19.2 (2025), 16.1 (2026)
- Commodities:
  - Gold price (USD per troy ounce): 1,248 (2016), 1,257 (2017), 1,269 (2018), 1,392 (2019), 1,770 (2020), 1,747 (2021), 1,708 (2022), 1,671 (2023), 1,637 (2024), 1,604 (2025), 1,588 (2026)
  - Oil price (USD per barrel): 42.85 (2016), 52.86 (2017), 68.36 (2018), 61.44 (2019), 41.36 (2020), 56.76 (2021), 44.56 (2022), 41.35 (2023), 39.05 (2024), 37.45 (2025), 36.3 (2026)

### Key risks, adjustment channels, and financing
- Adjustment channel:
  - "A significant part of the current account adjustment is born by import compression..."
  - "the surge in gold price has also contributed to ease the adjustment process."
- Reserves and adequacy:
  - Gross international reserves (USD millions): 381 (2016) rising to 2,222 (2025) then 2,183 (2026)
  - Usable gross international reserves (USD millions): 236 (2016) rising to 1,756 (2025) then 1,716 (2026)
  - Usable reserves are "just at around two months of imports" in recent observation.
- Financing and restructuring:
  - Gross financing needs (incl. IMF debt service, memorandum): figures presented in Table 3 (projected years) and Table 5 include "Financing from external debt restructuring 3/" with 154 (2021), 109 (2022), 105 (2023), 54 (2024).
  - External arrears and coverage: "External arrears in 2020 are implicitly covered in errors and omissions." Table 3 shows External arrears (net) 0.0 (2016-2019), 6.1 (2020), -1.3 (2023), 0.0 thereafter.

*Source: Surinamese authorities and IMF staff calculations and projections, as presented in the Restructuring Scenario tables and figures.*

### 1. Gross external financing requirements 535557-11815126814214779222

### 1surea2021001 - 1. Gross external financing requirements 535557-11815126814214779222

### Gross external financing requirements (levels and percent of GDP)
- 1. Gross external financing requirements: 535557-11815126814214779222
- 1. Gross external financing requirements (percent of GDP): 18.5 19.3 -4.1 5.2 9.3 4.9 5.1 2.7 7.7
- A. Current account deficit (levels): 119448-259-11527-80615
- A. Current account deficit (percent of GDP): 4.1 15.5 -9.0 -4.0 0.9 -0.3 0.0 0.2 0.5
- B. Public sector debt amortization (levels): 41112214626624014914873207
- B. Public sector debt amortization (percent of GDP): 14.3 4.2 5.1 9.2 8.3 5.2 5.1 2.5 7.2
  - (i) Central government (levels): 1399746166140494848157
  - (i) Central government (percent of GDP): 4.8 3.4 1.6 5.7 4.9 1.7 1.7 1.7 5.4
  - (ii) CBvS (levels): 0000000000
  - (ii) CBvS (percent of GDP): 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
  - (iii) SOEs (levels): 272251001001001001002550
  - (iii) SOEs (percent of GDP): 9.4 0.9 3.5 3.5 3.5 3.5 3.5 0.9 1.7
- C. Other outflows (levels): 5-13-5000000
- C. Other outflows (percent of GDP): 0.2 -0.4 -0.2 0.0 0.0 0.0 0.0 0.0 0.0

### Sources of financing (levels and percent of GDP)
- 2. Sources of financing (levels): 714611-48295150-45058-342
- 2. Sources of financing (percent of GDP): 24.7 21.2 -1.7 10.2 5.2 -0.1 1.7 2.0 -11.9
- A. Asset sales (net) (Other investment account) (levels): -104244-168-2500000
- A. Asset sales (percent of GDP): -3.6 8.5 -5.8 -0.9 0.0 0.0 0.0 0.0 0.0
- B. Foreign direct investment (net) (levels): 119-8010411511311210694
- B. Foreign direct investment (percent of GDP): 4.1 -0.3 0.0 3.6 4.0 3.9 3.9 3.7 3.3
- C. Portfolio flows (net) (levels): 59-117-35000000
- C. Portfolio flows (percent of GDP): 2.0 -4.0 -1.2 0.0 0.0 0.0 0.0 0.0 0.0
  - (i) Central government (levels): 01250000000
  - (i) Central government (percent of GDP): 0.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0
  - (ii) SOEs (levels): 0051000000
  - (ii) SOEs (percent of GDP): 0.0 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0
  - (iii) Other (levels): 59-242-86000000
  - (iii) Other (percent of GDP): 2.0 -8.4 -3.0 0.0 0.0 0.0 0.0 0.0 0.0
- D. Public sector debt financing (levels): 477201983935374857108
- D. Public sector debt financing (percent of GDP): 16.5 7.0 3.4 1.4 1.2 1.3 1.7 2.0 3.7
  - (i) Central government (levels): 186201983935374857108
  - (i) Central government (percent of GDP): 6.4 7.0 3.4 1.4 1.2 1.3 1.7 2.0 3.7
  - (ii) SOEs (levels): 29100000000
  - (ii) SOEs (percent of GDP): 10.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- E. Other inflows (net) (levels): 163290571760-154-109-105-544
- E. Other inflows (percent of GDP): 5.6 10.1 2.0 6.1 0.0 -5.3 -3.8 -3.6 -18.9

### Balance, reserves, errors, and financing needs
- Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (levels): 1795470144-118-146-97-21-564
- Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (percent of GDP): 6.2 1.9 2.4 5.0 -4.1 -5.0 -3.4 -0.7 -19.5
- 3. Expected change in gross reserves of the CBvS; accumulation (-) (levels): -14820883-383-454-365-352-8439
- 3. Expected change in gross reserves of the CBvS; accumulation (-) (percent of GDP): -5.1 7.2 2.9 -13.3 -15.7 -12.7 -12.2 -2.9 1.4
- 4. Errors and omissions (levels): -31-242-113000000
- 4. Errors and omissions (percent of GDP): -1.1 -8.4 -3.9 0.0 0.0 0.0 0.0 0.0 0.0
- 5. Financing needs -(2-1+3+4) (levels): 0-20-40239572511449105524
- 5. Financing needs -(2-1+3+4) (percent of GDP): 0.0 -0.7 -1.4 8.3 19.8 17.7 15.6 3.6 18.2

### Allocation of financing needs (levels and percent of GDP)
- Allocation by: (i) Official financing (levels): 0-20-40363953963400-20
- (i) Official financing (percent of GDP): 0.0 -0.7 -1.4 1.2 13.7 13.7 11.8 0.0 -0.7
  - a. IMF (levels): 0-20-40362282301740-20
  - a. IMF (percent of GDP): 0.0 -0.7 -1.4 1.2 7.9 8.0 6.0 0.0 -0.7
    - Purchases (levels): 0005622823017400
    - Purchases (percent of GDP): 0.0 0.0 0.0 2.0 7.9 8.0 6.0 0.0 0.0
    - O/w: for budget support (levels): 000568460000
    - O/w: for budget support (percent of GDP): 0.0 0.0 0.0 2.0 2.9 2.1 0.0 0.0 0.0
    - Repurchases (levels): 0204021000020
    - Repurchases (percent of GDP): 0.0 0.7 1.4 0.7 0.0 0.0 0.0 0.0 0.7
  - b. IFIs (levels): 000016816616600
  - b. IFIs (percent of GDP): 0.0 0.0 0.0 0.0 5.8 5.8 5.7 0.0 0.0
- (ii) External arrears (net) (levels): 203176-39000
- (ii) External arrears (net) (percent of GDP): 7.1 6.1 -1.4 0.0 0.0 0.0
- (iii) Financing from external debt restructuring 1/ (levels): 54109105544
- (iii) Financing from external debt restructuring 1/ (percent of GDP): 5.1 3.5 3.2 15.8

- Sources: Fund staff estimates and projections.
- 1/ Calculated as a difference betw een the debt restructuring scenario and a scenario w ithout debt restructuring.
- Proj. (In millions of US dollars) (In percent of GDP)

*Monetary, financial, and program key statistics (highlights from tables)*

### Monetary Survey and Central Bank Accounts (selected levels)
- Monetary Survey: Net foreign assets: 6,447 6,365 8,430 5,867 11,674 24,773 42,322 53,594 66,639
  - Net international reserves (Held by the CBvS): 2,216 2,515 3,685 4,345 7,905 21,859 38,554 49,491 62,138
  - Net other foreign assets: 4,231 3,850 4,745 1,522 3,769 2,914 3,768 4,103 4,501
- Net domestic assets: 9,178 10,669 9,977 13,431 20,119 22,796 18,568 16,712 15,331
- Credit to the private sector: 7,525 7,618 7,278 7,310 9,288 12,866 16,333 20,390 24,659
- Broad money: 15,621 17,030 18,403 19,269 31,793 47,568 60,890 70,306 81,970
- Gross International Reserves (CBvS): 2,802 3,140 4,296 4,790 8,199 21,862 42,902 60,044 80,504
  - (In USD millions) 381 424 581 576 585 968 1,421 1,786 2,138

### Central Bank (CBvS) selected items (levels)
- Net foreign assets: 1,137 512 1,992 2,394 4,039 11,680 24,828 34,115 44,820
- Gross Other foreign assets: 673 360 256 214 465 869 610 8
- SDR allocations (levels): -909 -900 -906 -901 -1,779 -6,846 -9,272 -10,417 -11,763
- RMB Swap with PBoC (levels): -1,043 -1,043 -1,043 -1,070 -2,131 -3,398 -4,540 -5,055 -5,663
- Reserve money: 3,004 3,674 4,975 9,593 12,817 18,294 23,191 27,341 32,575

### Memorandum monetary indicators (selected percent changes / ratios)
- Velocity (GDP/broad money; end of period): 1.3 1.6 1.6 1.6 1.2 1.2 1.3 1.4 1.4
- Broad money (Percent of GDP): 75.6 63.3 61.7 61.2 82.9 84.5 78.1 72.7 73.4
- Credit to private sector (Percent of GDP): 36.4 28.3 24.4 23.2 24.2 22.9 20.9 21.1 22.1

### Financial Soundness Indicators (percent, selected)
- Regulatory capital to risk-weighted assets: 5.5 9.3 9.6 11.4 11.8 12.4 (Dec. 2021: Sept)
- Regulatory Tier 1 capital to risk-weighted assets: 5.5 8.7 9.0 10.8 10.5 11.0
- NPL to gross loans: 10.8 13.0 12.0 10.6 14.6 12.4
- Provisions to total NPLs: 43.4 53.2 61.6 60.5 46.0 44.0
- Liquid assets to total assets: 32.7 37.9 40.2 46.8 51.5 55.4
- Total loans to total deposits: 52.4 53.7 44.6 47.9 40.2 32.8
- Foreign currency deposits to total deposits: 71.1 70.1 66.5 60.9 69.2 74.3
- Note: 1/ The increase in net asset position in 2016, 2020 and 2021 includes a valuation effect attributable to significant depreciation.

### Proposed Schedule of Reviews and Available Purchases (SDR)
- Availability Date / Millions of SDR / Percent of Quota / Conditions
  - 12/22/2021 — 39.4 — 30.6 — Board Approval of the Extended Arrangement
  - 3/15/2022 — 39.4 — 30.6 — First review and continuous and end-December 2021 performance criteria
  - 6/15/2022 — 39.4 — 30.6 — Second review and continuous and end-March 2022 performance criteria
  - 9/15/2022 — 39.4 — 30.6 — Third review and continuous and end-June 2022 performance criteria
  - 12/15/2022 — 39.4 — 30.6 — Fourth review and continuous and end-September 2022 performance criteria
  - 3/15/2023 — 39.4 — 30.6 — Fifth review and continuous and end-December 2022 performance criteria
  - 6/15/2023 — 39.4 — 30.6 — Sixth review and continuous and end-March 2023 performance criteria
  - 9/15/2023 — 39.4 — 30.6 — Seventh review and continuous and end-June 2023 performance criteria
  - 12/15/2023 — 39.4 — 30.6 — Eighth review and continuous and end-September 2023 performance criteria
  - 3/15/2024 — 39.4 — 30.6 — Nineth review and continuous and end-December 2023 performance criteria
  - 6/15/2024 — 39.4 — 30.6 — Tenth review and continuous and end-March 2024 performance criteria
  - 9/15/2024 — 39.4 — 30.6 — Eleventh and final review and continuous and end-June 2024 performance criteria
- Total: 472.8 Millions of SDR; Percent of Quota: 366.8
- Memo: Quota: 128.9

