## EXECUTIVE SUMMARY ## Source details **Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/cr/2022/english/1surea2022001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1surea2022001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1surea2022001.pdf.json) --- ### Program design and context - IMF Executive Board approved a 36-month arrangement under the Extended Fund Facility (EFF) with access of 366.8 percent of quota (SDR 472.8 million or USD 673 million). - Authorities’ homegrown economic recovery plan aims to address systemic fiscal and external imbalances and chart a course toward debt sustainability, declining inflation, and economic recovery while maintaining social stability. - Prior action for completion of the first review: government to submit to the National Assembly a supplemental 2022 budget aligned with the program. ### Program performance (implementation to date) - All end-December 2021 quantitative performance criteria were met. - Spending on social transfer programs fell short of the indicative target by 0.3 percent of GDP. - Structural benchmarks completed on time: - Establish competitive FX auctions. - Publish a plan to streamline treasury functions through the Treasury Single Account (TSA). - Develop terms of reference for hiring specialists to audit outstanding supplier arrears. - Structural benchmarks not met on time (implemented with delay or expected delay) include: - Publication of the 2016-18 audited financial reports of the Central Bank of Suriname (CBvS) — not met but implemented with a delay. - National Assembly adopting amendments to the CBvS law — not met. - Submission to the State Council of the Credit Institutions Resolution Act and the revised Banking and Credit Supervision Act — not met. - Operationalizing the Financial Stability Committee and a Bank Resolution Unit — not met. *Source attribution at end of document.* ### Staff support and adjusted conditionality - Staff support for new structural benchmarks requested by authorities: - Publish a plan to scale back a range of tax exemptions by March 9, 2022. - Publish a comprehensive financial assessment of the state electricity company by end-May 2022. - Review social protection public expenditure and publish a time-bound strategic plan by September 2022. - Staff support to: - Remove the structural benchmark on raising the royalty on large-scale gold exporters. - Delay the benchmark to publish the CBvS’s FY 2020–2021 audited financial statements from end-June to end-November 2022. --- ### RECENT DEVELOPMENTS AND OUTLOOK - Economic activity: monthly economic activity indicator (12-month moving average) improved from -15 percent in early 2021 to -2 percent in September 2021. - Inflation: - Headline inflation: 61.5 percent y/y in January 2022. - Y/Y inflation index excluding food and utility items declined from a peak of around 70 percent in August to 45 percent in December. - Forecasts: inflation to decline to 26 percent (y/y) by end-2022 and to 12 percent by end-2024. - Growth: - Real GDP: growth expected to remain sluggish in the next couple of years; medium-term growth forecast to reach 3 percent. - Key projected Real GDP (percent change): 2021 -3.5; 2022 1.8; 2023 2.1; 2024 2.7; 2025 3.0; 2026 3.0; 2027 3.0. - External and reserves: - Current account surplus expected to be around 5 percent of GDP in 2021 with sharp contraction in imports. - Usable international reserves: USD 505 million in January 2022, bolstered by the SDR allocation and the initial disbursement under the EFF. - Usable gross international reserves (USD millions) selected levels: 2019 505; 2020 129; 2021 501; 2022 512; 2023 955; 2024 934. - Authorities refrained from FX sales and purchases since November 16 and December 15, respectively. --- ### FISCAL CONSOLIDATION: KEY MEASURES AND PERFORMANCE - 2021 fiscal outcomes: - Primary surplus (cash basis): SRD 1.9 billion (about 3.5 percent of GDP) in 2021. - Primary balance on accrual basis estimated: -1.3 percent of GDP in 2021 (due to net accumulation of supplier arrears). - Significant supplier arrears accrued in 2021; arrears to domestic debt holders and suppliers estimated around 11 percent of GDP in 2021. - Stock of arrears to external creditors at end-2021 estimated around 10 percent of GDP (one-third to bilateral official creditors, mostly China, remainder to private creditors). - Fiscal trajectory and targets: - On an accrual basis, primary fiscal balance expected to increase to 1.7 percent of GDP in 2022. - Government’s economic plan targets a primary surplus of 4.5 percent of GDP by end-2024. - Combined with restructuring of official and private debt, debt should fall below 100 percent of GDP by 2026. - Fiscal measures and specifics: - VAT implementation: replace sales tax with a VAT by July 1, 2022; remaining legislation expected to be passed by the National Assembly by end-March 2022. - Revenue measures include scaling back tax exemptions, introducing withholding taxes on interest payments, royalties and service fees, and replacing sales tax with VAT. - Gold sector measures: - Royalty rate for small-scale gold exporters increased from 2.75 percent to 4.5 percent in January 2022; further phased increases to reach 7.5 percent by July 2022. - Planned increase in royalty on large-scale gold exporters replaced by reduction in tax exemptions to generate same 0.4 percent of GDP in revenues. - Public sector wage bill: plan to lower average public sector wage bill below 7 percent of GDP by 2024. - Electricity tariff reform: - Government will raise average electricity tariffs by 25 percent by May 2022, followed by periodic increases to reach full cost recovery by end-2024. - Staff estimates average tariffs would be increased by around 50 percent annually from 2022 to 2024 to achieve full-cost recovery (based on program projections and assuming no efficiency improvements). - Key fiscal numbers (selected): - 2021 primary surplus (cash basis) SRD 1.9 billion (about 3.5 percent of GDP). - Supplemental 2022 budget with a primary surplus of 1.7 percent of GDP expected to be submitted to the National Assembly (prior action); authorities expect approval by end-March. --- ### DEBT RESTRUCTURING AND SUSTAINABILITY - Public debt dynamics: - Public debt fell from 148 percent of GDP at end-2020 to an estimated 125 percent of GDP at end-2021 due to fiscal adjustment and real exchange rate appreciation. - Arrears and restructuring status: - Stock of external arrears estimated at 10 percent of GDP at end-2021 (including USD 61 million to China; USD 7 million to India; and USD 22 million to Paris Club creditors). - SRD 2.6 billion of domestic debt restructured by extending maturities to between 2 to 8 years. - Estimated arrears as of end-2021: - Domestic debt arrears: SRD 530 million. - Supplier arrears: SRD 2.7 billion. - An audit of supplier arrears scheduled to be completed by August 2022; remaining domestic arrears would be cleared between 2023 and 2026. - Authorities engaged official and private creditors and presented debt restructuring proposals in line with program parameters; Paris Club creditors provided specific financing assurances. - Debt Sustainability under the restructuring scenario: - Restructuring scenario: public debt projected to fall below 120 percent in 2024, below 80 percent in 2030, and below 60 percent by 2035. - GFNs (Gross Financing Needs) trajectory: decline sharply from 17 percent in 2021 to around 7 percent in 2024; rise temporarily to about 11 percent by 2030; then gradually decline to 9 percent. - NPV reductions under restructuring (at a 5 percent discount rate): around 36 percent for official bilateral creditors and around 45 percent for external commercial creditors. - At a 10 percent discount rate: around 62 percent NPV reduction for official bilateral creditors and around 58 percent for external commercial creditors. - Key DSA assumptions and targets: - Program objective: reduce public debt from 148 percent of GDP in 2020 to 60 percent of GDP by 2035, with an intermediate target of 120 percent of GDP by 2024. - Baseline program projections assume medium-term growth recovering to 2.5‒3 percent and inflation declining to 12 percent by end of program. - Restructuring assumptions include a 40 percent face-value cut on external commercial debt at end-2022 and pauses in amortization for specified periods for different creditor groups. --- ### MONETARY AND EXCHANGE RATE POLICY - Monetary framework: - CBvS implemented the reserve money targeting framework and met the NDA and NIR targets under the program. - Reserve money grew faster than targeted at end-2021 due to a larger-than-expected build-up of NIR and only partial sterilization. - CBvS met all monetary indicative targets and reserve money targets in local currency set for end-January 2022. - 7-day interest rates declined from around 80 percent at end-2021 to 57 percent by mid-February 2022. - CBvS will expand auctions of certificates of deposits and term deposits to qualifying nonbanks to strengthen monetary transmission and will remunerate local currency reserve requirements by mid-2022, subject to functioning of interest rate mechanism. - Exchange rate policy: - CBvS committed to a free-floating, market-determined exchange rate and has not intervened in foreign currency markets; continuous performance criterion of zero purchases/sales of FX from/to SOEs and the private sector has been met. - Nominal exchange rate traded in a narrow range; parallel market trades close to official rate. - Government committed to sell net FX receipts to CBvS to rebuild foreign reserves; CBvS will undertake FX sales only during episodes of disorderly market conditions. - Usable international reserves projections: - Expected to rise steadily to 175 percent of the ARA reserve adequacy metric (or around 8.5 months of imports) by end-2024. - Expected to gradually fall to 139 percent of the ARA reserve adequacy metric by 2034 as restructured public external debt service payments resume. - An electronic trading platform for interbank FX trading expected to be established by June 2022. --- ### FINANCIAL SECTOR: VULNERABILITIES, SUPERVISION, AND RESOLUTION - Banking sector vulnerabilities and indicators: - Capital adequacy rose to 13.3 percent (from 12.4 percent in September 2021); three weakest banks (around 7.8 percent of system assets) remain below regulatory requirements. - NPLs remain high at around 12 percent of total loans and likely understate credit quality problems. - Banks are highly liquid: liquid assets for the system are 58 percent of total assets. - Net open FX position of the system as a whole has been rising; aggregate bank holdings of USD cash have increased fivefold since December 2020. - CBvS actions and roadmap: - Independent advisor has started the asset quality review (AQR) for the largest two banks (structural benchmark, September 2022). - AQRs for the remainder of the banking system will start in the second quarter (structural benchmark, December 2022). - Following AQRs, CBvS will require submission of time-bound recapitalization and restructuring plans for banks not in full compliance; CBvS will review and oversee implementation and develop a roadmap to triage banks (structural benchmark, May 2022). - CBvS to operationalize a Bank Resolution Unit and Financial Stability Committee; related legislative submissions were delayed but expected soon. - CBvS has intensified supervision and stands ready to impose prompt corrective actions for banks experiencing difficulties. - Resolution and recapitalization: - Government to submit the Credit Institutions Resolution Act to the State Council in March 2022 with a view to adoption by the National Assembly by September 2022. - MoFP and CBvS to jointly develop a recapitalization plan for CBvS; assessment of CBvS policy solvency and capital adequacy to be finalized by end-June 2022; recapitalization plan by end-September 2022. --- ### GOVERNANCE, AML/CFT, PROCUREMENT, AND TRANSPARENCY - Anti-corruption and AML/CFT: - End-January 2022 structural benchmark to ratify the UNCAC was met. - Working committee established to set up the Anti-Corruption Commission by