### Program monitoring — Indicators of Fund Credit Under the EFF Supported Program (Millions of SDR unless otherwise indicated)
- Prospective Drawings (SDR): 0.0 39.4 157.6 157.6 118.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
  - Percent of quota: 0.0 30.6 122.3 122.3 91.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Repurchases (SDR): 29.0 14.5 0.0 0.0 0.0 0.0 13.1 39.4 65.7 78.8 78.8 78.8 65.7 39.4 13.1
- Total Interest / Charges (SDR): 0.7 0.3 1.7 3.7 7.9 9.6 9.6 9.2 9.2 6.3 3.3 1.9 1.1 0.5 0.1
- Total Debt Services (SDR): 29.7 14.8 1.7 3.7 7.9 9.6 22.7 48.6 74.9 85.1 82.1 80.7 66.8 39.9 13.3
  - Percent of exports: 1.7 0.8 0.1 0.2 0.4 0.5 1.2 2.6 3.9 4.3 4.0 3.7 2.9 1.6 0.5
  - Percent of usable reserves: 35.0 4.2 0.3 0.4 0.7 0.8 2.0 4.5 7.4 9.0 9.5 9.9 8.5 5.2 1.7
  - Percent of GDP: 1.4 0.8 0.1 0.2 0.4 0.4 1.0 2.0 2.9 0.2 0.1 0.1 0.1 0.0 0.0
  - Percent of quota: 23.0 11.5 1.3 2.9 6.1 7.5 17.6 37.7 58.1 66.1 63.7 62.6 51.8 30.9 10.3
- Outstanding Credit (eop, SDR): 14.5 39.4 197.0 354.6 472.8 472.8 459.7 420.3 354.6 275.8 197.0 118.2 52.5 13.1 0.0
  - Percent of exports: 0.8 2.2 10.7 19.6 26.1 26.2 25.3 22.6 18.4 13.9 9.5 5.4 2.3 0.5 0.0
  - Percent of usable reserves: 17.1 11.2 29.8 39.2 41.6 39.9 39.9 39.1 35.2 29.3 22.8 14.5 6.7 1.7 0.0
  - Percent of GDP: 0.7 2.0 9.8 17.2 22.2 21.4 19.9 17.2 13.7 10.1 6.8 3.9 1.6 0.4 0.0
  - Percent of quota: 11.2 30.6 152.8 275.1 366.8 366.8 356.6 326.0 275.1 214.0 152.8 91.7 40.8 10.2 0.0
- Memo items:
  - Exports of G&S (US$ million): 2,447 2,550 2,647 2,633 2,660 2,670 2,712 2,777 2,866 2,968 3,096 3,273 3,463 3,659 3,867
  - Gross International Reserves (US$ million): 585 968 1,421 1,786 2,138 2,222 2,183 2,069 1,968 1,871 1,755 1,684 1,637 1,613 1,617
    - as percent of ARA: 73 110 162 195 224 231 231 224 217 211 202 197 194 193 194
  - Gross International Usable Reserves (excluding PBoC swap and ring-fenced reserves) (US$ million): 118 501 955 1,320 1,672 1,756 1,716 1,602 1,501 1,405 1,289 1,218 1,170 1,147 1,150
    - as percent of ARA: 15 57 109 144 175 182 181 173 166 158 149 143 139 137 138
  - Nominal GDP (SRD million): 38,353 56,280 77,978 96,647 111,746 124,972 138,883 150,144 162,350 175,507 189,769 205,189 221,916 239,989 259,514

*Sources: Fund staff estimates and projections; Central Bank of Suriname; and IMF staff calculations and projections.*

### External Sector Assessment — Key findings, projections, and policy recommendations
- Current account and real exchange rate
  - Suriname’s current account balance in 2020 improved sharply to 9.0 percent of GDP from -11.3 percent in 2019.
  - The sharp reversal of CA (of 20.3 percent of GDP) was driven by: (i) decline in economic activity from the pandemic, (ii) severe external financial constraints, (iii) substantial depreciation of the parallel exchange rate, and (iv) substantial increase in the price of gold.
  - NEER and REER movements: NEER depreciated around 54 percent and REER depreciated around 27 percent on average during 2020. Between end-2020 and September 2021, NEER depreciated 18 percent while the REER appreciated 13 percent due to CPI inflation rates in excess of depreciation over 9 months.
  - IMF’s EBA-Lite assessment for 2020:
    - CA Actual: 9.0
    - Cyclical contributions (from model) (-): 6.2
    - COVID-19 adjustor (+) 1/: 1.0
    - Adjusted CA: 3.8
    - CA Norm (from model) 2/: -6.1
    - Adjustments to the norm (+) 3/: 10.9
      - Adjustments made for the migrant share: 8.7
      - Adjustments made for the financing constraint: 2.2
    - Adjusted CA Norm: 4.8
    - CA Gap: -1.0 (percent of GDP)
      - o/w Relative policy gap: -9.2
    - Elasticity: -0.69
    - REER Gap (in percent): 1.5
  - Staff note significant uncertainty around the assessment given significant shifts in the external position and real exchange rate over the past couple of years.
  - Staff recommend: fiscal consolidation, exchange rate flexibility, reserve accumulation and monetary tightening.

- Current account outlook and reserves
  - The current account surplus declined to 5.3 percent of GDP in 2021H1 from 7.1 percent of GDP in 2020H2. Staff expect a further decline in the current account surplus in 2021H2 due to a gradual pick-up in economic activity.
  - Usable international reserves increased to cover 2.3 months of imports in September 2021 largely due to the SDR allocation of USD 175 million in August and the CBvS’s purchases of FX.
  - Projection: Suriname is expected to accumulate usable international reserves to around 175 percent of the ARA reserve adequacy metric (equivalent of around 9 months of imports) by end-2024.

- International investor position and capital flows
  - Net international investment position (IIP): Suriname’s net IIP was -119 percent of GDP in 2020 (reported as 119 percent of GDP negative position in text — presented as 119 percent of GDP).
  - Net IIP deteriorated sharply from -91 percent of GDP in 2019 to -119 percent of GDP in 2020, owing to a sharp fall in USD GDP.
  - Components: Both net direct investment and net other investment positions deteriorated sharply to -71 and -59 percent of GDP, respectively.
  - Capital flows in 2020:
    - Large outflows of other investment: USD -218 million (8 percent of GDP), mostly due to an increase in foreign assets by banks and other sectors (USD 168 million) and reductions in foreign liabilities of the CBvS and Staatsolie.
    - Direct investment: USD -243 million (8 percent of GDP).
    - Portfolio investment inflows: USD 97 million (3 percent of GDP).
  - Usable international reserves decreased sharply to USD 118 million (0.7 months of imports) in 2020; level represented 15 percent of the ARA reserve adequacy metric in 2020.
  - Usable reserves increased to USD 419 million (2.3 months of imports) in September 2021.
  - Going forward, further exchange rate flexibility and the proposed program financing would allow for a rebuilding of foreign reserves over the program period.

*Sources: Surinamese authorities; Central Bank of Suriname; Fund staff estimates and projections.*

*Italic: Source — https://www.imf.org/-/media/files/publications/cr/2021/english/1surea2021001.pdf*

### Annex II. Debt Sustainability Analysis

### Annex II. Debt Sustainability Analysis

### Overview and Key Finding
- Suriname’s public debt is unsustainable under the maximum feasible fiscal adjustment in the next 15 years.
- Public debt reached about 148 percent of GDP by end-2020 with GFNs at 18 percent of GDP in 2020.
- Authorities’ preliminary debt restructuring scenario (covering external private and official bilateral debt) plus a large fiscal adjustment suggests public debt and GFNs would be brought to sustainable levels; however, even after restructuring, public debt would remain high (above 100 percent of GDP) over the medium term and highly vulnerable to macro-fiscal shocks, notably real exchange rate depreciation, economic growth, primary balance, and higher recapitalization needs of the banking system and/or the Central Bank of Suriname (CBvS).
- Vulnerability to real depreciation is mitigated by the significant share of government revenues received in foreign currency.

### A. Public Sector DSA — Definition and Current Trend
- Definition: “public debt” refers to Suriname’s central government debt including IMF loans to the CBvS. Statistics for the broader public sector are not compiled.

Debt profile and recent developments:
- Gross public debt: about 148 percent of GDP in 2020.
- External public debt at end-2020: 94 percent of GDP (about two thirds of total public debt).
  - Composition of external public debt end-2020 (percent of GDP): Multilateral debt accounts for 30 percent of GDP (debt owed to the Inter-American Development (IADB) accounts for 24 percent of GDP); Bilateral debt is at 20 percent of GDP (debt owed to China is 17 percent of GDP; Paris Club 2 percent of GDP; India 1 percent of GDP).
  - Private debt: two international bonds (placed in 2016 and 2019) account for 31 percent of GDP; external commercial loans are 11 percent of GDP.
  - ECA-backed facilities: 10 percent of GDP (56 percent owed to China, 11 percent to India, remainder to Paris Club creditors). As of October 2021, about 89 percent of ECA-backed debt has become official with loans to India remaining current.
  - External arrears of 3 percent of GDP were accumulated to multilateral (IADB and IDB), bilateral, and private creditors as of end-2020 (arrears to multilateral creditors were cleared in 2021).
- Domestic public debt at end-2020: 53 percent of GDP.
  - CBvS holds domestic debt equivalent to 26 percent of GDP.
  - Debt to commercial banks: 14 percent of GDP.
  - Debt to non-banking institutions: 6 percent of GDP.
  - Government accumulated arrears to commercial banks and the non-bank private sector: 8 percent of GDP.
  - Around 27 percent of public domestic debt in 2020 is denominated in foreign currency.

### Macroeconomic Assumptions (specific)
- Growth:
  - Real GDP declined by 15.9 percent in 2020.
  - In 2021, staff expect growth to stay negative, at 3.5 percent.
  - Over the medium term, growth would recover gradually to 2.5‒3 percent.
  - Long term growth steady at 3 percent.
  - Overall fiscal multiplier used: 0.3.
- Inflation:
  - Inflation spiked to about 61 percent (end of period) in 2020.
  - End-of-period inflation assumed 58 percent in 2021 and 26 percent in 2022.
  - Staff expect inflation to decline to 12 percent by the end of the program period, then gradually decrease to 5 percent in the long run.
  - Long-term pass-through from exchange rate depreciation assumed about 70 percent.
- REER:
  - A depreciation of 19 percent in 2020 eliminated the REER overvaluation.
  - In 2021, REER projected to appreciate by 4 percent.
  - REER projected to gradually appreciate in the medium term and beyond, by about 0.6 percent on average per year.
- Fiscal balance:
  - Primary fiscal balance was -9.7 percent of GDP in 2020.
  - Projected primary balance in 2021: -1.3 percent of GDP.
  - Over the medium term, primary balance would improve to 4.5 percent of GDP under the program.
  - Program fiscal policies remain at their 2024 bearings until 2035.
  - After the program, primary balance projected to converge to 3.5 percent of GDP and remain at this level until 2035.
  - 2021 Year-to-September outturn data: primary balance (cash basis) about 3.7 percent of GDP.

### Public Debt under No Restructuring Scenario
- Even with significant fiscal consolidation, public debt remains unsustainable without restructuring.
- Total public debt decline to about 134 percent in 2024.
- Public debt trajectory: around 75 percent of GDP by 2035 (higher than debt target of 60 percent).
- Gross financing needs (GFNs): projected to remain elevated at 13 percent of GDP on average over 2023‒35; maximum about 24 percent in 2026 (above MAC DSA threshold of 15 percent).

### Public Debt under Restructuring Scenario — Baseline Program Objectives and Assumptions
- Program anchors:
  - Reduce public debt from 148 percent of GDP in 2020 to 60 percent of GDP by 2035.
  - Intermediate debt target: 120 percent of GDP by 2024 (end of program).
  - Reduce GFNs to an average of 9 percent and an upper limit of 12 percent over 2023-2035.
- Debt restructuring perimeter: external commercial and official bilateral debt (including arrears), total about 65 percent of GDP as of end-2020.
- Timing: Restructuring projected to happen at end-2022 with commercial and official debt service due in 2021 and 2022 becoming arrears.
- Treatment and parameters:
  - Face value of external commercial debt (including arrears—bonds and non-ECA backed loans) reduced by 40 percent at end-2022; amortization of remaining outstanding paused for 3 years.
  - ECA-backed commercial debt: no face value reduction; amortization paused for 8 years (Paris Club stock treatment assumption).
  - Official debt (including arrears): no face value reduction; amortization paused for 7 years.
  - Interest payments resume in 2023 with reduced average coupon rates:
    - 3.4 percent for non ECA-backed commercial debt and Eurobonds.
    - Around 1.1 percent for official and ECA-backed commercial debt.
  - NPV reduction resulting from scenario:
    - Around 36 percent for official bilateral creditors at a 5 percent discount rate.
    - Around 45 percent for external commercial creditors at a 5 percent discount rate.
    - 62 percent for official bilateral creditors at a 10 percent discount rate.
    - 58 percent for external commercial creditors at a 10 percent discount rate.
- CBvS debt repayment: Some program disbursement programmed to repay part of an existing loan to the CBvS over the program period.
- Financing assumptions:
  - Financing requirements reduced significantly over the medium term due to external debt restructuring (face-value reduction and coupon reduction).
  - Project financing from multilateral creditors assumed to gradually decline in the long term as Suriname switches to market financing of capital expenditure.
  - Financing from external private creditors assumed to resume gradually over the medium and long term.
  - Domestic financing expected to continue.
- External and domestic arrears treatment:
  - One quarter of stock of arrears owed to official creditors at end-2021 settled six months after restructuring agreement; another quarter settled 4.5 years after the agreement.
  - Remaining stock of arrears to official creditors and arrears to external private creditors accumulated from 2020 to 2022 projected to be addressed as part of restructuring.
  - Arrears to multilaterals fully cleared and no new arrears projected.
  - As of September 2021, government settled all local currency commercial bank arrears (SRD 58 million) and repaid some private sector arrears (about SRD 127 million) with plans to settle additional SRD 276 million of supplier arrears by end-2021.
  - Based on supplier arrears accumulation until mid-November 2021, staff project additional accumulation of SRD 606 million in supplier arrears during 2021.
  - Remaining domestic arrears would be repaid over 4 years starting from 2022.