March 2022. - Government to amend 2017 Anti-Corruption Act to criminalize all relevant corruption acts and ensure verification of income and asset declarations (structural benchmark, June 2022). - Amend AML/CFT legislation and other relevant laws by August 2022 to align with FATF international AML/CFT standards, with focus on politically exposed persons and beneficial ownership (structural benchmark, August 2022). - Procurement and extractive sector transparency: - New procurement law expected to be adopted by National Assembly by end-June 2022 (structural benchmark). - State decree by August 2022 to mandate publication of all public procurement tenders and contracts, including names of awarded entities and their beneficial owners, names of public officials awarding contracts, and ex-post validation of delivery (structural benchmark). - Authorities committed to addressing EITI recommendations and improving mining law and publication of beneficial ownership information. - Fiscal transparency and data reporting commitments: - Monthly publication of central government’s liabilities on the debt management office website has resumed. - Monthly publication of the full scope of public sector obligations will be in place by December 2022. - MoFP will publish audited annual central government financial statements for FY2017-FY2021 by June 2022. - MoFP preparing to commence an audit of domestic arrears (structural benchmark, April 2022) to reduce discrepancy between cash- and accrual-based fiscal balances. --- ### CAPACITY DEVELOPMENT AND TECHNICAL ASSISTANCE - CD priorities and delivery: - Resident representative office to be established to support CD delivery and coordination. - Collaboration ongoing with CARTAC, IDB, CDB, UNODC, OAS, World Bank Group, the Dutch Ministry of Finance and the Dutch Central Bank. - Key areas for CD: - Fiscal statistics and public financial management: audit of arrears to be completed by August 2022; medium-term fiscal strategy and MTFF by end-December 2022. - Revenue administration: support for VAT implementation by July 1, 2022; creation of large taxpayer unit by end-June 2022. - Monetary statistics and RMT: CARTAC support requested; Dutch Central Bank provided long-term expert on RMT. - Financial sector supervision and resolution: LEG and MCM assistance on legal reforms and supervision; AQRs supported by independent advisors. --- ### RISKS, SCENARIOS, AND STRESS TESTS - Main downside risks: - Delays or non-implementation of key fiscal reforms (wage bill reduction, scaling back exemptions, electricity subsidy reductions). - Debt relief by official or private creditors falls short of amount needed to restore debt sustainability. - Exchange volatility, rising NPLs, and sovereign-bank nexus risks leading to financial stability problems. - Covid-19 resurgence requiring renewed public health restrictions. - Weakness in data reporting and capacity affecting policy formulation and program monitoring. - Energy price sensitivity: - IMF staff estimate: a 20 percent increase in oil prices from the current baseline could increase end-2022 inflation by 4.8 percentage points and deteriorate the current account by 0.9 percentage point in 2022. - Stress test outcomes (selected): - Macro-fiscal shock (combined shocks) could increase debt by around 180 percent of GDP by 2026 compared to baseline. - Real exchange rate shock (additional 30 percent depreciation) could push debt to 149 percent of GDP in 2024 before declining to about 123 percent in 2026. - Commodity-related revenue shock (revenues reduced by 50 percent for 2 years) would raise debt-to-GDP to 126 percent in 2024 then decline to 106 percent by 2026. --- ### STAFF APPRAISAL, POLICY RECOMMENDATIONS, AND CAPACITY PRIORITIES - Staff appraisal summary: - Authorities have shown strong ownership of the reform program; the program is on track despite difficult conditions exacerbated by COVID-19. - Planned medium-term fiscal consolidation, supported by revenue measures and prudent expenditure policies, will place public finances on a sustainable path if implemented. - CBvS adherence to reserve money targeting framework is critical to bring down inflation; reducing banking sector vulnerabilities is also key. - Key policy recommendations and priorities: - Continue fiscal consolidation while protecting and enhancing targeted social assistance. - Advance and conclude debt restructuring discussions with official and private creditors ensuring comparability of treatment among official creditors. - Further strengthen the new monetary policy framework and maintain a free-floating exchange rate with limited interventions to disorderly market conditions. - Address banking system vulnerabilities through AQRs, recapitalization plans, strengthened supervision, and operational resolution framework. - Tackle money laundering, corruption, and other governance shortcomings via timely legal reforms, operational Anti-Corruption Commission, procurement transparency, and AML/CFT upgrades. - Strengthen data quality and reporting: fiscal statistics, public debt reporting, monetary statistics, and financial sector data; meet reporting timelines required under the TMU. - Capacity and governance priorities: - Strengthen institutional capacity across fiscal policy, debt management, PFM, monetary policy, financial sector surveillance, AML/CFT, and governance. - Leverage CD from IMF and partners to support VAT rollout, arrears audit, TSA implementation, EBS financial assessment, and banking-sector reforms. - Overall risk assessment: - Program faces large risks that should diminish with steadfast implementation; however, delays in fiscal reforms or debt restructuring and intensification of banking system risks could disrupt restoration of debt sustainability and macro stability. *Source: EXECUTIVE SUMMARY and selected chapters/excerpts (1surea2022001) — IMF staff report content provided in the supplied PDF.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context - On December 22, 2021, the IMF Executive Board approved a 36-month arrangement under the Extended Fund Facility (EFF) with access of 366.8 percent of quota (SDR 472.8 million or USD 673 million). - The Surinamese authorities’ homegrown economic recovery plan aims to address systemic fiscal and external imbalances and chart a course toward debt sustainability, declining inflation, and economic recovery while maintaining social stability. - In the first few months of the program, the authorities have made good progress but important risks remain. ### Program performance - All end-December 2021 quantitative performance criteria were met. - Spending on social transfer programs fell modestly short of the indicative target. - Structural benchmarks completed on time: - Establish competitive FX auctions. - Publish a plan to streamline treasury functions through the Treasury Single Account (TSA). - Develop terms of reference for hiring specialists to audit outstanding supplier arrears. - Structural benchmarks not met on time (implemented with delay or expected delay): - Publication of the 2016-18 audited financial reports of the Central Bank of Suriname (CBvS) — not met but implemented with a delay. - National Assembly adopting amendments to the CBvS law — not met. - Submission to the State Council of the Credit Institutions Resolution Act and the revised Banking and Credit Supervision Act — not met. - Operationalizing the Financial Stability Committee and a Bank Resolution Unit — not met. - Prior action for completion of this review: government to submit to the National Assembly a supplemental 2022 budget aligned with the program. - Other key reforms on track: introducing a VAT, strengthening central bank governance, undertaking banking sector asset quality reviews. ### Policy priorities and staff support - Authorities’ policy aims: 1. Continue fiscal consolidation while further enhancing social assistance. 2. Advance debt restructuring discussions with creditors. 3. Further strengthen the new monetary policy framework. 4. Address banking system vulnerabilities. 5. Tackle money laundering, corruption and other governance shortcomings. - Staff support for new structural benchmarks requested by authorities: - Publish a plan to scale back a range of tax exemptions by March 9, 2022. - Publish a comprehensive financial assessment of the state electricity company by May (end-May structural benchmark). - Review social protection public expenditure and publish a time-bound strategic plan to improve efficiency and effectiveness of social assistance programs by September. - Staff support to: - Remove the structural benchmark on raising the royalty on large-scale gold exporters. - Delay the benchmark to publish the CBvS’s FY 2020–2021 audited financial statements from end-June to end-November 2022. ### Recent developments and outlook - Economic recovery underway; fiscal and external balances improving. - Monthly economic activity indicator (12-month moving average) improved from -15 percent in early 2021 to -2 percent in September 2021. - Headline inflation: 61.5 percent y/y in January; month-on-month inflation has fallen substantially since August. - Y/Y inflation index excluding food and utility items declined from a peak of around 70 percent in August to 45 percent in December. - 2021 primary balance: 3.5 percent of GDP on a cash basis; estimated to be around -1.3 percent of GDP on an accrual basis. - Significant supplier arrears accrued in 2021; arrears to domestic debt holders and suppliers estimated around 11 percent of GDP in 2021. - Stock of arrears to external creditors at end-2021 estimated around 10 percent of GDP (one-third to bilateral official creditors, mostly China, remainder to private creditors). - Public debt fell from 148 percent of GDP at end-2020 to an estimated 125 percent of GDP at end-2021 due to fiscal adjustment and real exchange rate appreciation. - Current account surplus expected to be around 5 percent of GDP in 2021 with sharp contraction in imports. - Usable international reserves: USD 505 million in January 2022, bolstered by the SDR allocation and the initial disbursement under the EFF. - Authorities refrained from FX sales and purchases since November 16 and December 15, respectively. - Banking sector: capital adequacy rose to 13.3 percent (from 12.4 percent in September); three weakest banks (around 7.8 percent of system assets) remain below regulatory requirements. - COVID-19 vaccination as of mid-February 2022: about 45 percent of the population received at least one dose; about 40 percent fully vaccinated. - Growth and inflation forecasts: - Real GDP: growth expected to remain sluggish in the next couple of years; medium-term growth forecast to reach 3 percent. - Inflation: forecast to decline to 26 percent (y/y) by end-2022 and to 12 percent by end-2024. - Fiscal trajectory: - On an accrual basis, primary fiscal balance expected to increase to 1.7 percent of GDP in 2022. - Government’s economic plan targets a primary surplus of 4.5 percent of GDP by end-2024. - Combined with restructuring of official and private debt, debt should fall below 100 percent of GDP by 2026. ### Fiscal consolidation: key measures and performance - 2021 fiscal outcomes: - Primary surplus (cash basis) was SRD 1.9 billion (about 3.5 percent of GDP) in 2021, versus the SRD 740 million deficit anticipated in the EFF request. - Primary balance on accrual basis estimated -1.3 percent of GDP in 2021 due to net accumulation of supplier arrears. - Spending on cash-transfer programs for lower income households fell short of the December indicative target by 0.3 percent of GDP. - End-January structural benchmarks met: terms of reference to hire specialists to audit outstanding supplier arrears; publish time-bound plan to streamline treasury functions through a TSA. - Supplemental 2022 budget with a primary surplus of 1.7 percent of GDP expected to be submitted to the National Assembly (prior action). Authorities expect approval by end-March. - Fiscal adjustment composition aligned with program: - Civil servant compensation capped consistent with government commitments in the EFF request. - Revenue