Restructuring scenario outcomes:
- Public debt placed on steady downward trend:
  - Below 120 percent in 2024.
  - 80 percent in 2030.
  - 60 percent by 2035.
- GFNs trajectory:
  - Decline sharply from 21 percent in 2021 to around 7 percent in 2024.
  - Rise temporarily to about 12 percent by 2030 (due to debt service to the IMF and repayments of restructured claims).
  - Gradually decline to 10 percent thereafter and remain at sustainable levels over the long term.

Risk assessment under restructuring:
- All public debt and GFN indicators identified as high risk for Suriname under the restructuring scenario.
- Indicators on debt profile, market perception, foreign currency debt, and non-residents’ holding of public debt also at high risk.
- External financing requirements deemed moderate risk.
- Additional risk: domestic banking sector may be called upon to meet domestic financing needs in a stress event; banks may need to absorb 16 to 18.2 percent of bank assets of sovereign debt over 2021-26 and 2026-31 respectively, posing risks to domestic financing requirements and fragile banks.

### Stress Tests and Shock Scenarios (Box 1 summary)
- General finding: Debt path under restructuring scenario remains vulnerable to macroeconomic shocks; Suriname’s debt-to-GDP ratio exceeds the emerging market benchmark of 70 percent of GDP in all shocks considered.
- Macro shocks with largest impacts:
  - Macro-fiscal shock (combines shocks on primary balance, real GDP growth, real exchange rate, and real interest rates): debt would increase by more than 180 percent of GDP by 2026 (compared to baseline).
  - Real exchange rate shock: would push up debt by about 25 percent of GDP by 2026 (compared to baseline).
  - Larger-than-anticipated recapitalization needs of CBvS and commercial banks, and lower-than-programmed commodity revenues would increase debt by 6-10 percent of GDP by 2026.
- Specific stress scenarios and impacts:
  - Primary balance shock: baseline minus half of 10-year historical standard deviation (primary balance lower by 3.0 percent of GDP on average each year over 2022‒23) — debt would rise to 123 percent of GDP by 2024, declining to 105 percent of GDP in 2026.
  - GDP growth shock: real GDP growth reduced by 1 standard deviation for 2 consecutive years (growth lower by 6.4 percent on average each year over 2022-23) — debt increases to 139 percent in 2024; impact similar but more pronounced than primary balance shock.
  - Real interest rate shock: higher real interest rates by 500bps would not lead to large increases in debt over projection horizon since most public debt expected to be program financing.
  - Real exchange rate shock: additional 30 percent depreciation relative to baseline — debt jumps to 149 percent of GDP in 2024 before declining to about 127 percent in 2026.
  - Macro-fiscal shock (combination): pushes debt up substantially to 289 percent of GDP in 2024, remaining at this level in 2026.
  - Larger CBvS and commercial banks recapitalization shock: additional 10 percent of GDP in 2022 — debt shifts to 129 percent of GDP by 2024, declining to 112 percent by 2026.
  - Commodity-related revenue shock: commodity-related revenues reduced by 50 percent for 2 consecutive years (commodity-related revenues decline by 7 percent of GDP each year in 2022-23) — debt rises to 126 percent in 2024 and then declines to 108 percent by 2026.

### Upside Potential and Exclusions
- Recent oil reserve discoveries present considerable upside potential to economic outcomes and payment capacity.
- In line with best international practice, the DSA does not incorporate impact of future oil production because available information does not provide assurances about economic viability of the reserves.

*Source: Annex II. Debt Sustainability Analysis (Suriname).*

### 13.      External debt is estimated to be around 165 percent of GDP at end-2020, substantially

### 1surea2021001 - 13.      External debt is estimated to be around 165 percent of GDP at end-2020, substantially

### External debt overview and projections
- External debt is estimated to be around 165 percent of GDP at end-2020, substantially higher than the 100 percent of GDP at end-2019.
- The increase in the external debt ratio is largely due to a massive devaluation of the Surinamese dollar and a large output contraction in 2020.
- Total external debt is forecasted to decline to around 130 percent of GDP at end-2026.
- Public sector external debt accounts for about 50 percent of total external debt and is expected to track overall external debt over the next few years.
- Staatsolie’s external debt accounts for about 20 percent of total external debt and is expected to be paid down (on a net basis), contributing to the projected decline in external debt over the projection horizon.

### Risks, shocks, and stress-test outcomes
- A depreciation shock to the exchange rate of 30 percent would push up external debt to 159 percent of GDP in 2026, 29 percentage points higher than in the baseline.
- A permanent shock to the non-interest current account balance (baseline minus half of the 10-year historical standard deviation) would raise external debt to 148 percent of GDP by 2026.
- A shock of the same magnitude and duration on real GDP growth would result in higher external debt of 152 percent of GDP by 2026.
- Figure 6 (External Debt Sustainability: Bound Tests) highlights:
  - Baseline external debt: 129 (percent of GDP) for the projection shown.
  - Historical scenario values: 193 (percent of GDP) in one historical depiction and 161.9 in another context.
  - Shock scenario averages shown in boxes: CA shock 148; Combined shock 151; 30% depreciation shock 159; Growth shock 152.
- Stress tests covering primary balance shocks, real GDP growth shocks, real interest rate shocks, real exchange rate shocks, combined shocks, commodity-related revenue shocks, and larger central bank/private bank recapitalization shocks are presented and imply substantial upward pressure on gross nominal public debt under adverse scenarios.

### Policy recommendations and required adjustments
- Continued internal and external adjustment is critical to ensure external sustainability.
- Recommended measures include:
  - Fiscal adjustment.
  - Public external debt restructuring.
  - A shift to a flexible exchange rate under a tight monetary framework.
- These measures are expected to help restore stability, eliminate macroeconomic imbalances, improve external sustainability and reduce external financing needs.

### Public sector debt dynamics (selected quantitative highlights from the restructuring scenario and projections)
- Nominal gross public debt (percent of GDP):
  - 2019: 40.3
  - 2020: 85.2
  - 2021: 147.7
  - 2022: 128.9
  - 2026: 108.6
  - 2030: 77.9
- Public gross financing needs (percent of GDP):
  - 2019: 7.2
  - 2020: 28.6
  - 2021: 18.3
  - 2022: 21.3
  - 2026: 2.8
- Real GDP growth (in percent):
  - 2019: 1.7
  - 2020: 1.1
  - 2021: -15.9
  - 2022: -3.5
  - 2023–2026: ranges from 1.8 to 3.0 (exact annual values provided in projections)
- Inflation (GDP deflator, in percent):
  - 2019: 9.9
  - 2020: 4.4
  - 2021: 44.9
  - 2022: 52.1
  - 2023: 36.1
  - 2024: 21.3
  - 2025: 12.6
  - 2026: 8.6
- Effective interest rate (in percent, defined as interest payments divided by debt stock at end of previous year):
  - 2019: 5.6
  - 2020: 4.6
  - 2021: 5.3
  - 2022: 2.5
  - 2026: 2.3
- Cumulative change in gross public sector debt (2021–2030) under the restructuring scenario: -69.8 (percent of GDP).
- Identified debt-creating flows (selected items, percent of GDP):
  - Primary deficit (2021): 2.6; (2022): 19.0; (2023): 9.7; (2024): 1.3; cumulative 2021–2030: -30.0
  - Automatic debt dynamics (2021): 0.0; (2022): 4.6; (2023): 38.0; (2024): -21.6; cumulative 2021–2030: -68.0
  - Exchange rate depreciation contribution (2021): 2.5; (2022): 5.2; (2023): 49.4; (2024): 22.8; cumulative 2021–2030: 80.2
  - Debt Restructuring (nominal cut) cumulative: -13.9 (percent of GDP)
  - IMF BOP support cumulative: 16.1 (percent of GDP)
  - Central Bank and private bank recapitalization cumulative: 14.2 (percent of GDP)
- Composition and creditor breakdown (selected 2021–2024 figures from decomposition table, US$ mln and percent):
  - Total public debt stock end-2020: 3,268 (US$ mln)
  - External debt component: 2,086 (64 percent of total)
  - Domestic debt component: 1,182 (36 percent of total)
  - External creditors:
    - Multilateral creditors: 666 (20 percent of total)
    - Bilateral creditors: 432 (13 percent of total), of which China: 385 (12 percent of total)
    - Commercial creditors: 921 (28 percent of total), of which Eurobonds (Oppenheimer): 675 (21 percent of total)
  - Debt service (selected): External debt service figures and percent GDP columns are detailed in the decomposition table (specific annual values by creditor and instrument are provided in the table).

### External debt sustainability framework (selected time-series and ratios)
- Baseline external debt (percent of GDP):
  - 2016: 106.3
  - 2019: 99.7
  - 2020: 164.6
  - 2021: 161.9
  - 2026: 129.5
- Change in external debt (percent of GDP):
  - 2016: 56.6
  - 2019: 11.7
  - 2020: 64.9
  - 2021: -2.7
  - 2026: -11.1
- Identified external debt-creating flows (percent of GDP) for 2021–2026 show a net modest negative contribution across the projection horizon (exact annual values provided in the framework table).
- External debt-to-exports ratio (in percent):
  - 2016: 219.5
  - 2019: 173.8
  - 2020: 194.1
  - 2021: 179.3
  - 2026: 164.8
- Gross external financing needs (in billions of US dollars and percent of GDP) show elevated needs in 2020 and 2021 with projected declines toward 2026 (exact annual values provided in the framework).

*Source: IMF staff and Surinamese authorities (content unit: 1surea2021001).*

### Annex III. Capacity Development Overview

### Annex III. Capacity Development Overview

### Overview
- The proposal for a program under the EFF for Suriname contains an elaborate set of policies to strengthen government finances, public debt, the economy, and the financial sector; authorities will require technical assistance as they implement these policies.
- Capacity development efforts by the IMF, International Financial Institutions (IFIs) and bilateral donors will assist authorities in a variety of areas covering different aspects of the Fund-supported Program.
- This Annex provides an overview of the expected capacity development in some of these areas.
- The capacity development overview is presented as of July 2021.

### Identified capacity development needs
- Staff have identified capacity development needs related to:
  - fiscal policy,
  - monetary policy,
  - financial sector,
  - anti-corruption, and
  - AML/CFT implementation.
- These needs will partially be met by efforts of the various departments at the IMF and the Fund’s Caribbean regional technical assistance center (CARTAC).
- Further capacity development needs may be identified and provided as the program progresses and is subject to the ongoing needs of the authorities.
- Example: Regarding potential oil discoveries, debt officials may need training in VRIs, state-contingent debt instruments, and other non-traditional sovereign securities to prepare them for negotiations with bondholders where such securities could play a role.

### IMF capacity development program (Table 1: Suriname: IMF Capacity Development Overview as of July 2021)
- Fiscal
  - Modernizing Treasury function — 2022
  - Improving fiscal data — 2021–2022
  - Budget process and preparation — 2022
  - Cash and debt management, liquidity forecasting — 2022
  - Improving customs administration — 2022
  - Enhancing tax administration — 2022
  - State Owned Entities monitoring — 2022
  - Public Private Partnership reforms — 2023
- Public debt management
  - Debt Management Office legal mandate, processes and procedures — 2022
- Monetary policy and FX operations
  - Monetary policy communication — 2023–2024
  - Governance in Monetary Policy decision-making — 2022
  - Liquidity forecasting capabilities — 2022–2023
  - Development medium term framework for FX operations and market development — 2022–2023
- Financial sector
  - Central Bank accounting practices — 2022
  - Financial safety net legislation — 2021–2022
  - Bank supervision procedures and practices — 2022–2023
  - Financial sector stress testing — 2021–2022
  - Correspondent banking — 2022–2023
- Central Bank governance
  - Central Bank law — 2021–2022
  - Central Bank audited statements — 2022
  - Central Bank recapitalization strategy — 2022
- AML/CFT
  - Anti-money laundering legal and regulatory framework; beneficial ownership and procurement measures — 2022–2023

### Capacity development from other IFIs and bilateral donors
- Part of the necessary capacity development is expected to be provided by IFIs and bilateral donors.
- Staff have discussed capacity development needs with:
  - Inter-American Development Bank,
  - Caribbean Development Bank,
  - United Nations Office on Drugs and Crimes (UNODC),
  - Organization of American States (OAS),
  - World Bank,
  - the Dutch Ministry of Finance, and
  - the Dutch Central Bank.
- These institutions are currently providing or considering technical assistance in the areas including:
  - monetary policy,
  - taxation,
  - State Owned Enterprises,
  - design of social policies,
  - governance issues,
  - financial inclusion, and
  - anti-corruption.

*Annex III. Capacity Development Overview — Suriname (as of July 2021).*

### 7.5 percent by June 2022). The government is planning to raise the royalty rate for large-scale

### 1surea2021001 - 7.5 percent by June 2022). The government is planning to raise the royalty rate for large-scale

### Revenue measures and tax/royalty changes
- Plan to raise the royalty rate for large-scale (multinational) gold exporters from 6 to 7.5 percent by end-March 2022.
- If contractual agreements preclude the 1.5-percentage point royalty increase, the government will seek technical assistance from the Fund and other development partners to develop feasible options for raising applicable taxes and fees on large-scale gold exporters so that additional revenue equivalent to that from a 1.5-percentage point increase in the royalty rate can be achieved by March 2022.
- Efforts to improve tax compliance and revenue collection, especially in the mining sector.
  - A multi-departmental government task force commissioned in November to review revenue collection from small-scale gold exporters; task force to publish recommendations by April 2022.
- A one-time solidarity tax of 10 percent on household and business income in excess of SRD 150,000 in the 2021 calendar year.
- Creation of a large taxpayer unit to increase taxpayer compliance by end-June 2022.
- Comprehensive review of work processes and the legal framework for tax administration processes; a time-bound plan to implement identified improvement measures will be published by end-September 2022.
- Improvements in customs administration risk management, post-clearance audit, and monitoring and verification of duty concessions, waivers, and exemptions; a time-bound improvement plan to be published by end-September 2022.

### Public wage bill and employment rationalization
- Limiting the nominal increase in the government’s total wage and benefits bill in 2021 to 25 percent.
- Commitment to further lower the wage bill to below 7 percent of GDP by 2024.
- Reduction to be achieved through workforce reductions and a cap on the nominal growth of an individual’s compensation at below the projected inflation rate.
- Analysis underway on the existing payroll structure (of about 53,000 workers) to identify public functions to be streamlined through non-renewal of temporary contracts, elimination of ghost workers, and rationalizing employment.
- Publication of an employment rationalization strategy in April 2022 including clear quantitative targets.

### Electricity sector reforms and tariffs (Energie Bedrijven Suriname - EBS)
- Increase in the average electricity tariff to achieve full cost recovery by end-2024 through per-unit tariff rate hikes, adjustments in the base charge, and better targeting of lump-sum consumer subsidies.
- Aim: fully eliminate direct and indirect subsidies to EBS for electricity generation, transmission, and distribution; ensure long-term financial viability, solvency, and cost efficiency of EBS.
- Tariff adjustments already implemented and planned:
  - Increased the average tariff by 103 percent in July.
  - Further raise by 25 percent in May 2022.
- Government will draw up a financial and operational restructuring plan for EBS by September 2022 and implement the plan by end-2023.
- Reform administration of the electricity sector and fully equip the Suriname Energy Authority to serve as an independent and transparent regulatory agency that implements quarterly tariff adjustments aligned with energy generation costs (starting in January 2023).
- A low “social” tariff will be retained for economically vulnerable customers, determined by a means test of income and assets.
  - Recipients who qualify for means-tested cash transfer programs administered by the Ministry of Social Affairs will automatically start receiving the social tariff in their EBS billing accounts by end-2022.

### Subsidies, transfers, and public agency budget discipline
- Transfers and subsidies, excluding electricity subsidies, are about 4 percent of GDP.
- Commitment to bring these subsidies down to around 3 percent of GDP by 2024 by improving spending efficiency of public agencies and better targeting transfer and subsidy programs.
- Improving budget discipline of public agencies that rely on government transfers by reducing untargeted and poorly targeted subsidies.

### Strengthening the institutional framework for fiscal policy
- Improve the existing medium-term fiscal framework, with technical assistance from international partners, by end-December 2022 to guide annual budgeting.
- Publish a medium-term fiscal strategy by December 2022 establishing clear expenditure and debt targets consistent with the program; define a binding spending envelope for ministries and agencies and the mechanism to ensure compliance; plan to publish the strategy on the MoFP website after approval.
- Resume regular reporting and publication of central government outturn data on the MoFP’s website, with a lag of no more than six weeks after the closing of a month (starting in February 2022).
  - Government has published January 2021 to August 2021 monthly central government outturn data and will publish September and October outturn by end-2021.
- Publish annually audited central government financial statements; begin by publishing audited annual central government financial statements for FY2017-FY2021 on the MoFP website by end-June 2022.
- Improve accountability of SOEs:
  - Publish the audited financial reports for FY2017-FY2021 of the ten largest state-owned enterprises (by asset size) by December 2022, including identifying main fiscal risks and mitigation steps.
- Reform and modernize the Treasury function in the MoFP and adopt international best practices of cash and liquidity management; implement recommendations to streamline all treasury functions into a Treasury Single Account (TSA).
  - Publish a time-bound improvement plan by end-January 2022.
- Develop terms of reference, with technical assistance from international partners, by end-January 2022 to commence an audit of all outstanding supplier arrears by end-April 2022.
  - Conduct a comprehensive review of expenditure control systems and draw up a time-bound reform plan based on findings.
- Expand the legal mandate of the debt management office (SDMO) to include the whole nonfinancial public sector, including all suppliers’ arrears, guarantees, and contingent liabilities by end-June 2022.
- Resume monthly publication of central government obligations on the SDMO’s website starting in January 2022, based on a data template agreed with IMF staff and with a lag of no more than four weeks after the closing of a month; SDMO will publish monthly central government debt information from January to December 2021, based on a data template agreed with IMF staff, by end-January 2022.
- Commence monthly publication on the SDMO’s website, starting in December 2022, that provides data on the full scope of public sector obligations.
- Create a public investment and Public-Private Partnership (PPP) unit within the MoFP by end-June 2023 to:
  - Systematically undertake full cost-benefit reviews of all ongoing investment projects.
  - Fully cost and provide feasibility studies for all new public investments and PPP projects.
  - Introduce a gateway process for PPPs, establish limits on PPP stocks and flows, ensure proper monitoring of guarantees associated with PPPs, and publish beneficial ownership information for companies that receive public contracts for capital projects.

### Public debt restructuring and sustainability targets
- Government committed to putting public debt onto a sustainable path and has approached both official and commercial creditors to initiate orderly restructuring discussions.
  - Appointed financial and legal advisors in September 2020 to negotiate the restructuring of privately-held external debt.
- Commitments and targets:
  - Reduce public debt to below 120 percent of GDP by 2024.
  - Reduce public debt further to 60 percent of GDP by 2035.
  - Lower gross financing needs to an average of 9 percent of GDP in 2023-35 (and no higher than 12 percent of GDP in any one year).
  - Program ensures the fiscal position is fully financed from 2022-2024.
- Engagement with creditors:
  - Followed best practices in sovereign debt restructuring, including inter-creditor equity and comparability of treatment of all official bilateral creditors.
  - Paris Club creditors have provided specific and credible assurances that they will provide debt relief in line with program parameters.
  - China and India have provided assurances (China’s consent to Fund financing notwithstanding arrears to them; India has requested more time to consider consenting).
  - Government will refrain from making payments on its other official debt until a debt treatment can be agreed that ensures comparability of treatment with other official bilateral creditors.
- Other public debt actions:
  - Government will repay some of the legacy debt owed to CBvS by June 2024.
  - Government will not provide guarantees to debt contracted by other parties during the program, nor contract new debt collateralized by natural resource revenues or allow the public sector to do so on behalf of the central government.
  - CBvS will discontinue issuance of new FX-linked or FX-denominated debt.
  - Government has provided Fund staff with contracts for all public sector borrowing—including that of Staatsolie—from official and private creditors.

### Social safety net and social spending
- Poverty context:
  - Estimated 26 percent of the population living in poverty as of 2017 (based on the 2017 Suriname Survey of Living Conditions).
  - Economic crisis likely increased hardship and inequalities, but timely and reliable data on poverty extent not available.
- Social protection measures:
  - In July, expanded existing targeted cash transfer system to compensate economically vulnerable citizens for increases in cost of living and subsidy reductions.
  - Ongoing administrative and digitalization efforts to identify eligible recipients not currently receiving benefits and to eliminate duplication.
  - Intend to expand eligibility of existing food assistance programs during 2022.
  - Commitment to maintain social spending on major cash transfer programs above 1.9 percent of GDP per year.
  - Intend to review income thresholds of means-tested social assistance programs and broader design features to improve efficiency and quality of social spending.

### Monetary policy framework and inflation objectives
- Adoption of a new monetary policy framework to bring down inflation and restore macroeconomic stability.
  - CBvS announced a new reserve money targeting regime with the intention of setting monthly growth in reserve money at a level well below expected growth in nominal GDP.
  - Reserve money targeting system aims to lower inflation to 12 percent by end-2024.
  - Established prudent monthly targets for Net International Reserves and Net Domestic Assets to be monitored during the Fund-supported program.
- Liquidity management and interest rate policy:
  - CBvS started draining liquidity through weekly issuance of certificates of deposit and/or term deposits using fixed quantity/variable rate auctions.
  - Interest rates increased from 12 percent in July to 68 percent in early December (may need to rise further).
  - Commitment to allow interest rates to move freely, in line with market conditions and the monetary aggregates focus.
  - Introduced partial reserve averaging for local currency reserve requirements with a two-weeks reserve averaging period.
  - CBvS will remunerate local currency reserve requirements by mid-2022, depending on interest rate mechanism functioning and impact on CBvS financial position; remuneration impact to be addressed by planned recapitalization of the CBvS.

### Central bank facilities, liquidity tools, and FX market arrangements
- CBvS standing lending facility and ELA:
  - CBvS has put in place a standing lending facility; banks have unrestricted access but recurrent and sizeable users may face supervisory investigations and actions.
  - Facility priced on the basis of the weighted average price of open-market operations plus a modest spread.
  - Any injection of liquidity through the standing lending facility will be fully sterilized through issuance of CBvS certificates of deposits and/or term deposits to keep reserve money consistent with reserve money targets.
  - CBvS is developing an emergency liquidity assistance (ELA) framework to provide emergency liquidity to banks, intended to be in place by April 2022.
- Liquidity monitoring and data exchange:
  - CBvS has stepped up liquidity monitoring and forecasting capabilities.
  - CBvS and MoFP formalized a regular data exchange arrangement codified in a Memorandum of Understanding signed by the Governor of the CBvS and the Minister of Finance to improve CBvS forecasting of government expenditure and revenue inflows.
- Foreign exchange market unification and exchange rate policy:
  - CBvS unified foreign exchange market rates and committed to a fully flexible exchange rate.
  - Official exchange rate devalued in September 2020 and in March and May 2021; currency fully floated in June 2021, unifying official and parallel rates.
  - Cumulative depreciation about 180 percent over the past year.
  - CBvS ended practice of mandating a CBvS determined exchange rate; banks and cambios can set rates without restrictions.
  - On June 7, CBvS began publishing (three times a day) the official exchange rate fixing based on a weighted average rate from actual executed trades in the FX market.
  - CBvS intends to establish an electronic trading platform for interbank foreign exchange trading open to commercial banks and cambios by June 2022.
- FX intervention rules and auctions:
  - CBvS will refrain from FX interventions except in cases of disorderly market conditions.
  - All FX sales and purchases by CBvS will be undertaken with banks and cambios through transparent fixed allotment/variable price auctions by end-December 2021.
  - Over-the-counter sales or purchases to/from state-owned enterprises or private sector entities have been discontinued.
  - FX surrender regulations will be amended to redirect FX inflows from exporters to the interbank market (instead of to the CBvS) and to remove FX surrender requirements for banks and cambios.
  - Government will sell all net FX receipts (including from IFI budget support) to the CBvS only, at the prevailing market exchange rate, and receive a counterpart deposit in domestic currency.
  - CBvS will fully repay the long-term loan to commercial banks in line with the agreed schedule (USD 160 million loan with maturity of eight years).
  - Foreign currency sales by the CBvS will be permitted only if the SRD-USD exchange rate records an intraday depreciation in excess of 2 percent; in such circumstances CBvS may sell up to USD 2 million in the course of the day via competitive auctions.
  - Gross FX sales by the CBvS are capped at USD 20 million per quarter.
  - CBvS does not foresee purchasing FX in the market in the foreseeable future since reserves will be rebuilt from government sales of FX budget support; if private FX inflows are larger than expected, CBvS may intervene to purchase FX via transparent, pre-announced fixed allotment/variable price auctions and sterilize these purchases.

*Italic: Content derived from the supplied IMF document excerpt.*

### 17.      There are significant vulnerabilities in the banking system. Although the reported

### There are significant vulnerabilities in the banking system

### Banking-sector vulnerabilities and near-term outlook
- Combined capital adequacy ratio per September 2021: 12.4 percent.
- Non-performing loans (NPLs) as of September 2021:
  - 12.4 percent of gross total lending.
  - 8.7 percent of net total lending.
- Foreign currency loans make up around 55.5 percent of total lending and represent a particular vulnerability, given that loans prior to 2016 were often extended to individuals and businesses without a natural FX hedge or with an insufficient hedge.
- Assessment: NPLs are likely to continue rising in the coming months as the impact of the economic contraction crystalizes.