measures: scaling back tax exemptions, withholding taxes on interest payments, royalty and services fee, and replacing sales tax with a VAT. - VAT implementation: - Authorities on-track to replace the sales tax with a VAT by July 1, 2022. - Full-time Implementation Team established; MoFP-led Steering Committee in place. - Remaining legislation expected to be passed by the National Assembly by end-March 2022 (structural benchmark). - Gold sector measures: - Planned increase in royalty on large-scale gold exporters replaced by reduction in tax exemptions to generate same 0.4 percent of GDP in revenues (new structural benchmark for March 2022). - Royalty rate for small-scale gold exporters increased from 2.75 percent to 4.5 percent in January 2022; further phased increases to reach 7.5 percent by July 2022. - Multi-departmental task force to review revenue collection from small-scale gold exporters; recommendations to strengthen compliance to be published by April 2022. - Public sector wage bill: - Plan to lower average public sector wage bill below 7 percent of GDP by 2024 through: - Capping nominal growth of individual compensation below projected inflation rate. - Streamlining workforce (including not renewing temporary contracts). - Eliminating ghost workers. - Authorities expect to partially reverse the 14 percent increase in the size of the public workforce that took place in 2020. - Public sector reform task force established to develop reorganization plan (improve civil servant registry, develop early retirement program). - Electricity tariff reform: - Government will raise average electricity tariffs by 25 percent by May 2022, followed by periodic increases to reach full cost recovery by end-2024. - Current lump-sum subsidy to all households and businesses will be better targeted over time via a low social tariff for vulnerable groups. - Comprehensive financial assessment of the state electricity company to be prepared with IDB technical support (new end-May structural benchmark). - Staff estimates average tariffs would be increased by around 50 percent annually from 2022 to 2024 to achieve full-cost recovery (based on program projections and assuming no efficiency improvements). - Institutional reforms to improve fiscal framework: - Strengthening budget framework and process: develop a medium-term fiscal strategy (with IFI technical assistance) to establish clear expenditure and debt targets consistent with the program; strategy will be published after approval by Council of Ministers, State Council, and National Assembly. - Strengthening cash and liquidity management: MoFP to adopt CARTAC recommendations to incorporate all treasury functions into a TSA and continue implementation with CARTAC support. - Improving revenue administration: establish a large taxpayer unit by June (structural benchmark); undertake comprehensive review of tax and customs administration processes and legal framework; publish a time-bound plan to monitor reform implementation. - Strengthening SOE management and accountability: publish audited financial reports for FY2017-FY2021 for the ten largest SOEs, identify main fiscal risks, and outline mitigation steps (December 2022 structural benchmark). *Source: EXECUTIVE SUMMARY (1surea2022001) — IMF staff report content provided in the supplied PDF.* ### 10. The authorities are committed to strengthening fiscal data reporting and monitoring. ### 10. The authorities are committed to strengthening fiscal data reporting and monitoring. ### Strengthening fiscal data reporting and monitoring - Monthly publication of the central government’s liabilities on the debt management office website has resumed. - Monthly publication of the full scope of public sector obligations will be in place by December 2022. - Authorities intend to pass legislation to expand the legal mandate of the debt management office to include monitoring and reporting of all liabilities of the nonfinancial public sector (including suppliers’ arrears, guarantees provided by public sector entities, and contingent liabilities; June structural benchmark). - The MoFP will publish the audited annual central government financial statements for FY2017-FY2021 by June 2022. - MoFP is preparing to commence an audit of domestic arrears to ensure the accuracy of supplier claims (structural benchmark, April 2022). - Audit of domestic arrears is intended to reduce the discrepancy between cash- and accrual-based fiscal balances and obtain a more accurate assessment of the fiscal policy stance. - The government is seeking technical assistance to: - Improve the quality of fiscal and public debt data. - Strengthen commitment control to avoid future accumulation of supplier arrears. ### Expanding the social safety net - By March 2022, the government will disburse social spending delayed in 2021. - The government will increase the size of cash transfers to individual recipients under many existing programs by at least 25 percent in March 2022. - Digitalization of records is underway to better identify eligible recipients and eliminate duplication. - A financial inclusion drive will expand digital payment capabilities for cash transfer programs to reduce transaction costs and ensure timely transfers. - The government will review all social protection expenditures and publish a time-bound, strategic plan to improve efficiency and effectiveness of social assistance programs (new September 2022 structural benchmark). - Note: Only the four major cash transfer programs with the highest coverage of vulnerable groups are monitored under program conditionality. ### Bringing debt to sustainable levels - Program targets on debt and external arrears have been met; authorities intend to gradually reduce accumulated domestic arrears. - The government has not provided debt guarantees or contracted new debt collateralized by natural resource revenues. - The CBvS has not issued new FX-linked or FX-denominated debt. - Estimated arrears as of end-2021: - Domestic debt arrears: SRD 530 million. - Supplier arrears: SRD 2.7 billion. - SRD 2.6 billion of domestic debt (loans and T-notes held by banks and private sector including arrears) was restructured by extending maturities to between 2 to 8 years. - An audit of supplier arrears is scheduled to be completed by August 2022, after which authorities will design a plan to clear these arrears. - Government has engaged official and private creditors and presented debt restructuring proposals in line with program parameters. - Paris Club creditors have provided specific and credible financing assurances indicating they will provide debt relief in line with program parameters. - China and India continue to consent to the use of Fund resources despite Suriname running arrears on their official debt. - Conditional on expected implementation of debt treatments on both official and private debt, Suriname’s debt is sustainable on a forward-looking basis (Annex II). ### Monetary and exchange rate policy - The CBvS has implemented the reserve money targeting framework and met the NDA and NIR targets under the program. - Reserve money grew faster than targeted at end-2021 due to a larger-than-expected build-up of NIR and only partial sterilization. - Inflation in December turned out modestly above program forecasts; CBvS remains committed to the downward path for inflation targeted in the authorities' economic program. - CBvS met all monetary indicative targets and reserve money targets in local currency set for end-January 2022. - The central bank is actively draining liquidity; commercial banks increased investment in central bank short-term paper. - 7-day interest rates declined from around 80 percent at end-2021 to 57 percent by mid-February. - CBvS will expand auctions of certificates of deposits and term deposits to qualifying nonbanks to strengthen monetary transmission. - Coordination with MoFP is being improved to enhance liquidity forecasting and calibrate open market operations. - CBvS remains committed to a free-floating, market-determined exchange rate and has not intervened in foreign currency markets; continuous performance criterion of zero purchases/sales of FX from/to SOEs and the private sector has been met. - Nominal exchange rate traded in a narrow range; parallel market trades close to official rate. - Government committed to sell net FX receipts to CBvS to rebuild foreign reserves; CBvS will undertake FX sales only during episodes of disorderly market conditions. - Usable international reserves projections: - Expected to rise steadily to 175 percent of the ARA reserve adequacy metric (or around 8.5 months of imports) by end-2024. - Expected to gradually fall to 139 percent of the ARA reserve adequacy metric by 2034 as restructured public external debt service payments resume. - An electronic trading platform for interbank FX trading (open to commercial banks and cambios) is expected to be established by June 2022 (structural benchmark). - FX surrender requirements for exporters and cambios were suspended in mid-December 2021; authorities will amend FX surrender regulations to redirect FX inflows from exporters to banks and cambios and remove FX surrender requirements for cambios. - Banks are easing self-imposed withdrawal restrictions; five of the nine commercial banks no longer apply withdrawal restrictions on any currency. - Around half of the banking sector is placing limits or fees on depositing FX cash. - Aggregate bank holdings of USD cash have increased fivefold since December 2020. ### Stabilizing the financial system - Vulnerabilities have intensified: - Three undercapitalized banks’ solvency has deteriorated; two now report negative capital. - These banks represent 7.8 percent of the banking system assets (7.5 percent of GDP). - A systemically large bank remains close to breaching the regulatory capital requirement. - NPLs remain high at around 12 percent of total loans and likely understate credit quality problems. - Capital shortfalls may worsen when banks shift to IFRS9. - Banks are highly liquid: liquid assets for the system are 58 percent of total assets. - Net open FX position of the system as a whole has been rising. - CBvS actions: - Independent advisor has started the asset quality review (AQR) for the largest two banks (structural benchmark, September 2022). - AQRs for the remainder of the banking system will start in the second quarter (structural benchmark, December 2022). - Following AQRs, CBvS will require submission of time-bound recapitalization and restructuring plans for banks not in full compliance. - CBvS will review and oversee the implementation of these plans and develop a roadmap to triage banks, determine conditions for public funds use, and outline steps to unwind regulatory forbearance (structural benchmark, May 2022). - Governance reforms will be developed for government-owned banks to ensure fully commercial operations. - CBvS has intensified supervision and stands ready to impose prompt corrective actions for banks experiencing difficulties. ### Strengthening crisis management and central bank governance - Structural benchmarks missed or delayed but expected soon: - End-January structural benchmarks to submit Credit Institutions Resolution Act and revised Banking and Credit Supervision Act were not met due to extra technical discussions; expected to be implemented in March 2022 and sent to National Assembly for passage. - Benchmarks to operationalize the Financial Stability Committee and a Bank Resolution Unit within CBvS were not met but expected to be implemented with a delay in March 2022. - CBvS will start work on regulations to implement Acts and operationalize the resolution framework and will work with technical assistance providers. - CBvS progress on governance reforms: - Committed to the Governance Reform Implementation Plan (GRIP) adopted in response to the 2021 safeguards assessment. - End-January 2022 structural benchmark to adopt amendments to the CBvS’s Act was not met but expected to be implemented with a delay; government submitted amendments to the national assembly in February and expects passage not later than end-April. - End-December 2021 structural benchmark to publish CBvS’s FY 2016–18 external audit results was implemented with a delay in February. - CBvS will publish FY 2019 audit results in March 2022 and asked to delay the benchmark to publish FY 2020–21 audited financial statements based on IFRS to end-November 2022 (from June 2022). - A special audit of program monetary data (Net International Reserves and Net Domestic Assets) has been completed and confirms data underlying program performance criteria for the first review. - Internal audit activities have begun with the help of an external consultant. - Review and amendment of the Foreign Exchange Regulation (FER): - Government and CBvS will review FER to document license requirements, assess appropriateness, check alignment with Article VIII obligations, and determine amendments needed in view of the amended Central Bank Act to enable CBvS to manage official reserves and conduct FX policy effectively. - Review and amendments will be undertaken in consultation with Fund staff and concluded by end-June 2022. - Recapitalization of CBvS: - MoFP and CBvS are jointly developing a plan to recapitalize CBvS. - Authorities will undertake an assessment of CBvS’ policy solvency and capital adequacy to establish size of capital shortfall (MEFP ¶29, June 2022). - Following the assessment, authorities will prepare a plan to recapitalize CBvS (structural benchmark, September 2022) including a clear target level of capital, a trigger point for recapitalization, and a binding time frame to complete recapitalization. *Source: Central Bank of Suriname and IMF staff (content as provided in the source PDF).