### Asset quality review and bank restructuring roadmap
- CBvS action: Hired an internationally reputable specialist firm to undertake an asset quality review for all banks based on Terms of Reference agreed with Fund staff.
- Timeline:
  - Asset quality review for the largest two banks: to be completed by September 2022.
  - Further asset quality reviews covering the remainder of the banking system: to be completed by December 2022.
  - Roadmap for financial sector restructuring and governance reform of banks: to be finalized by May 2022.
- Roadmap features:
  - Scenarios developed by the CBvS for triaging banks depending on asset quality review outcomes.
  - Reviewed banks required to submit time-bound plans addressing breaches of prudential requirements and ensuring viability.
  - Plans to include, where appropriate, business, recapitalization, and restructuring plans with implementation milestones.
  - CBvS to review the credibility of plans and, if credible, oversee implementation.
  - Government (as shareholder) to catalyze governance reforms for publicly owned banks to be run at arm’s length and on a commercial basis.
  - CBvS to intensify supervision and impose prompt corrective actions for banks experiencing difficulties.

### Strengthening resolution framework and crisis-management capacity
- Credit Institutions Resolution Act:
  - Government to submit to the State Council by January 2022.
  - Target adoption by the National Assembly by September 2022.
  - Expected effect: increase CBvS’ powers and tools for early intervention, recovery, and resolution of financial institutions; law will closely follow international best practices and give CBvS powers to directly intervene in a bank.
- Bank Resolution Unit:
  - New unit within CBvS to be operationalized by February 2022.
  - Will include appropriate governance arrangements, staffing, funding, and clear internal guidelines for crisis management and enforcement actions.

### Enhancing supervision and institutional arrangements
- Financial Stability Committee:
  - To be operationalized by January 2022.
  - Composition: representatives from the MoFP and the CBvS.
  - Mandate: diagnose risks to financial stability and develop concrete plans to manage and mitigate those risks.
- Banking and Credit Supervision Act (revised):
  - To be submitted to the State Council by January 2022.
  - Target adoption by the National Assembly by July 2022.
  - Revision will facilitate risk-based supervision by providing CBvS powers to assess banks’ business strategies, governance, risk management (including provisioning policies), capital planning, budget forecasting, valuation of collateral, and profit and loss projections.
- CBvS supervisory stance: Increased intensity of supervision of all banks given heightened vulnerabilities.

### Contingency measures and exchange restrictions
- Commercial banks intend to keep existing limits on cash withdrawal of both foreign currency and domestic deposits for the foreseeable future (electronic payments within the system are fully permitted).
- CBvS preparedness: In consultation with Fund staff, CBvS is prepared to introduce further measures to stabilize pressures on the balance of payments.
- Program procedure: If such measures give rise to restrictions on current transactions, the authorities will request a waiver for non-observance of the performance criteria on exchange restriction/MCPs and work with Fund staff to adapt the program and provide a clear roadmap toward gradual elimination of such exchange restrictions/MCPs.

### Broader financial-sector modernization commitments
- Legal and supervisory reforms in progress or planned:
  - Improve supervision of the insurance sector and of pension and provident funds.
  - Establish credit reporting and deposit insurance.
  - Improve electronic transactions.
  - Draft laws in these areas are under preparation.
- Coordination: Authorities will prepare a comprehensive plan to coordinate and integrate various reform initiatives, supported by technical assistance from the IMF and other parties.
- AML/CFT strengthening: Ongoing efforts to strengthen the AML/CFT framework will support the financial sector.

### CBvS transparency, governance, and recapitalization
- Special audits: Conducted of program monetary data to verify opening stocks used as performance criteria; these audits will be conducted at each test date.
- Internal audit: CBvS contracted a consultant to co-source the internal audit function and commence internal auditing.
- Publication of audited financial statements:
  - FY 2016-2018 audited financial statements: planned publication on CBvS external website by end-December 2021.
  - FY 2019 statements: planned publication by February 2022.
  - Audited FY 2020 and 2021 financial statements: to be prepared in line with International Financial Reporting Standards and published by end-June 2022.
- Governance reforms:
  - New MoU signed between Governor of CBvS and Minister of Finance to preclude all new, direct or indirect, gross CBvS financing of the government.
  - CBvS Board adopted a Governance Reform Implementation Plan covering legal amendments; strengthening collegiality and Handbook of Sound Governance; establishing compliance, risk management, and internal audit; and introducing reporting mechanisms to the Board and committees. Roadmap published in June; implementation monitored by the Supervisory Board; first quarterly review conducted in September with report and updated Plan published on CBvS website.
- Legal amendments: National Assembly to pass amendments to the CBvS Act by end-January 2022 to permanently prohibit monetary financing of the government and improve governance by:
  - Clarifying and strengthening the mandate of the CBvS.
  - Bringing CBvS institutional, financial, and personal autonomy into line with international best practice.
  - Increasing transparency, accountability, and oversight.
  - Defining clear requirements on accounting, profit distribution, reserves, and eventual recapitalization of the CBvS.
- Recapitalization plan:
  - MoFP and CBvS to develop jointly a recapitalization plan including a clear target level of capital, a trigger point for recapitalization, and a binding time frame.
  - Plan to be completed by end-September 2022 following the FY 2020 and FY 2021 audits of CBvS financial statements.

### Anti-corruption, procurement transparency, and AML/CFT reforms
- Anti-corruption framework:
  - Suriname is a signatory to the Inter-American Convention against Corruption but has not yet ratified the United Nations Convention Against Corruption (‘UNCAC’).
  - Anti-Corruption Act enacted in 2017, but implementation delays have occurred.
  - Government has received National Assembly approval of the ratification of UNCAC, with a view to finalizing ratification by end-January 2022.
  - Government intends to amend the Anti-Corruption Act by June 2022 to ensure criminalization of all corrupt acts in line with UNCAC requirements.
  - Amendments will allow routine verification of income and asset declarations for high-level and high-risk public officials, to be provided to the public with proportionate sanctions for non-compliance.
  - Anti-Corruption Commission to be operationalized by March 2022 (as required by the 2017 Act).
- Procurement transparency:
  - New procurement law to be enacted by end-June 2022 to centralize publication of all tenders and contract awards and to expand the Integrated Financial Management Information System to cover procurement, audits, and controls.
  - By end-August 2022, government to mandate publication, on a government website, of all public procurement contracts; names of awarded entities and their beneficial owner(s); names of public officials awarding contracts; and ex-post validation of delivery of contracted services.
- AML/CFT improvements:
  - Suriname’s AML/CFT framework currently being assessed by CFATF.
  - National Risk Assessment (NRA) completed in 2019 with IDB technical support; NRA identified technical compliance deficiencies and effective implementation challenges.
  - Government will address findings and recommendations of the NRA report.
  - Government to amend AML/CFT legislation (and other relevant laws and regulations) by end-August 2022 to align with FATF international AML/CFT standards, including treatment of politically exposed persons and beneficial ownership requirements.
- Beneficial ownership transparency:
  - Authorities will ensure requirements for transparency of beneficial ownership are in line with FATF standards, including consideration of:
    - A centralized system for collecting beneficial ownership information.
    - Requiring all legal entities to submit timely updates of beneficial owners.
    - Measures for verification and proportionate, dissuasive sanctions for non-compliance.
- Extractive sector governance:
  - Suriname joined EITI in 2017 and has published reports for fiscal years 2016 and 2017, with an upcoming report for fiscal year 2018 scheduled to be published shortly.
  - Government intends to address EITI recommendations including reforming the mining law to reduce discretion in investor incentives and strengthen mining title framework, and legally compel extractive companies to disclose beneficial owners.

### Statistics and program monitoring
- Data quality and timeliness issues identified:
  - Long lag in publication of annual GDP and absence of quarterly GDP statistics.
  - Need to improve quality of Consumer Price Index, fiscal sector statistics, and public debt data, and to ensure consistency with other data sources (monetary accounts and fiscal flows in the balance of payments).
- Commitments:
  - Accurate reporting of all domestic arrears on a monthly basis.
  - Work towards broadening institutional coverage of fiscal statistics to the public sector to better assess fiscal risks.
  - IMF technical assistance to support improvements in quality and dissemination of economic data.
- Program monitoring:
  - Economic plan to be monitored through prior actions, reviews, quantitative and continuous performance criteria, indicative targets, and structural benchmarks.
  - Quantitative performance criteria established for end-December 2021, and end-March, end-June, end-September, and end-December 2022.
  - Indicative monthly targets established for end-January, end-February, end-April, end-May, end-July, end-August, end-October, and end-November 2022.
  - Reviews scheduled on a quarterly basis beginning on or after March 15, 2022.

*Source: IMF program document excerpt.*

### 1. Social spending of central government (floor) 2/5491,0703717421,1121,483

### 1. Social spending of central government (floor) 2/5491,0703717421,1121,483

### Memorandum items — reserves, monetary and program exchange rate
- Reserve money: 12,817 18,294 18,629 19,061 19,597 20,248 20,714 21,136 21,510 21,888 22,213 22,540 22,871 23,191
- Reserve money (local currency portion only): 7,342 9,188 9,341 9,494 9,647 9,801 9,954 10,107 10,260 10,413 10,566 10,718 10,871 11,024
- Reserve money (constant exchange rates): 12,817 14,838 14,991 15,144 15,297 15,450 15,604 15,757 15,910 16,063 16,215 16,368 16,521 16,674
- NFA (constant exchange rates): 4,039 6,403 6,563 7,844 8,000 8,056 8,110 8,585 8,617 8,644 9,097 9,127 9,150 9,572
- Gross international reserves (millions of U.S. dollar): 585 968 979 1,071 1,139 1,143 1,147 1,238 1,240 1,242 1,331 1,333 1,335 1,421
- Usable international reserves (millions of U.S. dollar): 5/ 118 501 513 604 673 677 681 771 774 776 865 867 868 955
- Program exchange rate: 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018

Source: Authorities and IMF staff calculations and projections.

### Prior Actions and Structural Benchmarks under an EFF — summary of measures, status, and objectives
- Prior Actions (Fiscal)
  - Enactment by the National Assembly of (i) a 2021 budget that is consistent with the parameters of the program, and (ii) key fiscal measures (i.e. raising the sales tax to 12 percent; putting in place a VAT in mid-2022; replacing the sales tax with the VAT starting July 1, 2022; raising the royalty rate on small gold miners to 7.5 percent; limiting a nominal wage and benefit increase in 2021; and a timeline to phase out electricity subsidies). — Met. Objective: Ensure fiscal adjustment in line with program parameters.
- Prior Actions (Exchange rate/monetary/safeguards)
  - The CBvS to unify the official and parallel exchange rates and ensure that the official exchange rate is calculated based on the rates used in unrestricted FX market transactions. — Met. Objective: Eliminate distortion and quasi-fiscal costs.
  - Conclude a MoU between the CBvS and Ministry of Finance to end new, gross central bank financing of the government. — Met. Objective: Stop further monetary financing and protect the CBvS’s financial autonomy.
  - Conduct special audits of program monetary data (net international reserves and net domestic assets of the CBvS) to verify the opening stocks of data used as performance criteria. — Met. Objective: Reduce the risk of misreporting.
  - The CBvS to co-source the internal audit function to a qualified expert firm based on Terms of Reference prepared in consultation with IMF staff (to commence internal auditing and advance its development). — Met. Objective: Ensure the adequacy of controls in CBvS operations.
  - The CBvS Board to adopt a timebound Governance Reform Implementation Plan, in consultation with the IMF, to strengthen the governance and control environment. — Met. Objective: Reduce vulnerabilities to corruption and promote investment and growth.
- Prior Actions (Financial)
  - The CBvS to engage an internationally reputable specialist firm and develop the terms of reference to undertake an asset quality review for all banks. — Met. Objective: Diagnose the largest banks and potential recap needs.
- Prior Actions (Governance)
  - The government to request the National Assembly's approval of the ratification of the United Nations Convention Against Corruption. — Met. Objective: Reduce vulnerabilities to corruption and promote investment and growth.

- Structural benchmarks (Exchange rate/monetary/safeguards)
  - Establish competitive FX auctions for the CBvS to undertake buying/selling of FX during periods of disorderly market conditions (defined as when the intraday change in the exchange rate versus the U.S. dollar is more than 2 percent) under the agreed rule. — December 2021. Objective: Ensure the CBvS has a mechanism to intervene in the FX market.
  - Publish on the CBvS's external website the FY 2016 - 2018 audited financial statements. — December 2021. Objective: Strengthen accountability and transparency, and reduce risk of misreporting.
  - National Assembly to pass amendments that are in line with IMF staff recommendations, to inter alia, (i) clarify and strengthen the mandate; (ii) bring CBvS’ institutional, financial, and personal autonomy into line with international best practice; (iii) increase transparency, accountability and oversight; (iv) define clear requirements on accounting, profit distribution, reserves and eventual recapitalization of the CBvS and (v) introduce strict limits on monetary financing (with transitional rules). — January 2022. Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency.
  - Establish an electronic trading platform for inter-bank/cambio FX trading. — June 2022. Objective: Create a consolidated FX market.
  - Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements. — June 2022. Objective: Strengthen accountability and transparency, and reduce risk of misreporting.
  - Develop a time-bound plan for the CBvS’s recapitalization agreed between the CBvS and the government. — September 2022. Objective: Protect the CBvS’s financial autonomy.