* ### 24. The end-January 2022 structural benchmark to ratify the United Nations Convention ### The end-January 2022 structural benchmark to ratify the United Nations Convention Against Corruption (UNCAC) ### Anti-corruption, AML/CFT, and beneficial ownership - The end-January 2022 structural benchmark to ratify the UNCAC was met. - Ratification supports Suriname’s technical compliance with the FATF AML/CFT Requirements (which requires countries to become a party to the UNCAC). - Authorities actions and timelines: - A working committee established to help set up the Anti-Corruption Commission (as envisioned by the 2017 Anti-Corruption Act) by March 2022 (structural benchmark). - The government will amend the 2017 Anti-Corruption Act to ensure criminalization of all relevant corruption acts (in line with UNCAC) and to ensure routine verification of income and asset declarations by high-level and high-risk public officials (structural benchmark, June 2022). - Information on income and asset declarations will be published and proportionate sanctions will be introduced for non-compliance. - AML/CFT improvements and focus: - Authorities are working with international bodies to address shortcomings; Suriname is being assessed by the Caribbean Financial Action Task Force. - Steps (with technical assistance from the Fund) to amend the AML/CFT law and other relevant laws and regulations to align with international standards. - Particular focus on treatment of politically exposed persons and beneficial ownership requirements (structural benchmark, August 2022). - Beneficial ownership: - Suriname needs to adopt a uniform approach to beneficial ownership. - Authorities intend to define their approach clearly in the AML/CFT law, in line with FATF international standards. - Disclosure of beneficial ownership information is relevant to structural benchmarks on public investment, public procurement contracts, and EITI requirements. ### Public procurement, transparency, and Extractive Industry Transparency Initiative (EITI) - Public procurement transparency and accountability measures and timelines: - A new procurement law is expected to be adopted by the National Assembly by end-June 2022 (structural benchmark) to expand the Integrated Financial Management Information System to cover procurement, audits, and controls. - A state decree to be established by August (structural benchmark) requiring mandatory publication on a government website of all public procurement tenders and contracts, including: - names of awarded entities and their beneficial owners; - names of the public officials awarding the contracts; - an ex-post validation of delivery of the contracted services. - Extractive industries safeguards: - Authorities committed to strong safeguards to protect the extractive industries sector and guard against corruption risks. - Authorities will address EITI recommendations to: - improve the mining law to reduce discretion in investor incentives; - strengthen the framework for mining titles; - ensure publication of beneficial ownership information. ### Program modalities, conditionality, and structural benchmarks - Quantitative targets: - The PCs and the IT remain unchanged. - Staff will work with the authorities to improve the quality and timeliness of data on domestic arrears. - As improved arrears data become available, consideration will be given to changing the primary balance PC from a cash to an accrual basis (or adding separate conditionality to ensure a steady reduction in the stock of such arrears). - Prior actions: - Submitting to the National Assembly a 2022 supplemental budget consistent with the program is a prior action for completion of the first review. - New structural benchmarks established: - Publish a plan to scale back a range of tax exemptions (including an assessment of existing tax exemptions, the list of exemptions to be discontinued starting April 1, 2022, and the expected revenue impact) by March 2022, aimed at raising additional revenue of 0.4 percent of GDP. - Publish a comprehensive financial assessment of the EBS (May 2022). - Review social protection programs and publish a time-bound strategic plan to improve the efficiency and effectiveness of social benefits (September 2022). - Adjustments and delays: - The existing structural benchmark on raising the royalty on large-scale gold exporter (March 2022) is proposed to be removed. - The authorities requested to delay the benchmark to publish the CBvS’s FY 2020-2021 audited financial statements from end-June to end-November 2022. ### Access, financing, arrears, and debt restructuring - Access and capacity to repay: - Access of SDR 472.8 million (366.8 percent of quota or USD 673 million) continues to be justified by large balance of payments needs, program vulnerabilities, and program strength. - Out of the SDR 39.4 million scheduled for the first review, SDR 14.5 million would be made available for budget support as a direct disbursement to the Treasury. - Capacity to repay assessed as adequate under the program scenario, but subject to significant risks. - The access of 366.8 percent of quota would mean that Fund credit outstanding would reach a maximum of around 26 percent of exports of goods and services, 41 percent of usable reserves, and 21 percent of GDP in 2024. - Debt service 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 around 4 percent of exports of goods and services in 2029 and around 10 percent of usable reserves in 2031). - Arrears and restructuring status: - The stock of external arrears is estimated at 10 percent of GDP at end-2021 (including USD 61 million to China; USD 7 million to India; and USD 22 million to Paris Club creditors). - Authorities have been in regular contact with official bilateral creditors to regularize the arrears in line with program parameters; discussions with Paris Club creditors on specific terms of treatment are ongoing and an agreement is expected in the coming months. - Authorities presented debt restructuring options to China and India, who provided consent to proceeding with Fund financing despite official arrears; authorities intend to maintain comparable treatment among official creditors and not to make payments to official creditors until a debt treatment has been finalized. - Arrears to private external creditors (commercial loans and bonds) were USD 181 million at end-2021. - Staff judge authorities are making good faith efforts and meet the Fund’s Lending Into Arrears policy requirements; authorities’ financial advisors have provided data as requested by creditors and a revised restructuring proposal to bondholders was made in January 2022 that includes: - a nominal haircut on fixed income instruments in line with program parameters; and - a value recovery mechanism linked to future oil revenue. - Financing assurances: - Access under the EFF is helping meet sizable balance of payments and budget financing needs. - Program remains fully financed, with firm commitments of financing for the first 12 months and good prospects for adequate financing for the remaining program period. - Staff will continue to assess progress in debt restructuring as part of regular financing assurances reviews at each program review. ### Risks, scenarios, and potential impacts - Main downside risks include: - Key reforms to restore fiscal sustainability not completed due to capacity or political constraints — including reduction in the public wage bill, scaling back of exemptions, higher gold royalties, and reduced electricity subsidies. - Debt relief by official or private creditors falls short of the amount needed to restore debt sustainability. - Possible exchange volatility under the floating exchange rate regime, rising non-performing exposures for the financial sector, and sovereign-bank nexus risks leading to financial stability problems. - Covid-19 leads to a rise in hospitalizations and mortality and the need for renewed public health restrictions. - Weakness in data reporting and capacity impacts policy formulation and/or leads to misreporting during the program period. - Energy price shock sensitivity: - A preliminary IMF staff estimate: a 20 percent increase in oil prices from the current baseline assumption could lead to an increase in end-2022 inflation by 4.8 percentage points and a deterioration of the current account (as percent of GDP) by 0.9 percentage point in 2022. - Direct fiscal impact may be limited if higher revenues from the state oil company offset increased electricity subsidies, but second-round effects could be larger if fiscal measures are needed to mitigate impacts on households and firms. - Government exploring contingency measures to limit fiscal impact if the risk materializes. - Upside risk: - Potential for significant new oil developments in coming years which would be a meaningful upside risk to economic outcomes and payment capacity. - If significant new oil developments materialize, the macro framework would be modified and these resources incorporated into program design and the envelope for future debt restructuring. - Government does not expect any Final Investment Decision on Suriname’s oil reserves to be taken before the end of 2022. ### Staff appraisal, policy recommendations, and capacity priorities - Staff appraisal summary: - Authorities have shown strong ownership of the reform program; the homegrown economic recovery program is on track despite difficult conditions exacerbated by COVID-19. - Authorities remain committed to fiscal consolidation based on realistic revenue and expenditure measures while further strengthening the social safety net. - The government is expected to submit a revised 2022 budget in line with program parameters before the conclusion of the review. - Planned medium-term fiscal consolidation, supported by revenue measures and prudent expenditure policies, will place public finances on a sustainable path. - It is crucial to steadily phase out electricity subsidies and expand targeted social support programs to protect the most vulnerable. - Authorities are advancing debt restructuring negotiations; Paris Club creditors provided financing assurances; China and India consented to Fund financing despite arrears. - Debt restructuring combined with fiscal consolidation expected to restore debt sustainability, provided comparability of treatment among official creditors is ensured. - CBvS adherence to its reserve money targeting framework is critical to bring down inflation; reducing banking sector vulnerabilities is also key. - CBvS committed to further tightening monetary conditions if inflation outlook does not decline as targeted. - Key capacity and governance priorities: - Strengthen capacity, enhance governance, and improve data quality: fiscal statistics, public financial management, debt management, monetary policy, financial sector surveillance, AML/CFT, and governance. - Maintain a free-floating currency: market-determined exchange rate to support FX intermediation, FX market liquidity, and adjustment to external shocks; limit foreign currency intervention to periods of disorderly market conditions. - Continue parsimonious approach to foreign currency intervention. - Overall risk assessment: - Program faces large risks that should diminish over time with steadfast implementation of the authorities’ economic plan. - Delays in key fiscal reforms or debt restructuring could disrupt restoration of debt sustainability. - Intensification of banking system risks—particularly as deposit restrictions are unwound—could have unpredictable consequences for capital flows, the fiscal position, and domestic output. - Further Covid-19 outbreaks may require renewed public health restrictions and create growth headwinds. - Positive potential from new oil developments could strengthen growth, investment, and the balance of payments. *Source: IMF staff report excerpt (Suriname).* ### 41. Steadfast implementation of the authorities’ economic program is starting the process ### Steadfast implementation of the authorities’ economic program is starting the process ### IMF support and program status - The authorities’ homegrown economic plan provides a framework for policy reform that will institutionalize macroeconomic stability and accelerate economic recovery. - IMF staff supports the authorities’ request for completion of the first review under the EFF, and the completion of the financing assurances review. ### Fiscal developments and initial outcomes - Total revenues improved markedly in 2021, due to the marked increase from mining revenue and the stepped-up collection effort on tax revenue. - The government continues to exercise restraint to limit the growth of government expenditure. - Subsidies to the electricity sector increased due to very low tariffs and rising costs of generation on the back of the surge in international oil price in 2021. - Overall, fiscal positions are on track to improve further in 2021, and public debt is estimated to have declined. ### External sector developments - Suriname underwent a substantial current account correction following the deterioration in 2019. - The financial account weakened in 2020, largely due to other investment outflows, before strengthening in 2021 due to the new SDR allocation. - A significant part of the current account adjustment was borne by compression in imports, which have started to increase recently. - Exports that contributed to the current account adjustment have started to moderate recently. - After significant depreciation, the REER has started to appreciate recently. - International reserves have increased recently, partly due to SDR allocation and EFF disbursement, but usable reserves remain at lower than three months of imports. ### Key outlook indicators (selected) - Real GDP (percent change): 2021 -3.5; 2022 1.8; 2023 2.1; 2024 2.7; 2025 3.0; 2026 3.0; 2027 3.0. - Consumer prices (period average): 2021 58.6; 2022 59.1; 2023 37.9; 2024 38.9; 2025 22.6; 2026 13.9; 2027 10.7. - Central government debt (percent of GDP) (selected years shown in source): 2017 71.5; 2018 66.1; 2019 85.2; 2020 147.7; 2021 128.9. - Gross international reserves (USD millions) (selected levels in source): 2019 648; 2020 585; 2021 968; 2022 992; 2023 1,421; 2024 1,260. - Usable gross international reserves (USD millions) (selected levels in source): 2019 505; 2020 129; 2021 501; 2022 512; 2023 955; 2024 934. - Trade and external flows (selected): Exports of goods and services (USD millions) 2021 2,550; Imports of goods and services (USD millions) 2021 2,019; Current account (USD millions) 2021 115. ### Policy implications and near-term priorities (as reflected in the source) - Continue steadfast implementation of the authorities’ economic program to restore macroeconomic stability and accelerate recovery. - Maintain revenue-enhancing efforts, including stepped-up tax collection and effective management of mining-related revenues. - Sustain fiscal restraint to limit growth of government expenditure while managing unavoidable transfers such as electricity subsidies driven by low tariffs and higher generation costs. - Preserve and rebuild international reserve buffers; monitor usable reserves given they remain below three months of imports. - Advance the completion of IMF program reviews (first EFF review and financing assurances review) to secure ongoing external support. *Source: Suriname — IMF staff report and accompanying tables and figures.* ### 1. Gross external financing requirements 535557-12015111126826114014982222227 ### 1. Gross external financing requirements 535557-12015111126826114014982222227 ### 1. Gross external financing requirements (levels) - A. Current account deficit: 119448-261-115-1492727-9191642 - B. Public sector debt amortization: 41112214626626024023414914873206184 - (i) Central government: 1399746166160140134494848156159 - (ii) CBvS: 000000000000 - (iii) SOEs: 27225100100100100100100100255025 - C. Other outflows: 5-13-5000000000 ### 1. Gross external financing requirements (percent of GDP) - Total: 13.4 14.0-4.2 5.2 3.9 9.3 8.7 4.5 4.6 2.4 6.2 6.0 - A. Current account deficit: 3.0 11.3-9.1-4.0-5.2 0.9 0.9-0.3 0.0 0.3 0.4 1.1 - B. Public sector debt amortization: 10.3 3.1 5.1 9.2 9.1 8.3 7.8 4.8 4.6 2.2 5.8 4.9 - (i) Central government: 3.5 2.4 1.6 5.7 5.6 4.9 4.5 1.6 1.5 1.4 4.4 4.2 - (ii) CBvS: 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - (iii) SOEs: 6.8 0.6 3.5 3.5 3.5 3.5 3.3 3.2 3.1 0.7 1.4 0.7 - C. Other outflows: 0.1-0.3-0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ### 2. Sources of financing (levels) - Total sources: 714611-48295251150-11-164453-346284 - A. Asset sales (net) (Other investment account): -104244-168-251050000000 - B. Foreign direct investment (net): 119-80104-1601151041011051059697 - C. Portfolio flows (net): -59117350780000000 - (i) Central government: 01250000000000 - (ii) SOEs: 0051000000000 - (iii) Other: -59-9-160780000000 - D. Public sector debt financing: 4772019839533535374854102110 - (i) Central government: 1862019839533535374854102110 - (ii) SOEs: 29100000000000 - E. Other inflows (net): 28057-141761760-150-154-109-105-54478 ### 2. Sources of financing (percent of GDP) - Total: 17.9 15.3-1.7 10.2 8.8 5.2-0.4-0.5 1.4 1.6-9.7 7.5 - A. Asset sales (net): -2.6 6.1-5.8-0.9 3.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - B. Foreign direct investment (net): 3.0-0.2 0.0 3.6-5.6 4.0 3.5 3.2 3.3 3.1 2.7 2.6 - C. Portfolio flows (net): -1.5 2.9 1.2 0.0 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - (i) Central government: 0.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - (ii) SOEs: 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - (iii) Other: -1.5-0.2-0.5 0.0 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - D. Public sector debt financing: 11.9 5.0 3.4 1.4 1.9 1.2 1.2 1.2 1.5 1.6 2.9 2.9 - (i) Central government: 4.7 5.0 3.4 1.4 1.9 1.2 1.2 1.2 1.5 1.6 2.9 2.9 - (ii) SOEs: 7.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - E. Other inflows (net): 7.0 1.4-0.5 6.1 6.2 0.0-5.0-4.9-3.4-3.1-15.2 2.0 ### Balance, reserves, errors, and financing needs - Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+): 1795472144140-118-272-156-105-29-56858 - Expected change in gross reserves of the CBvS; accumulation (-): -14820883-383-407-454-268-360-349-7643115 - Percent of GDP series: -3.7 5.2 2.9-13.3-14.3-15.7-9.0-11.6-10.8-2.3 1.2 3.0 - Errors and omissions: -31-242-1150290000000 - Percent of GDP series: -0.8-6.1-4.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Financing needs -(2-1+3+4): 0-20-40239238572540517454105525-172 - Percent of GDP series: 0.0-0.5-1.4 8.3 8.3 19.8 18.1 16.6 14.0 3.1 14.7-4.6 ### Allocation of financing needs (levels and percent of GDP where provided) - (i) Official financing: 0-20-4036343953734003450-19-58 - Percent of GDP: 0.0-0.5-1.4 1.2 1.2 13.7 12.5 12.8 10.6 0.0-0.5-1.5 - a. IMF: 0-20-4036342282232251700-19-58 - Purchases: 0005655228223225170000 - O/w: for budget support: 00056558482590000 - Repurchases: 020402121000001958 - Percent of GDP: 0.0-0.5-1.4 1.2 1.2 7.9 7.5 7.2 5.2 0.0-0.5-1.5 - Purchases (percent of GDP): 0.0 0.0 0.0 2.0 1.9 7.9 7.5 7.2 5.2 0.0 0.0 0.0 - O/w: for budget support (percent of GDP): 0.0 0.0 0.0 2.0 1.9 2.9 2.7 1.9 0.0 0.0 0.0 0.0 - Repurchases (percent of GDP): 0.0 0.5 1.4 0.7 0.7 0.0 0.0 0.0 0.0 0.0 0.5 1.5 - b. IFIs: 00000168150175175000 - Percent of GDP: 0.0 0.0 0.0 0.0 0.0 5.8 5.0 5.6 5.4 0.0 0.0 0.0 - (ii) External arrears (net): 203203176167-37000-37 - Percent of GDP: 7.1 7.1 6.1 5.6-1.2 0.0 0.0 0.0-1.0 - (iii) Financing from external debt restructuring 1/: 154109105544-78 - Percent of GDP: 4.9 3.4 3.1 5.2-2.0 Sources: Fund staff estimates and projections. 1/ Calculated as a difference between the debt restructuring scenario and a scenario without debt restructuring. (In millions of US dollars) (In percent of GDP) Proj. ### Key program and monetary/financial indicators (selected exact figures) - Monetary Survey (Monetary Survey totals, Millions of SRD): - Net foreign assets: 6,447 6,365 8,430 5,867 11,674 24,773 24,088 42,322 43,168 51,701 66,364 - Net international reserves (Held by the CBvS): 2,216 2,515 3,685 4,345 7,905 21,859 20,727 38,554 33,807 41,897 55,115 - Net domestic assets: 9,178 10,669 9,977 13,431 20,119 22,796 22,096 18,568 20,096 18,667 17,442 - Broad money 1/: 15,621 17,030 18,403 19,269 31,793 47,568 46,184 60,890 63,264 70,367 83,806 - Central Bank (CBvS) selected items (Millions of SRD): - Net foreign assets: 1,137 512 1,992 2,394 4,039 11,680 11,266 24,828 24,625 32,114 43,697 - Net international reserves: 2,216 2,515 3,685 4,345 7,905 21,859 20,727 38,554 33,807 41,897 55,115 - Gross International Reserves: 2,802 3,140 4,296 4,790 8,199 21,862 20,730 42,902 38,073 51,716 72,761 - Reserve money: 3,004 3,674 4,975 9,593 12,817 18,294 18,967 23,191 25,047 28,605 34,540 - Financial Soundness Indicators (Percent, selected): - Regulatory capital to risk-weighted assets: 5.5 9.3 9.6 11.4 11.8 13.3 - NPL to gross loans: 10.8 13.0 12.0 10.6 14.6 12.0 - Return on assets (ROA, annualized): -0.7 0.9 0.1 1.0 2.0 1.2 - Liquid assets to total assets: 32.7 37.9 40.2 46.8 51.5 58.0 - Schedule of Reviews and Available Purchases (Millions of SDR): - Each scheduled availability date shows 39.4 (percent of quota 30.6); Total: 472.8 (percent of quota 366.8) - Memo: Quota 128.9 - Program Monitoring—Indicators of Fund Credit Under the EFF (Millions of SDR, selected): - Prospective Drawings: 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 - Repurchases: 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 - Gross International Reserves (US$ million): 992 1,260 1,620 1,970 2,046 2,003 1,888 1,792 1,697 1,595 1,527 1,476 1,454 1,442 - Gross International Usable Reserves (US$ million): 512 934 1,295 1,644 1,720 1,677 1,562 1,466 1,371 1,269 1,201 1,150 1,128 1,116 - Nominal GDP (SRD million): 56,240 77,811 96,618 111,558 125,541 139,456 150,848 163,186 176,492 190,926 206,545 223,397 241,613 261,302 - Quantitative Performance Criteria and Indicative Targets (selected exact entries, Millions of SRD or specified units): - Primary fiscal balance (cash basis) of central government (floor): 2/-2,321-7193343,007Met110TBDTBDTBD221TBDTBDTBD - Net international reserves of the central bank (floor) (millions of U.S. dollar) 2/4/-154348310317Met11-25Met103TBDTBD - Net domestic assets of the central bank (ceiling) 2/4/8,777-34316134Met-6180-50Met-1,134TBDTBD - Indicative target — Social spending of central government (floor): 2/6041,070922Not metTBDTBDTBDTBD - Program exchange rate: 14.01814.01814.01814.01814.01814.018TBD *Source: IMF staff estimates and projections; Central Bank of Suriname; Fund staff calculations and projections.