- Structural benchmarks (Financial/crisis preparedness)
  - Submit to the State Council the Credit Institutions Resolution Act to increase CBvS’ powers and tools for early intervention, recovery, and resolution of financial institutions. — January 2022. Objective: Strengthen the CBvS's role in crisis management.
  - Submit the revised Banking and Credit Supervision Act to the State Council to facilitate risk-based supervision through expanding CBvS' assessment powers to determine bank compliance with regulatory requirements. — January 2022. Objective: Solidify oversight over the financial sector.
  - Operationalize the Financial Stability Committee, composed of representatives from the MoF and CBvS. — January 2022. Objective: Improve coordination on financial sector issues.
  - Operationalize a Bank Resolution Unit within the CBvS with appropriate governance arrangements, staffing, funding and clear internal guidelines on how the unit would undertake crisis management and enforcement actions. — February 2022. Objective: Strengthen the CBvS's role in crisis management.
  - Finalize the roadmap for financial sector restructuring and governance reform of banks. — May 2022. Objective: Improve strength of the financial sector.
  - Undertake full asset quality review for the two largest (by assets size) banks (drawing on the expertise of an internationally reputable specialist firm). — September 2022. Objective: Diagnose the largest banks and potential recapitalization needs.
  - Undertake full asset quality review for the remaining banks (drawing on the expertise of an internationally reputable specialist firm). — December 2022. Objective: Diagnose the financial sector and potential recapitalization needs.

- Structural benchmarks (Fiscal)
  - Publish a time-bound plan to implement recommendations from technical assistance programs provided by the IMF to streamline treasury functions through the Treasury Single Account (TSA). — January 2022. Objective: Improve governance and increase transparency.
  - Develop a term of reference, with technical assistance from international partners, for hiring specialists to audit outstanding supplier arrears. — January 2022. Objective: Improve governance and increase transparency; improve fiscal data reporting.
  - Raise the royalty on multinational gold mining corporations to 7.5 percent (or raise applicable taxes and fees to a level that would yield additional revenue equivalent to raising the royalty rate to 7.5 percent). — March 2022. Objective: Ensure fiscal adjustment in line with program parameters.
  - Passage of laws needed to implement the VAT by the National Assembly. — March 2022. Objective: Ensure fiscal adjustment in line with program parameters.
  - Commence an audit on outstanding supplier arrears. — April 2022. Objective: Improve governance and increase transparency; improve fiscal data reporting.
  - Pass laws and issue relevant decrees if needed to expand the legal mandate of the debt management office (SDMO) to include the whole nonfinancial public sector, including all suppliers’ arrears, guarantees, and contingent liabilities. — June 2022. Objective: Improve debt data reporting.
  - Create a large taxpayer unit to increase taxpayer compliance. — June 2022. Objective: Improve tax administration.
  - Publish the audited financial reports for FY2017-FY2021 of the 10 largest state-owned enterprises by total assets and a report that identifies and quantifies the principal fiscal risks created by these enterprises. — December 2022. Objective: Contain fiscal risks.

- Structural benchmarks (Governance — anti-corruption)
  - Ratify the United Nations Convention Against Corruption (UNCAC). — January 2022. Objective: Reduce vulnerabilities to corruption and promote investment and growth.
  - Operationalize the Anti-Corruption Commission (as required by the 2017 Anti-Corruption Act) and adopt an operational framework for its implementation, in line with the UNCAC. — March 2022. Objective: Reduce vulnerabilities to corruption and promote investment and growth.
  - Issue an Implementation Act to amend the Anti-Corruption legal framework to ensure criminalization of all corruption acts (in line the with the requirements of the UNCAC) and to strengthen the income and asset declaration provisions in the Anti-Corruption law to support routine verification of income and asset declarations for high-level and high-risk public officials, provide this information to the public and establish proportionate sanctions for non-compliance. — June 2022. Objective: Reduce vulnerabilities to corruption and promote investment and growth.

- Structural benchmarks (Governance — procurement)
  - Enact the new procurement law to centralize the publication of all tenders and contract awards and to expand the Integrated Financial Management Information System to cover procurement, audits, and controls. — June 2022. Objective: Strengthen procurement efficiency.
  - Mandate the publication, on a government website, of all public procurement contracts, the names of the awarded entities and their beneficial owner(s), the names of the public officials awarding the contracts, and an ex-post validation of delivery of the contracted services. — August 2022. Objective: Strengthen procurement efficiency.

- Structural benchmarks (Governance — AML/CFT)
  - Amend the AML/CFT law legislation and other relevant laws and regulations to bring them into line with the FATF international AML/CFT standards (including with respect to the treatment of politically-exposed persons and beneficial ownership requirements). — August 2022. Objective: Mitigate the adverse effects of criminal economic activity and promote integrity in financial markets.

### Attachment II. Technical Memorandum of Understanding — key definitions and procedures
- Purpose: Sets out understanding between Surinamese authorities and IMF staff regarding definition of quantitative performance criteria (QPC) and indicative targets (IT), QPC and IT adjusters, and data reporting requirements for the Arrangement under the Extended Fund Facility (EFF) as described in the LOI dated December 8, 2021 and MEFP.
- Program accounting exchange rates:
  - U.S. dollar denominated components of the CBvS balance sheet valued at official exchange rate of 14.0180 (as of December 31, 2020).
  - Cross-rates as of December 31, 2020: Euro = 1.2281 U.S. dollars; Pound Sterling = 1.3600 U.S. dollars; Chinese Yuan = 0.1532 U.S. dollars; SDR = 1.4403 U.S. dollars.
  - Official gold holdings valued at 1,892.0 U.S. dollars per fine ounce.
- Definition of central government (CG): Institutions and government units currently covered under the state budget; newly formed public sector entities to be examined against Government Finance Statistics Manual 2014.
- Definition of State-Owned Enterprises (SOE): Corporations i) the CG is a shareholder or ii) controlled by the CG directly or indirectly.
- Definition of debt: Residency criterion; includes loans, suppliers’ credits, leases (PV at inception excluding operation/repair/maintenance payments); arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt.
- Contracting of debt: Considered contracted when all conditions for entrance into effect met, including National Assembly approval; credit lines with no predetermined disbursement schedules or multiple disbursements also considered contracting of debt.
- Fiscal year: Calendar year, January 1 to December 31.

### Quantitative Performance Criteria: Central Government Primary Fiscal Balance (cash basis) and related definitions
- Primary fiscal balance (cash basis) of the CG: Calculated as the cumulative CG interest payments minus total net borrowing requirements (NBR) from the beginning of the year.
- Net borrowing requirements (NBR) components (measured at official current exchange rates):
  - The change in net CBvS credit to the CG, including changes in the government deposit position at the CBvS;
  - The change in net credit from depository corporations (including changes in CG deposits and net issuance of treasury bills, lending, and other CG securities held by commercial banks);
  - The change in net non-bank credit to the CG (net issuance of Treasury bills and other CG securities to non-banks, and other CG claims and debts vis-à-vis nonbank institutions);
  - New external loan disbursements net of external loan amortization;
  - Net repayments of external arrears and gross repayments of domestic arrears;
  - Privatization receipts received.
- CG Interest payments: Defined on a cash basis as interest paid on CG domestic and external debt obligations.
- Mineral revenue: Government’s tax and non-tax proceeds from state-oil company Staatsolie Suriname and from gold companies, including corporate tax, wage tax (including old age fund contributions), dividend tax, indirect taxes, dividends, royalties and others; royalties from small scale gold mining included.

### Table 1 — Total Mineral Revenues of CG (Millions of SRD; cumulative flows from beginning of fiscal year)
- End-December 2021: 6308
- End-January 2022: 819
- End-February 2022: 1638
- End-March 2022: 2458
- End-April 2022: 3277
- End-May 2022: 4096
- End-June 2022: 4915
- End-July 2022: 5734
- End-August 2022: 6554
- End-September 2022: 7373
- End-October 2022: 8192
- End-November 2022: 9011
- End-December 2022: 9830

### Reporting requirements and FX financing tables (cumulative flows from beginning of fiscal year)
- Fiscal data reporting lag: No more than six weeks after the end of the month.
- External loans from IFIs for budget financing (In millions of US$)
  - End-December 2021: 0
  - End-January 2022: 0
  - End-February 2022: 80
  - End-March 2022: 80
  - End-April 2022: 80
  - End-May 2022: 80
  - End-June 2022: 110
  - End-July 2022: 110
  - End-August 2022: 110
  - End-September 2022: 140
  - End-October 2022: 140
  - End-November 2022: 140
  - End-December 2022: 168
  - Note: 1/ Excluding IMF disbursements.
- External debt from bilateral and private creditors for budget financing: all periods reported as 0.
  - Note: 2/ Including international capital markets.
- External loans for project financing (In millions of US$)
  - End-December 2021: 39
  - End-January 2022: 3
  - End-February 2022: 6
  - End-March 2022: 9
  - End-April 2022: 12
  - End-May 2022: 15
  - End-June 2022: 18
  - End-July 2022: 28
  - End-August 2022: 30
  - End-September 2022: 33
  - End-October 2022: 36
  - End-November 2022: 39
  - End-December 2022: 42

*Source: IMF staff.*

### 14.      Adjusters: The floor on the cumulative primary cash balance of the CG will be adjusted:

### 14.      Adjusters: The floor on the cumulative primary cash balance of the CG will be adjusted:

### A. Adjustments to the floor on cumulative primary cash balance
- The floor will be adjusted:
  - downward (upward) to the full extent that cumulative project loans, relative to December 31, 2020, are more (less) than project loans given in Table 2.
  - upward to the extent of any rise in mineral revenue above the cumulative baseline projections, relative to December 31, 2020, given in Table 1.

### B. New Natural Resource Revenue-Collateralized Debt Contracted by or on Behalf of the Central Government and/or State-Owned Enterprises (SOE) (Continuous Ceiling)
- Definition:
  - The ceiling on new natural resource revenue-collateralized debt (domestic and external) contracted on a gross basis by or on behalf of the CG and/or SOEs will be a continuous performance criterion throughout the program period.
  - Natural resource revenue-collateralized debt is external or domestic debt which involves creating a security interest, charge or lien over any natural resource, natural resource receivables, or the proceeds from the sale or lease of natural resources.
  - The use of a collection account (e.g., for natural resources receivables or the proceeds of the sale of natural resources) where no charge or lien is created over such account is excluded from this definition.
  - External debt contracted due to external debt restructuring, to be agreed between the authorities and its creditors, is excluded from this definition.
  - The ceiling also applies to prefinancing arrangements (where debt is contracted against future sales of natural resources).
  - The official exchange rate will apply to all non-SRD denominated debt.
- Reporting:
  - Data will be provided to the IMF on a continuous basis, including any new debt contracts entered into by the CG and/or SOEs to verify they do not include a security interest, charge, or lien over any natural resource.

### C. New Central Government Guaranteed Debt (Continuous Ceiling)
- Definition:
  - The ceiling on new CG guaranteed debt (domestic and external) will apply to the amount of guarantees issued by the CG for debt contracted by any agency or entity outside the CG.
  - For program purposes, the guarantee of a debt arises from any explicit legal or contractual obligation of CG to service a debt owed by a debtor outside the CG (involving payments in cash or in kind).
  - The official exchange rate will apply to all non-SRD denominated debt.
- Reporting:
  - Data will be provided to the IMF on a continuous basis.

### D. Non-Accumulation of Central Government External Debt Arrears (Continuous Ceiling)
- Definition:
  - The non-accumulation of arrears by the CG on contractual debt obligations owed to non-resident creditors will be a continuous performance criterion throughout the program period.
  - External payments arrears for program monitoring purposes are defined as external debt obligations of the CG, which have not been paid within 30 days after the contractual due date (taking into account any contractual grace periods).
  - Arrears resulting from the nonpayment of debt service, for which a rescheduling or restructuring agreement is being sought, based on good faith negotiations, are excluded from this definition.
- Measurement and reporting:
  - The stock of external arrears of the CG will be calculated based on the schedule of external payment obligations reported by the Ministry of Finance and Planning (MoFP).
  - Data on external arrears will be reconciled with the relevant creditors, and any necessary adjustments will be incorporated as they occur.
  - Data will be provided to the IMF on a continuous basis.

### E. Gross Credit to Central Government by the CBvS (Continuous Ceiling)
- Definitions:
  - The ceiling on the change in gross credit provided to the CG by CBvS (including any provision of overdrafts) will be a continuous performance criterion throughout the program period and will be measured from end-June 2021 for 2021 and from beginning of the year for 2022.
  - Coins and notes issued by the MoFP are excluded from the definition.
  - The stock of gross credit will be valued at fair value and at program exchange rates.
  - Changes in the stock of the COVID-19 Fund approved by Parliament in 2020 would constitute gross credit from the CBvS to the CG.
  - Rolling over CG principal and interest payments due to the CBvS does not constitute gross credit.
- Reporting:
  - Data will be provided to the IMF on a continuous basis.