* ### 1. Social spending of central government (floor) 2/3717421,1121,483 ### 1. Social spending of central government (floor) 2/3717421,1121,483 ### Major indicators (Memorandum items) - Reserve money: 19,597; 21,223; 21,856; 22,390; 22,912; 23,444; 23,858; 24,277; 24,660; 25,047 - Reserve money (local currency portion only): 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): 15,297; 16,306; 16,459; 16,612; 16,765; 16,918; 17,071; 17,224; 17,377; 17,529 - NFA (constant exchange rates): 8,000; 8,220; 8,277; 8,739; 8,778; 8,811; 9,253; 9,289; 9,316; 9,478 - Gross international reserves (millions of U.S. dollar): 1,139; 1,000; 1,004; 1,094; 1,097; 1,099; 1,187; 1,190; 1,192; 1,260 - Usable international reserves (millions of U.S. dollar): 5/673; 674; 678; 768; 771; 773; 862; 864; 866; 934 - Program exchange rate: 14.018 (repeated across reporting periods) - Notes: - Source: Authorities and IMF staff calculations and projections. - 1/ Targets as defined in the Technical Memorandum of Understanding. - 2/ Cumulative flows from begining of the year. - 3/ The 2020 figure is a stock as of end-June. - 4/ The 2020 figure is a stock as of end-December. - 5/ Official reserve assets excluding the PBOC swap and ring-fenced reserves. ### Prior Action and Structural Benchmarks under the EFF — summary of measures, target dates, status, and objectives - Prior Action (Fiscal) - Submit to National Assembly a supplemental 2022 budget consistent with the parameters of the program. - Target date: (Expected to be met) - Objective: Ensure fiscal adjustment in line with program parameters. - 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. - Target date: December 2021 - Status: Met - 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. - Target date: December 2021 - Status: Not met; implemented with a delay (February 2022) - Objective: Strengthen accountability and transparency, and reduce risk of misreporting. - National Assembly to pass amendments (to clarify/strengthen mandate, autonomy, transparency, accounting, profit distribution, reserves, recapitalization rules, and strict limits on monetary financing with transitional rules). - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency. - Establish an electronic trading platform for inter-bank/cambio FX trading. - Target date: June 2022 - Objective: Create a consolidated FX market. - Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements. - Target date: June 2022 - Status: Proposed to extend to November 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. - Target date: September 2022 - Objective: Protect the CBvS’s financial autonomy. - 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. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - 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. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - Objective: Solidify oversight over the financial sector. - Operationalize the Financial Stability Committee, composed of representatives from the MoF and CBvS. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - 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. - Target date: February 2022 - Status: Not met; expected to be implemented with a delay - Objective: Strengthen the CBvS's role in crisis management. - Finalize the roadmap for financial sector restructuring and governance reform of banks. - Target date: 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). - Target date: 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). - Target date: December 2022 - Objective: Diagnose the financial sector and potential recapitalization needs. - 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). - Target date: January 2022 - Status: Met - 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. - Target date: January 2022 - Status: Met - 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 yield equivalent additional revenue). - Target date: March 2022 - Status: Proposed to remove - Objective: Ensure fiscal adjustment in line with program parameters. - Passage of laws needed to implement the VAT by the National Assembly. - Target date: March 2022 - Objective: Ensure fiscal adjustment in line with program parameters. - Publish a plan to scale back a range of tax exemptions aimed at raising additional revenue of 0.4 percent of GDP (including assessment of exemptions and list to be discontinued starting April 1, 2022). - Target date: March 2022 - Status: New - Objective: Ensure fiscal adjustment in line with program parameters. - Commence an audit on outstanding supplier arrears. - Target date: April 2022 - Objective: Improve governance and increase transparency; improve fiscal data reporting. - Publish the financial assessment of EBS that includes its legacy liabilities. - Target date: May 2022 - Status: New - Objective: Achieve full cost recovery in the electricity sector. - 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. - Target date: June 2022 - Objective: Improve debt data reporting. - Create a large taxpayer unit to increase taxpayer compliance. - Target date: June 2022 - Objective: Improve tax administration. - Review the social protection public expenditure and publish a time-bound strategic plan to improve the efficiency and effectiveness of social benefits. - Target date: September 2022 - Status: New - Objective: Strengthen social spending. - 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. - Target date: December 2022 - Objective: Contain fiscal risks. - Governance (anti-corruption) - Ratify the United Nations Convention Against Corruption (UNCAC). - Target date: January 2022 - Status: Met - 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, in line with the UNCAC. - Target date: 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 with UNCAC) and to strengthen income and asset declaration provisions. - Target date: June 2022 - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Governance (procurement) - Enact the new procurement law to centralize publication of all tenders and contract awards and to expand the Integrated Financial Management Information System to cover procurement, audits, and controls. - Target date: 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. - Target date: August 2022 - Objective: Strengthen procurement efficiency. - 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). - Target date: August 2022 - Objective: Mitigate the adverse effects of criminal economic activity and promote integrity in financial markets. ### Annex I — Capacity Development (CD) Strategy: context and priorities - Context - Executive Board on December 22, 2021 approved a 36-month arrangement under the Extended Fund Facility (EFF). - Central objective of the authorities’ program: restore macroeconomic stability and address systemic fiscal and external sector imbalances. - Program pillars include: - Restore fiscal sustainability and strengthen fiscal management. - Bring debt down to sustainable levels. - Improve the social safety net to better-protect the most vulnerable. - Upgrade the monetary policy framework and maintain a flexible, market-determined exchange rate adopted in June 2021. - Improve the viability of the financial system (including recapitalization and more effective bank oversight). - Tackle corruption, strengthen institutions and institutional governance, and enhance Suriname’s AML/CFT framework. - CD delivery and coordination - CD activities increased markedly in 2021 after the authorities requested Fund support. - A resident representative office will be established to support CD delivery and coordination. - Collaboration with CARTAC, IDB, CDB, UNODC, OAS, World Bank Group, the Dutch Ministry of Finance and the Dutch Central Bank is ongoing. - CD Priorities and specific areas of support - Strengthen the Institutional Framework for Fiscal Policy - The authorities’ economic plan targets an improvement in the primary balance of around 14 percentage points of GDP over 2021-2024. - Government financial statistics (GFS): - An independent and comprehensive audit of the stock of arrears is being organized and should be completed by August 2022. - CD will support improving the quality and timeliness of fiscal and public debt reporting and amending the SDMO mandate to cover liabilities of the whole non-financial public sector. - STA TA missions identified significant weakness in compilation of fiscal and public debt data; follow-up remote technical support expected through end-Q1 2022; two prospective follow-up TA missions are in planning stage. - Public financial management (PFM): - CD will support development of a comprehensive medium-term fiscal framework and medium-term fiscal strategy, reform and modernization of MoF cash and liquidity management, and expenditure control processes. - Two TA missions completed in mid-2021 provided recommendations on reforming the Treasury function and improving financial accounting of budget execution. - CARTAC TA on fiscal reporting planned for mid-2022. - Revenue administration: - CD needed to support transition to VAT by July 2022. - Support for creation of large taxpayer units (Dutch government assistance noted). - Strengthening natural resource taxation critical given potential for oil revenue in the medium-term. - Resources for CD in this area remain to be confirmed; no TA missions planned at this stage. - Governance of the electricity sector: - CD needed to support reform of EBS governance, management, and electricity tariff pricing. - IDB providing assistance for an independent financial assessment of EBS. - Resources for CD in this area remain to be confirmed; no TA missions planned at this stage. - Expenditure policy: - CD would focus on rationalizing the government wage bill and untargeted social spending including energy subsidies. - Resources remain to be confirmed; no TA missions planned at this stage. - Improving social safety net: - CD to support design and targeting of social transfer programs to enhance spending quality and efficiency. - IDB social protection support program to work on enhancing efficiency and transparency of cash transfer programs. - Other economic statistics: - CD to improve monetary statistics, national accounts (currently annual frequency with eight to nine months lag; goal to produce quarterly accounts), price statistics (rebasing exercise), and external sector statistics. - STA expected to provide hands-on training to monetary statistics compiler in the Caribbean region this year. - CARTAC follow-up technical assistance on balance of payments planned for April 2022. *Source: IMF staff and Suriname authorities (from the EFF documentation and Annex I: Capacity Development Strategy).* ### 5. The authorities have adopted a flexible exchange rate regime and fully transited to the ### 5. The authorities have adopted a flexible exchange rate regime and fully transited to the Reserve Money Target (RMT) framework. ### Central Bank operations and Reserve Money Target (RMT) - Current focus: enhancing the functioning of the RMT framework and the auction process for RMT. - Capacity development (CD) support: - Dutch Central Bank provided a long-term expert (LTX) coordinating with MCM/WHD to provide TA on RMT, the auction process for RMT, and development of alternative instruments for interbank transactions. - CBvS requested CD from CARTAC on the compilation and analysis of monetary statistics. - Continuous CD needs: - Strengthen modelling and forecasting capabilities. - Improve monetary policy decision making and liquidity management. - Design an effective communication strategy. - Develop a medium-term framework for foreign exchange operations and market development. - Resource/status: - Resources for CD activities in this area remain to be confirmed and no technical assistance missions are planned at this stage. ### Strengthen the Autonomy and Governance of the CBvS and the Supervisory and Crisis Management Framework - Legal and governance reforms: - Authorities are revising the CBvS’s law to improve governance, transparency, accountability and oversight. - Revision of the Bank Supervision Law to facilitate risk-based supervision, including powers to assess banks’ business strategies, governance, risk management (including provisioning policies), capital planning, budget forecasting, valuation of collateral, and profit and loss projections. - Resolution framework to be strengthened to increase CBvS’ powers and tools for early intervention, recovery, and resolution of financial institutions. - Fund support and actions: - LEG is helping modify and adopt the CBvS’s law to strengthen the CBvS’s mandate, autonomy, and decision-making structures. - FIN is monitoring implementation of a governance reform implementation plan adopted in June 2021 by the CBvS. - CD needed to help the ministry of finance and CBvS jointly develop a plan to recapitalize the CBvS; additional resources may be needed. - Financial supervision and regulation: - LEG and MCM are discussing assistance options with CBvS on Bank Supervision and Bank Resolution Laws. - After legal framework revision, focus will shift to bank supervision practices and enforcement by CBvS. - Team will push for a scoping mission by MCM to identify priority areas and provide a roadmap for reforms and practical guidance. - Resources for supporting CD activities in this area remain to be confirmed and no technical assistance missions are planned. ### Improve Governance: AML/CFT and Anti-corruption - AML/CFT: - CD will focus on strengthening AML/CFT framework in line with the international AML-CFT standard. - Project funded by Phase III of the Fund’s AML/CFT Thematic Trust Fund. - LEG scoping mission in November 2021 identified support areas: (i) legal drafting, (ii) risk-based supervision, (iii) support for the MOT (Suriname’s financial intelligence unit), and (iv) measures to support pressures on correspondent banking relationships. - Follow-up: staff started providing legal drafting TA support, including a desk-review of Suriname’s AML/CFT laws. - Tackling corruption and transparency: - CD prioritized to support revision of the Anti-Corruption law and procurement law. - Resources for supporting CD activities in this area remain to be confirmed and no technical assistance missions are planned. ### Challenges and Mitigating Factors - Ownership and risks: - Authorities generally have strong ownership of the Fund-supported program and view CD as critical. - Risks of delayed implementation are high due to limited human resources, weak information technology infrastructure, and absorption capacity constraints. - Mitigants: - The three-year duration of the EFF arrangement is expected to mitigate risks by catalyzing support from IFIs and bilateral partners and incorporating critical CD activities as program structural benchmarks. - The Fund’s resident representative office expected to play a critical role in CD coordination between authorities and CD providers. ### Capacity Development Activities (2011–2021) — Central Bank and Related TA highlights - Central Bank Operations / Monetary Framework related activities (selected entries as presented): - Introduction of indirect monetary instruments MCM Jun 2011 - T-bills auction MCM Mar 2013; MCM Jul 2013; MCM Dec 2013; MCM Jul 2014; MCM Apr 2016; MCM Dec 2013 - Central bank modernization MCM Septembe 2013 - Modernizing payments system at the Central Bank of Suriname MCM Octobe 2013 - Central bank accounting and treasury account rationalization MCM Decembe 2013 - Macroeconomic and monetary operations MCM September 2 2015 - TA needs assessment MCM Septembe 2015 - Exchange rate policy MCM Novembe 2015 - Monetary framework operations MCM Marc 2016 - T-bills auction MCM Apri 2016 - Liquidity management and monetary operations MCM June 2016 - Enhancing Central Bank financial strength and transparency MCM Octobe 2016 - Monetary Policy Framework and Foreign Exchange Operations MCM Januar 2020 - Desk reviews for Amendment of Central Bank Law LEG May 2021 - Calibration of Reserve Money Targets MCM Jun 2021 ### Annex II. Debt Sustainability Analysis — Key findings and assumptions - Overview: - 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 and a large fiscal adjustment) suggests public debt and GFNs would be sustainable on a forward-looking basis, but public debt would remain high (above 100 percent of GDP) over the medium term and highly vulnerable to macro-fiscal shocks. - Vulnerabilities particularly to real exchange rate depreciation, economic growth, primary balance, and higher recapitalization needs of the banking system and/or the CBvS. - Vulnerability to real depreciation is mitigated by the significant share of government revenues received in foreign currency. - Definitions and data scope: - For the DSA, “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; estimated to have declined to 125 percent at end-2021 compared to 129 percent of GDP at the time of the EFF request staff report. - External public debt: 94 percent of GDP at end-2020; estimated to decline to 82 percent of GDP by end-2021. - Multilateral debt at end-2021: 26 percent of GDP (debt owed to IADB estimated at 19 percent of GDP). - Official bilateral debt at end-2021: estimated at 15 percent of GDP. - ECA-backed debt at end-2021: estimated at 7 percent of GDP. - Of official creditors at end-2021: China at 18 percent of GDP, Paris Club at 3 percent of GDP, India at 1 percent of GDP. - Private bonds and loans: two international bonds (placed in 2016 and 2019) account for 23 percent of GDP; non-ECA backed facilities account for 1 percent of GDP as of end-2021. - External arrears: 10 percent of GDP accumulated to official and commercial creditors as of end-2021 (accumulated arrears as of end-2020 to multilateral creditors were cleared in 2021). - Domestic debt: reached 53 percent of GDP by end-2020 and estimated to decline to 43 percent of GDP by end-2021. - CBvS held domestic debt equivalent to 18 percent of GDP in 2021. - Debt to commercial banks estimated at 9 percent of GDP. - Debt to non-banking institutions estimated at 5 percent of GDP. - Government accumulated arrears to commercial banks and non-bank private sector of 11 percent of GDP as of end-2021. - Macroeconomic assumptions (specific assumptions as presented): - Growth: - Real GDP declined by 15.9 percent in 2020. - In 2021, staff expect growth to stay negative, at 3.5 percent, reflecting fiscal and monetary tightening. - Over the medium term, growth would recover gradually to 2.5‒3 percent. - Growth steady at 3 percent over the long term. - Overall fiscal multiplier used is 0.3 reflecting Alichi and others (2019). - Inflation: - Inflation spiked to about 61 percent (end of period) in 2020. - End-of-period inflation expected to remain at about 61 percent in 2021 and further down to 26 percent in 2022. - Staff expect inflation to decline to 12 percent by the end of the program period, and then to gradually decrease to 5 percent in the long run. - Assumed pass-through from exchange rate depreciation about 70 percent over the long term (Shibata (2019)). - REER: - 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 at -1.3 percent in 2021. - Over the medium term, primary balance would improve to 4.5 percent of GDP under the program. - Fiscal policies implemented during the program period will remain at their 2024 bearings until 2035. - After the program, the primary balance is projected to converge to 3.5 percent of GDP and remain at this level until 2035. - The proposed policy adjustment package is characterized as very large; the long-term primary balance is high by both international standards and historical experience in Suriname but viewed as necessary to restore debt sustainability. - Public debt under restructuring scenario: - Program overarching objective: reduce public debt from 148 percent of GDP in 2020 to 60 percent of GDP by 2035, with an intermediate target of 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. - Standard MAC DSA thresholds for EMs: GFN of 15 percent of GDP and a debt stock of 70 percent of GDP; given Suriname’s vulnerabilities, a buffer is necessary; 60 percent debt-to-GDP target consistent with recent restructurings in the region. - Baseline program scenario assumptions on restructuring: - Debt perimeter for restructuring covers external commercial and official bilateral debt (including arrears), totaling about 65 percent of GDP as of end-2020. - Restructuring projected to happen at end-2022 with commercial and official debt service due in 2021 and 2022 becoming arrears. - Face value of external commercial debt, including arrears—bonds and non-ECA backed loans—is reduced by 40 percent at end-2022, and amortization of remaining debt outstanding would be paused for 3 years. - Debt from all official bilateral creditors restructured on same terms as Paris Club creditors. - Paris Club stock treatment assumption: no face value reduction of ECA-backed commercial debt, including arrears accumulated until end-2022, but amortization of remaining debt outstanding paused for 8 years. - No face value reduction of official debt, including arrears, and amortization of remaining debt outstanding paused for 7 years. - Restructuring scenario also assumes interest payments starting in 2023 with reduced average coupon rates of 3.4 percent for non ECA-backed commercial debt and Eurobonds. *Italic: IMF staff report content as provided in the supplied document excerpt.* ### 1.1 percent for official and ECA-backed commercial debt. Under the baseline, this restructuring ### Suriname: Debt Sustainability Under the Restructuring Scenario ### Restructuring outcomes and creditor NPV reductions - Restructuring scenario results in NPV reduction of around 36 percent for official bilateral creditors at a 5 percent discount rate. - Restructuring scenario results in NPV reduction of around 45 percent for external commercial creditors at a 5 percent discount rate. - Restructuring scenario results in NPV reduction of around 62 percent for official bilateral creditors at a 10 percent discount rate. - Restructuring scenario results in NPV reduction of around 58 percent for external commercial creditors at a 10 percent discount rate. - 1.1 percent for official and ECA-backed commercial debt. (text fragment present in source) ### Financing, CBvS repayment, and arrears treatment - CBvS Debt repayment: Some program disbursement is programmed to repay part of an existing loan to the CBvS over the program period. - Financing: - Financing requirements are reduced significantly over the medium term due to the external debt restructuring (through face-value reduction and coupon reduction on existing external bilateral and commercial debt). - Project financing from multilateral creditors is assumed to gradually decline in the long term as Suriname switches to market financing of its capital expenditure. - Financing from external private creditors is assumed to resume gradually over the medium and long term. - Domestic financing is expected to continue. - External and domestic arrears: - One quarter of the stock of arrears owed to the official creditors at end-2021 will be settled six months after the restructuring agreement is reached. - Another quarter of the arrears will be settled 4.5 years after the agreement. - The remaining stock of arrears to the official creditors, as well as the arrears to external private creditors accumulated from 2020 to 2022, are projected to be addressed as part of the debt restructuring. - Arrears to multilaterals have been fully cleared and no new arrears will be accumulated going forward. - The government is estimated to have accumulated domestic debt and supplier arrears of around SRD 3.3 billion during 2021. - At the end of 2021, the government has restructured around SRD 2.6 billion of domestic debt (loans and T-notes held by banks and private sector including arrears) with maturity extension between 2 to 8 years; this is estimated to have marginally lowered average gross financing needs and debt by 0.1 and 0.2 percent of GDP, respectively, over 2022-2035. - Remaining domestic arrears would be cleared between 2023 and 2026. ### Public debt trajectory and Gross Financing Needs (GFN) - Under