### F. Net International Reserves of the CBvS (Floor)
- Definitions:
  - The floor applies to cumulative flows from the beginning of the year.
  - For program monitoring purposes, net international reserves (NIR) of the CBvS are defined as the U.S. dollar value of the difference between reserve assets and reserve liabilities.
  - The change is measured relative to the end-December 2020 level of NIR.
- Reserve assets (included):
  - (i) foreign exchange (foreign currency cash, deposits with foreign correspondents, holdings of foreign securities),
  - (ii) monetary gold,
  - (iii) IMF reserve position, and
  - (iv) SDR holdings.
- Reserve assets (excluded):
  - any assets that are pledged, collateralized, or otherwise encumbered; CBvS claims on resident banks and nonbanks; claims in foreign exchange arising from derivatives in foreign currencies vis-à-vis domestic currency; precious metals other than gold; assets in nonconvertible currencies; illiquid swaps; and any reserve assets not readily available for intervention.
- Reserve liabilities:
  - (i) all short-term foreign liabilities of the CBvS vis-à-vis nonresidents denominated in convertible foreign currencies with an original maturity of one year or less;
  - (ii) all outstanding credit from the IMF resulting from purchases;
  - (iii) the nominal value of all derivative positions (including swaps, options, forwards, and futures) of the CBvS, implying the sale of foreign currency or other reserve assets;
  - (iv) all foreign exchange liabilities of the CBvS to resident entities excluding foreign exchange liabilities to the CG.
  - Examples included: claims in foreign exchange of domestic banks, non-ring-fenced reserve requirements of domestic banks on their foreign currency deposits, reserve requirements of domestic banks on their foreign currency deposits that are ring-fenced in Suriname’s sovereign bond in the amount of USD 10.283 million, and CBvS credits in foreign exchange from the domestic market.
- Valuation:
  - The stock of foreign assets and liabilities shall be valued at fair value and converted at program exchange rates.
- As of December 31, 2020:
  - Net international reserves amounted to USD-154.3 million (at the program exchange rates).
- Reporting:
  - Data on foreign reserves and the foreign exchange cash flow will be provided by the CBvS to the Fund once a week.
  - Data in Table 3 will be provided monthly in both official and program exchange rates, with a lag of no more than two weeks after the end of the month.
  - At each program test date, the quarterly data on net international reserves submitted by the CBvS to the IMF will be audited by the CBvS external auditors in accordance with International Standards on Auditing.
  - Reports from the external auditors should be submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date.
- Adjusters for NIR targets:
  - 1. upward (downward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to the baseline projections reported in Table 2. Program loan disbursements are defined as external loan disbursements from official creditors that are usable for the financing of the CG.
  - 2. upward (downward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors (including international capital markets) relative to the baseline projections reported in Table 2.
  - 3. upward (downward) by the full amount of the cumulative surplus (shortfall) in mineral revenues in foreign exchange that are transferred to the CG account at the CBvS relative to baseline projections reported in Table 4.
  - 4. downward by the amount of FX sales by the CBvS insofar as these sales occur via competitive auctions in response to the intraday depreciation in the exchange rate versus the U.S. dollar that is more than 2 percent and are less than USD 2 million per day. This adjustor is capped at USD 20 million per quarter.
- Table 3. Suriname: International Reserves (US$ Million, unless otherwise specified) — 31-Dec-20
  - Reserve assets: 128.9
  - IMF reserve position: 2.8
  - IMF SDR: 1.1
  - Foreign currency cash and deposits with foreign banks: 125.0
  - Reserve liabilities: 283.1
  - IMF program disbursements outstanding: 20.9
  - Other liabilities with non-residents: 0.1
  - Liabilities with residents: 262.2
  - Reserve Requirements (non-ringfenced): 5.6
  - Reserve Requirements (the ring-fenced sovereign bond): 10.3
  - Working balance accounts of commercial banks: 69.0
  - Long-term loan to commercial banks: 177.3
  - Other: 0.0
  - Net international reserves: -154.3

### G. Net Domestic Assets of the CBvS (Ceiling)
- Definitions:
  - The ceiling applies to cumulative flows from the beginning of the year.
  - Net domestic assets (NDA) are defined as the difference between reserve money and net foreign assets (NFA).
  - Items in foreign currencies will be valued at fair value and at program exchange rates.
  - As of December 31, 2020, the stock of NDA amounted to SRD 8,777.1 million (Table 5).
- Reserve money at program exchange rates is defined as:
  - currency in circulation,
  - commercial banks’ deposits in correspondent accounts at the CBvS,
  - statutory cash reserve requirements against prescribed liabilities in SRDs and foreign currency held by commercial banks at the CBvS,
  - other commercial banks’ deposits at the CBvS in national and foreign currency,
  - other demand deposits in national and foreign currency, and
  - gold certificates.
  - Reserve money excludes balances in deposit auctions and commercial banks’ term deposits at the CBvS.
  - As of December 31, 2020, reserve money amounted to SRD 12,816.6 million.
- NFA definition:
  - difference between foreign assets and foreign liabilities.
  - Foreign assets include foreign exchange, monetary gold, IMF reserve position, and SDR holdings.
  - Foreign liabilities include liabilities of the CBvS vis-à-vis nonresidents denominated in foreign currencies; outstanding credit from the IMF resulting from purchases under arrangements and SDR allocation; nominal value of all derivative positions of the CBvS implying the sale of foreign currency or other reserve assets.
- As of December 31, 2020:
  - NFA amounted to SRD 4,039.5 million (Table 5).
- Reporting:
  - Data will be provided to the IMF with a lag of no more than two weeks after the end of the month.
  - At each program test date, the quarterly data on net domestic assets submitted by the CBvS to the IMF will be reviewed by the CBvS external auditors.
  - Reports should be submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date.
- Adjusters for NDA targets (consistent with NIR adjustments):
  - 1. downward (upward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to the baseline projections reported in Table 2.
  - 2. downward (upward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors (including international capital markets) relative to the baseline projections reported in Table 2.
  - 3. downward (upward) by the full amount of the cumulative surplus (shortfall) in mineral revenues in foreign exchange that are transferred to the CG account at the CBvS relative to baseline projections reported in Table 4.
  - 4. Downward by the full amount of the CBvS’ cumulative purchases of foreign exchange from the market relative to the baseline projections reported in Table 6.
  - For the purposes of calculating adjusters, these flows will be valued at program exchange rates.
- Table 5. Suriname: NFA, NDA, and Reserve Money (SRD Millions) — 31-Dec-20
  - Net foreign assets: 4039.5
  - Foreign assets: 8243.5
  - Foreign liabilities: -4204.0
  - Net domestic assets: 8777.1
  - Net claims on the government: 8234.0
  - Claims on the government in local currency: 9833.7
  - Liabilities to the government in local currency: -446.8
  - Claims on the government in foreign currency: 144.1
  - Liabilities to government  in foreign currency: -1297.0
  - Net claims on commercial banks: -2495.6
  - Claims on commercial banks in local currency: 2.2
  - Liabilities to commercial banks in local currency: -200.0
  - Claims on commercial banks in foreign currency: 187.0
  - Liabilities to commercial banks  in foreign currency: -2484.7
  - Other items net: 3038.7
  - Reserve money: 12816.6
  - Reserve money in local currency: 7342.2
  - Reserve money in foreign currency: 5474.4
  - Memorandum item: Program exchange rate: 14.018

- Table 4. Suriname: FX Mineral Revenues of CG Transferred to CBvS (Baseline Projection) — Cumulative flows from the beginning of the fiscal year (In millions of US$)
  - End-December 2021: 211
  - End-January 2022: 14
  - End-February 2022: 28
  - End-March 2022: 43
  - End-April 2022: 57
  - End-May 2022: 71
  - End-June 2022: 85
  - End-July 2022: 100
  - End-August 2022: 114
  - End-September 2022: 128
  - End-October 2022: 142
  - End-November 2022: 156
  - End-December 2022: 171

- Table 6. Suriname: CBvS's Purchases of FX (Baseline Projection) — Cumulative flows from the beginning of the fiscal year 1/(In millions of US$)
  - End-December 2021: 0
  - End-January 2022: 0
  - End-February 2022: 0
  - End-March 2022: 0
  - End-April 2022: 0
  - End-May 2022: 0
  - End-June 2022: 0
  - End-July 2022: 0
  - End-August 2022: 0
  - End-September 2022: 0
  - End-October 2022: 0
  - End-November 2022: 0
  - End-December 2022: 0
  - 1/ Except for 2021 which is a flow for December only.

### H. Direct Purchases/Sales of FX by the CBvS and/or Central Government from/to SOEs and Private Sector (Continuous Ceiling)
- Definitions:
  - The ceiling on direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and private sector will be a continuous performance criterion throughout the program period.
  - Exclusions from this definition:
    - Purchases/sales of FX with banks and cambios undertaken through fixed allotment/variable price auctions.
    - Sales of FX to (former) CBvS employees for children’s overseas study and livelihood purposes, overseas pension transfers, overseas salary transfers and overseas travel expenses up to a maximum amount of USD 100.000 per quarter or an equivalent thereof in another convertible currency.
    - Purchases of EUR banknotes from banks and cambios in exchange for USD banknotes.
- Reporting:
  - Data on direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and private sector will be provided by the CBvS to the Fund daily.

### II. OTHER CONTINUOUS PERFORMANCE CRITERIA
- During the period of the Arrangement under the EFF, Suriname will not:
  - (i) impose or intensify restrictions on the making of payments and transfers for current international transactions;
  - (ii) introduce or modify multiple currency practices;
  - (iii) conclude bilateral payments agreements that are inconsistent with Article VIII; and
  - (iv) impose or intensify import restrictions for balance of payments reasons.

### III. INDICATIVE TARGETS: DEFINITION OF VARIABLES
A. Social Spending of Central Government (Floor)
- Definition:
  - Social spending of central government includes all the spending of the Ministry of Social Affairs and Public Housing (Ministerie van Sociale Zaken en Volkshuisvesting) on social protection programs.
  - The floor on CG social spending is cumulative from the beginning of the year and is defined as the sum of spending on the following cash transfer programs:
    - General old-age pension.
    - General Child benefit.
    - Financial assistance for persons with disabilities.
    - Financial assistance for weak households.
- Reporting:
  - Data will be provided to the IMF with a lag of no more than six weeks after the end of the quarter.

### III. INFORMATION REQUIREMENTS
- To ensure adequate monitoring of economic variables and reforms, the authorities will provide the following information:

Daily/Semi-weekly
- Official nominal exchange rates.
- Volumes and nominal exchange rates (inclusive of any fees, commission, or other types of charge) of foreign exchange transactions (purchases and sales) by banks and cambios.
- Volumes and nominal exchange rates of direct purchases/sales of foreign exchange by the CBvS and/or central government from/to SOEs and private sector.
- Monitoring Template IMF (no. 25) - Deposits including largest 5 depositors in accordance with the Enhanced Supervision framework, within one week after the reporting period.
- Monitoring Template IMF (no. 26) – Liquid assets held by banks in accordance with the Enhanced Supervision framework, within one week after the reporting period.
- Liquidity Coverage SRD template (no. 30) in accordance with the Enhanced Supervision framework, within one week after the reporting period.
- Liquidity Coverage FX template (no. 31) in accordance with the Enhanced Supervision framework, within one week after the reporting period.
- Net Foreign Currency Position (Net Open Position) template (no. 27) for banks in accordance with the Enhanced Supervision framework. [For cambios this ratio will also be reported], in both cases within one week after the reporting period.

Weekly/bi-weekly
- CBvS liquidity assistance to financial institutions, by institution.
- Reports on large exposures by bank that are equal or exceed 10 percent of Tier 1 Capital (template no. 28) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
- Large deposits that are equal or exceed 10 percent of Tier 1 Capital (template no. 29) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
- Liquidity forecast and realization (templates no. 15, 17 and 19) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
- Liquidity stress testing (templates no. 10-13) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
- Lending availability in SRD and USD (templates no. 21 and 22) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
- Table on monitoring of banking sector benchmarks in accordance with the Enhanced Supervision framework on a bi-weekly basis, within two weeks after the reporting period.
- CBvS purchases and sales of foreign currency (FX cash flow table). FX auction amounts, auction bids, highest and lowest prices, cut-off and weighted average prices, FX rate before the auction.
- Information on auction results for open market operations no later than the day after the auctions, including on: instrument type, total open market operations auction volume, settlement date, expiration date, the number of total bids, total amount of bids, the number of total allocated bids, total amount of allocated bids, the minimum bid rate, the cut-off interest rate, the highest bid rate, and the weighted average allotted interest rate.
- Weekly submission of daily transactions and rates for the following: interest rates on domestic debt securities by maturity; required and excess reserves of the banking sector in local and foreign currency; total liquidity assistance to banks through normal lending operations, standing facilities, and ELA. Interest rates on OMOs, standing facilities, and ELA by maturity.

*Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1surea2021001.pdf (1surea2021001 - 14.      Adjusters: The floor on the cumulative primary cash balance of the CG will be adjusted:)*

### 40.      Monthly

### 1surea2021001 - 40.      Monthly

### Monthly reporting requirements (central government, CBvS, banks, utilities)
- CG operations (revenues and expenditure) data in GFS format within six weeks of the end of the month.
- CG detailed revenues data from the tax office by revenue category, including: (i) direct tax by item, (ii) indirect tax by item, and (iii) non-tax revenues by item within six weeks of the end of the month.
- Mineral tax and non-tax revenue of major commodity companies and small gold miners, by revenue item and type of commodity (and separately for large-scale gold companies and small-scale gold miners). Data is to be provided within four weeks of the end of the month.
- Number of public civil servants and total wage bill by Ministry within six weeks of the end of the month.
- CG authorized spending data by Ministry within four weeks of the end of the month.
- CG subsidies data by Ministry and programs within six weeks of the end of the month.
- CG balance from the financing side by sources and by currency, with a lag of no more than six weeks after the end of the month.
- CG domestic and external debt stock, including by: (i) creditor, (ii) currency, (iii) instrument; (iv) collateralized by natural resources revenue; and (v) guaranteed. The reporting lag should not exceed four weeks after the end of the month.
- Amortization payments of CG and government guaranteed debt by creditor, instrument, and currency. In the case of issuance of government guaranteed debt, the name of the guaranteed individual/institution should be provided. The reporting lag should not exceed four weeks after the end of the month.
- Interest payments and fees on CG and government guaranteed debt by creditor, instrument, and currency. The reporting lag should not exceed four weeks after the end of the month.
- Stock of CG expenditure arrears, separately including payment of existing arrears and creation of new domestic arrears including the currency of the arrears. The reporting lag should not exceed four weeks after the end of the month.
- Stock of CG domestic and external debt arrears, including the currency of arrears. The reporting lag should not exceed two weeks after the end of the month.
- New debt contracts (official or private) entered into by the CG and/or SOEs. The reporting lag should not exceed two weeks after the end of the month.
- Holdings of domestic T-notes and T-bills (SRD-denominated and foreign currency-denominated) by investor, maturity, and currency. The reporting lag should not exceed four weeks after the end of the month.
- Legal measures that affect the revenue of the CG, such as tax rates, import tariffs, and exemptions. The reporting lag should not exceed six weeks after the end of the month.
- Balance sheet of the CBvS within two weeks of end of the month.
- A summary of the monetary survey of the banking system (including CBvS and deposit-taking institutions). This information should be received with a lag of no more than six weeks after the end of the month.
- Income statement of the CBvS on a cash and accrual basis, with a lag of no more than three weeks from the end of the month.
- Projections of CBvS purchases and sales of foreign currency (FX cash flow table, 12 months ahead).
- Information on interconnectedness of the financial sector and related party lending (templates no. 6 and 37) in accordance with the Enhanced Supervision framework, within four weeks after the end of the month.
- The deposit funding structure of the banks (template no.8) in accordance with the Enhanced Supervision framework, within four weeks after the end of the month.
- Information on measures taken by the banks in the context of the COVID-19 pandemic (templates no.33-35), within four weeks after the end of the month.
- Banks’ claims on the government and State-owned Entities with breakdown by type (debt types, loan types including the gross amount of overdrafts) within four weeks after the end of the month.
- The Monthly Returns as reported to the CBvS, within four weeks of the end of the month.
- A written update on the progress of the Asset Quality Review (until the review has been concluded) that includes any issues encountered by CBvS and/or their advisor and any remedial actions taken.
- Data on foreign reserve assets and foreign reserve liabilities for NIR target purposes (Table 2) evaluated at both official and program exchange rates, within two weeks of the end of the month.
- Data on NDA, NFA, and reserve money (Table 4) evaluated at both official and program exchange rates, within two weeks of the end of the months.
- Data on foreign reserve assets split into ring-fenced and non-ring-fenced assets evaluation at official exchange rates, within two weeks of the end of the months.
- Monthly outturns in open market operations against projections and revised projections for the new months.
- Consumer price index, including by sub-components of the CPI index within four weeks after the end of the month.
- Cash flow of EBS showing government transfers to cover the gap between the average electricity tariff and EBS recovery cost within eight weeks after the end of the month.
- Electricity average tariff, total electricity consumption volume, total billing and amount collected (in SRD) to be provided by consumption categories (household, commercial, and industrial) and by consumption volume. This information should be received with a lag of no more than eight weeks after the end of the month.
- Electricity costs including: (i) production costs: fuel costs, Staatsolie electricity costs, hydropower costs, separately, (ii) other operational costs: personnel costs and financing costs, and (iii) investment costs. This information should be received with a lag of no more than eight weeks after the end of the month.
- EBS committed and executed payments to Staatsolie for purchases of fuel and electricity. This information should be received with a lag of no more than eight weeks after the end of the month.

### Quarterly reporting requirements
- Detailed balance of payments data within 60 days after the end of the quarter.
- Detailed International Investment Position data within two months after the end of the quarter.
- Projections regarding banks’ balance sheets and profit and loss statement (template no. 2 and 3) in accordance with the Enhanced Supervision framework, within four4 weeks after the end of the quarter.
- Liquidity forecast and realization (templates no. 14, 16 and 18) in accordance with the Enhanced Supervision framework, within four weeks after the end of the quarter.
- Progress reports of the banks on inspection items identified by CBvS, within six weeks after the end of the quarter.
- A full set of quarterly Financial Soundness Indicators (FSI) calculated by the CBvS within 60 days after the end of the quarter.
- CG spending on social protection programs, by program, as defined for the indicative target on social spending. The reporting lag should not exceed six weeks after the end of the quarter.

### Annual reporting requirements
- Financial statements of EBS within six months of year end.
- Nominal GDP and real GDP within eight months of year end.
- Labor market statistics (including the unemployment rate and labor participation ratio) within twelve months of the year end.

### Statements and program context (December 22, 2021)
- Staff Representative update:
  - India consent to the IMF financing was received on December 14, 2021.
- Authorities’ statement themes:
  - New Administration took office in July 2020 and faced a severe economic downturn from economic mismanagement and the COVID-19 pandemic.
  - Exports and tourist arrivals plummeted by more than 50 percent.
  - Before the new Administration took office, the overall fiscal deficit reached 21 percent of GDP and the debt-to-GDP ratio peaked at 160 percent.
  - Government approved a home-grown Recovery Plan (RP) in June 2021 and engaged IFIs for financial and technical support.
  - A Special Tripartite Consultation was established on September 15, 2021 to pursue a Tripartite Agreement of Social Contract.
  - Authorities translated the program into quantitative targets, structural benchmarks, and indicative targets; staff-level agreement (SLA) reached on April 29, 2021.
  - Authorities allowed the exchange rate to move freely, started weekly auctions of central bank term deposits, substantially reduced domestic payments arrears, and interrupted retroactive wage payments and continuation of tax credits.

### Fiscal policy objectives and major measures
- Restoring fiscal sustainability is the main fiscal policy objective.
- Program projection for primary fiscal balance:
  - Primary fiscal balance will improve continuously to surpluses ranging from 3.5 percent of GDP to 4.5 percent of GDP from 2023 onwards.
- Debt and restructuring:
  - Given extremely high debt levels, obligations to private and official external creditors must be restructured to ensure public debt sustainability within the projection period.
- Noted fiscal turnaround actions in 2021:
  - Doubling electricity tariffs last July.
  - A further 25 percent increase projected for 2022 and subsequent adjustments to reach cost recovery levels.

*Source: 1surea2021001 - 40.      Monthly*

### 2024. By  eliminating  direct  and  indirect  subsidies, ample  space  will  be  created  for  targeted

### 1surea2021001 - 2024. By  eliminating  direct  and  indirect  subsidies, ample  space  will  be  created  for  targeted

### Fiscal consolidation and revenue measures
- Eliminating direct and indirect subsidies to create space for targeted subsidies protecting vulnerable groups.
- Upgrading the Treasury Department to establish a Treasury Single Account; Cash Management Department is streamlining treasury functions with Fund technical assistance.
- Introducing a Solidarity Levy of 10 percent on the highest public and private sector wages; temporary measure that will lapse in January 2022.
- Initiating a gradual reduction of fuel subsidies and phasing out untargeted subsidies while exploring targeted public transportation subsidies for vulnerable groups.
- Diversifying revenue sources and modernizing the Tax and Customs administration with technical assistance from Fund, CARTAC, and IDB.
- Commitment to maintain social spending above 5 percent of GDP per year.

Key fiscal outcomes and figures:
- Primary fiscal balance now expected to reach a surplus of 2.6 percent of GDP in 2021 (instead of the projected deficit of 1.3 percent of GDP).
- Accumulated arrears (dating back to 2018) reached SRD 1.3 billion.
  - Approximately SRD 400 million was paid to domestic creditors (starting September 2021).
  - SRD 411 million was paid to the Central Bank as part of outstanding interest on the Government’s Legacy Debt.
  - The (mid-2020) SRD 400 million loan from commercial banks used to pay civil servants’ salaries was settled.

### Debt negotiations, reprofiling, and domestic obligations
- Engaging in good faith negotiations with private and official creditors; dialogue resulted in a temporary stand-still of debt and interest payments.
- Further negotiations ongoing, adhering to debt restructuring parameters under the Fund-supported program.
- Reprofiling local debt to banks, domestic suppliers, contractors, and others with payments and agreements in “good faith”; some construction businesses restarted public works.
- Authorities reaffirm commitment to swift, good-faith negotiations with all creditors to regain debt sustainability in line with program parameters.

### Social protection and distributional measures
- Protecting the most vulnerable by increasing old age pensions, child support, and support to vulnerable households; social benefits increased significantly starting in late 2020 through 2021.
- Authorities will adjust social benefits in a fiscally responsible manner given elevated inflation, while keeping social spending above 5 percent of GDP per year.
- The Social Contract aims to balance fiscal sustainability with securing existing social investments and creating additional safety nets while trying to restore real wages.

### External balance and international reserves
- International reserves dropped to critically low levels through mid-2021, jeopardizing exchange rate stability.
- After two devaluations in March and May 2021, monetary authorities adopted a flexible exchange arrangement on June 7, 2021.
- In July 2021, the Central Bank implemented a new monetary policy framework with weekly multiple-pricing auctions of Central Bank term deposits.
- The reserve money targeting regime was implemented with term deposits sterilizing around SRD 2.6 billion.
- Realignment of the exchange rate and term deposit auctions, combined with strong fiscal measures, curbed domestic demand and contributed to the absence of exchange rate spikes.
- With Fund financial support and pledges by the IDB, the World Bank, and the Caribbean Development Bank, international reserves are expected to strengthen to adequate levels.
- Current account balance in 2021 expected to present a more modest surplus of around 4 percent of GDP, compared to the 9 percent of GDP surplus in 2020.

### Monetary policy and financial sector reforms
- Central Bank switched nominal monetary anchor to a reserve money targeting regime after decades of using the nominal exchange rate.
- Operationalization through open market operations: term deposits offered to commercial banks to attract excess liquidity, mitigate demand, and reduce pressures on the exchange rate and domestic prices while maintaining FX market flexibility.
- Central Bank Act comprehensively revised to guarantee operational independence.
- MFP and the Central Bank signed a memorandum of understanding (MoU) to stop monetary financing of budget deficits.
  - By end-January 2022, the National Assembly will pass amendments to the Central Bank Act to permanently prohibit monetary financing of the government and improve the Central Bank’s governance.
- Central Bank actions to strengthen regulatory and supervisory framework and support financial stability:
  - Revised Banking and Credit Supervision Act and Credit Institutions Resolution Act planned for parliament.
  - New Financial Stability Committee to become operational in January 2022.
  - Asset quality review (AQR) of all banks: starting with the two largest banks in the third quarter and finalizing remaining banks in the fourth quarter of 2022.
  - Central Bank will join the Government in designing a recapitalization plan to strengthen the Central Bank’s capital and autonomy.

### Structural reforms, governance, and institutional strengthening
- Continued implementation of broad structural reforms to enhance business climate and ease-of-doing-business:
  - Cutting “red tape” to increase access to permits.
  - Measures to facilitate access to bank credit and alternative financing.
  - Establishment of Investment and Export Promotion Agency (FDI Suriname) to attract FDI with high spin-off potential.
  - Implementation of Public-Private Partnership policy to facilitate privatization and foster job creation.
- Governance reforms:
  - Follow-up on Extractive Industries Transparency Initiative (EITI) recommendations to reform mining law, including mining titles and beneficial ownership disclosure obligations.
- AML/CFT improvements:
  - Suriname is not on the Financial Action Task Force (FAFT)’s list of countries identified as having strategic AML/CFT deficiencies.
  - National Risk Assessment finalized and presented; Suriname commended for ownership in strengthening AML/CFT frameworks.
  - Critical step toward ratification of the United Nations Convention Against Corruption (UNCAC) taken with approval by the National Assembly; ratification to be completed very shortly.

### Macroeconomic context and outlook
- Combined impact of exchange rate devaluation, sales tax increase, and electricity tariff and fuel price hikes resulted in inflation rising from 35 percent in 2020 to around 60 percent in 2021.
- Authorities recognize that curbing inflation and restoring fiscal sustainability are necessary to sustainably increase disposable income.

### Conclusion
- Authorities are fully committed to the IMF-supported three-year Extended Arrangement to restore macroeconomic and financial stability, debt sustainability, and improve living standards over the medium term.
- Commitment to maintain social cohesion and protect the most vulnerable while proceeding with good-faith negotiations with all creditors.

*Source: IMF content unit 1surea2021001.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1surea2021001.pdf_