the restructuring scenario, public debt is sustainable and placed on a steady downward trend: - Public debt falls below 120 percent in 2024. - Public debt falls below 80 percent in 2030. - Public debt falls below 60 percent by 2035. - GFNs trajectory: - GFNs decline sharply from 17 percent in 2021 to around 7 percent in 2024. - GFNs rise temporarily to about 11 percent by 2030 (due to debt service to the IMF and repayments of restructured claims). - GFNs then gradually decline to 9 percent and remain at sustainable levels over the long term. - GFN targets shown in figures: GFN average target of 9 percent; GFN max target of 12 percent. Final target of 60 percent and intermediate target of 120 percent referenced in figures. ### Risk assessment and exposure of the banking sector - The risk assessment identifies all public debt and GFN indicators as a high risk for Suriname under the restructuring scenario. - Among indicators on the debt profile, market perception, foreign currency debt, and non-residents’ holding of public debt are also at high risk. - External financing requirements are deemed at moderate risk. - Additional risk: If the domestic banking sector is called upon to meet domestic financing needs in a stress event, the banking sector may need to absorb 16 to 18 percent of bank assets of sovereign debt over 2021-26 and 2026-31, respectively, which is a risk to domestic financing requirements and to banks in their current fragile state. ### Stress tests — vulnerability to macroeconomic shocks - Suriname’s debt-to-GDP ratio exceeds the emerging market debt burden benchmark of 70 percent of GDP in all shocks (real GDP, primary balance, interest rate and real exchange rate), indicating vulnerability and the need for prudent fiscal policies. - Macroeconomic shocks with the largest impact: - Macro-fiscal shock (combination of shocks on primary balance, real GDP growth, real exchange rate, and real interest rates): would increase debt by around 180 percent of GDP by 2026 compared to the baseline. - Real exchange rate shock: would push up debt by about 25 percent of GDP by 2026 compared to the baseline. - Shocks related to assumptions on 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. ### Box 1 — Specific stress test scenarios and impacts - Primary balance shock: baseline minus half of the 10-year historical standard deviation (primary balance is lower by 3.0 percent of GDP on average each year over 2022‒23). Result: public debt rises to 126 percent of GDP by 2024, declining to 104 percent of GDP in 2026. - GDP growth shock: real GDP growth reduced by 1 standard deviation for 2 consecutive years (growth is lower by 6.4 percent on average each year over 2022-23). Result: debt increases to 141 percent in 2024; impact similar to primary balance shock but more pronounced. - Real interest rate shock: higher real interest rates by 500bps would lead to debt increasing to 123 percent in 2024, declining to 113 percent in 2026. - Real exchange rate shock: additional 30 percent depreciation of the real exchange rate than under the baseline would push debt to 149 percent of GDP in 2024 before declining to about 123 percent in 2026. - Macro-fiscal shock: combined shocks push debt to 294 percent of GDP in 2024, declining slightly to 279 percent in 2026. - Larger CBvS and commercial banks recapitalization shock: additional 10 percent of GDP in 2022; would shift debt to 130 percent of GDP by 2024, declining to 109 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). Result: debt to GDP rises to 126 percent in 2024 and then declines to 106 percent by 2026. ### External Debt Sustainability (External DSA) - External debt estimated around 164 percent of GDP at end-2020, substantially higher than 100 percent of GDP at end-2019. - Increase in external debt ratio largely due to a massive devaluation of the Surinamese dollar and a large output contraction in 2020. - Total external debt forecasted to decline to around 121 percent of GDP at end-2026. - Public sector external debt accounts for more than 50 percent of total external debt and is expected to decline substantially due to a large fiscal adjustment and public external debt restructuring. - Staatsolie’s external debt accounts for about 20 percent of the total external debt and is expected to be paid down (on a net basis), contributing to the decline in external debt. - External shock impacts by 2026 (compared to baseline): - Depreciation shock to the exchange rate of 30 percent would push up external debt to 146 percent of GDP in 2026, 25 percentage points higher than in the baseline. - Permanent shock to the non-interest current account balance (baseline minus half of the 10-year historical standard deviation) would raise external debt to 139 percent of GDP by 2026. - A shock of the same magnitude and duration on real GDP growth would result in higher external debt, of 14 percent of GDP by 2026. *Source: IMF Staff Estimates* ### 15. Continued internal and external adjustment is critical to ensure external sustainability ### 15. Continued internal and external adjustment is critical to ensure external sustainability ### Key policy recommendation - Fiscal adjustment, public external debt restructuring, and a shift to a flexible exchange rate under a tight monetary framework would help restore stability, eliminate macro-economic imbalances, improve external sustainability and reduce external financing needs. ### Public debt dynamics and projections (Restructuring Scenario) - Nominal gross public debt (in percent of GDP): 40.3, 85.2, 147.7, 125.3, 132.2, 116.2, 119.5, 105.0, 99.0, 91.6, 86.4, 80.9, 75.7 (series shown in source). - Public gross financing needs (in percent of GDP): 7.2, 28.6, 18.3, 17.0, 11.1, 0.3, 6.6, 3.3, 6.2, 7.3, 8.1, 9.6, 11.2 (series shown in source). - Real GDP growth (in percent): 1.7, 1.1, -15.9, -3.5, 1.8, 2.1, 2.7, 3.0, 3.0, 3.0, 3.0, 3.0, 3.0 (series shown in source). - Inflation (GDP deflator, in percent): 9.9, 4.4, 44.9, 52.0, 35.9, 21.6, 12.5, 9.3, 7.8, 5.0, 5.0, 5.0, 5.0 (series shown in source). - Nominal GDP growth (in percent): 11.7, 5.6, 21.8, 46.6, 38.4, 24.2, 15.5, 12.5, 11.1, 8.2, 8.2, 8.2, 8.2 (series shown in source). - Effective interest rate (in percent): 5.6, 4.6, 5.3, 2.0, 2.5, 2.8, 2.5, 2.4, 2.3, 2.9, 3.2, 3.3, 3.6 (series shown in source). ### Contributions to changes in public debt (Restructuring Scenario) - Change in gross public sector debt (cumulative): 5.7, 19.1, 62.5, -22.4, 6.9, -16.0, 3.3, -14.5, -6.0, -7.4, -5.2, -5.5, -5.2, -72.0 (series shown in source). - Identified debt-creating flows: 2.6, 20.6, 53.2, -26.6, 1.7, -22.3, -3.1, -15.1, -6.6, -7.8, -5.6, -5.9, -5.6, -96.9 (series shown in source). - Primary deficit (in percent of GDP): 2.6, 19.0, 9.7, 1.3, -1.7, -3.5, -4.5, -4.0, -3.5, -3.5, -3.5, -3.5, -3.5, -29.9 (series shown in source). - Automatic debt dynamics: 0.0, 4.6, 38.0, -29.1, -0.4, -17.6, 0.6, -10.3, -2.3, -4.3, -2.1, -2.4, -2.1, -70.2 (series shown in source). - Interest rate/growth differential: -2.6, -0.6, -11.4, -44.7, -32.4, -22.3, -12.8, -10.8, -8.3, -4.8, -4.3, -3.9, -3.5, -147.9 (series shown in source). - Of which: real interest rate: -2.1, 0.1, -22.5, -48.3, -30.7, -20.0, -10.1, -7.6, -5.5, -2.1, -1.8, -1.5, -1.2, -128.9 (series shown in source). - Of which: real GDP growth: -0.5, -0.7, 11.1, 3.5, -1.7, -2.3, -2.7, -3.2, -2.8, -2.7, -2.5, -2.4, -2.2, -19.0 (series shown in source). - Exchange rate depreciation contribution: 2.5, 5.2, 49.4, 15.6, 32.0, 4.7, 13.4, 0.5, 6.0, 0.5, 2.2, 1.5, 1.4, 77.7 (series shown in source). - Debt Restructuring (nominal cut): 0.0 and a one-off -14.0 in the projection sequence (series shown in source). - IMF BOP support cumulative: 0.3, 0.0, 0.0, 0.0, 4.7, 5.3, 5.2, 0.0, 0.0, 0.0, 0.0, 0.0, 15.3 (series shown in source). - Central Bank and private bank recapitalization cumulative: 0.0, 0.0, 0.0, 0.0, 10.0, 1.0, 0.7, 0.6, 0.5, 0.4, 0.4, 0.4, 14.2 (series shown in source). - External arrear accumulation cumulative: 3.3, 6.6, 5.6, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 12.2 (series shown in source). ### Debt profile, risks, and stress tests - Public debt held by non-residents, public debt in foreign currency, change in share of short-term debt, bond spread, and external financing requirement are used for the heat-map risk assessment; benchmarks include gross financing needs benchmark of 15 percent and other numerical thresholds (e.g., 200 and 600 basis points for bond spreads; 5 and 15 percent of GDP for external financing requirement; 0.5 and 1 percent for change in the share of short-term debt; 15 and 45 percent for public debt held by non-residents; 20 and 60 percent for share of foreign-currency denominated debt). - Stress tests presented under the restructuring scenario include: - Primary Balance Shock, Real GDP Growth Shock, Real Interest Rate Shock, Real Exchange Rate Shock, Combined Shock, Commodity-related Revenue Shock, Larger CB/PB Recapitalization Shock. - Under multiple stress scenarios, gross nominal public debt and public gross financing needs can rise substantially (figures shown in series across 2021–2026 in source). - External debt bound tests and alternative scenarios shown include interest rate shock, current account shock, combined shock, 30 percent real depreciation shock, growth shock; baseline external debt (in percent of GDP) series and scenario boxes are reported in the source figures. ### External debt and external financing need (Table 2) - Baseline: External debt (in percent of GDP): 106.3, 87.7, 88.0, 99.7, 164.4, 150.3, 151.4, 137.2, 145.8, 129.8, 120.9, -2.4 (series shown in source). - Change in external debt (in percent of GDP): 56.6, -18.5, 0.3, 11.7, 64.7, -14.1, 1.1, -14.2, 8.6, -16.0, -8.9 (series shown in source). - Identified external debt-creating flows (in percent of GDP): 56.3, -7.6, -4.4, 14.2, 30.3, -4.7, 1.7, 0.3, 0.0, -0.5, -0.5 (series shown in source). - Current account deficit, excluding interest payments (in percent of GDP): 3.4, -4.2, 0.7, 9.2, -11.1, -10.1, -2.7, -1.6, -1.5, -1.3, -1.1 (series shown in source). - External debt-to-exports ratio (in percent): 219.5, 147.0, 157.3, 173.8, 193.8, 184.1, 172.0, 162.4, 178.2, 165.2, 160.2 (series shown in source). - Gross external financing need (in billions of US dollars): 0.8, 0.3, 0.6, 0.9, 0.3, 0.5, 0.6, 0.5, 0.5, 0.4, 0.5 (series shown in source). - Gross external financing need (in percent of GDP): 22.8, 8.6, 14.6, 22.7, 11.3, 10-Year, 10-Year, 17.0, 19.8, 14.6, 13.9, 10.9, 14.1 (labels and series shown in source). ### Alternate scenarios and realism assessment - Alternative debt projection scenarios shown: Baseline, Historical, Constant Primary Balance. - Under Baseline assumptions (examples): Real GDP growth -3.5, 1.8, 2.1, 2.7, 3.0; Inflation 52.0, 35.9, 21.6, 12.5, 9.3; Primary Balance -1.3, 1.7, 3.5, 4.5, 4.0, 3.5; Effective interest rate 2.0, 2.5, 2.8, 2.5, 2.4, 2.3 (series shown in source). - Under Constant Primary Balance scenario: Primary Balance held at -1.3 across projection years with corresponding debt dynamics reported in source. - The IMF staff assesses the realism of macro-fiscal and debt projections using forecast track record, boom-bust analysis, and metrics such as 3-year CAPB adjustment and 3-year average CAPB level; Suriname percentile ranks and forecast errors are presented in source charts. *Source: IMF staff estimates using preliminary data from Suriname Debt Management Office (SDMO) and CBvS; IMF staff and Surinamese authorities.* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Recent economic developments and outlook - Economy contracted by 15.9 percent in 2020 and is likely to contract by another 3½ percent in 2021. - Monthly economic activity indicator (12-month moving average) improved from -15 percent in early 2021 to -2 percent in September 2021. - Inflation peaked at 74 percent (y/y) in August and declined to 60.6 percent at the end of 2021. - Nominal SRD/USD exchange rate remained largely stable since the central bank allowed the official exchange rate to be determined by market conditions in June 2021 and appreciated slightly near the end of 2021. - Usable international reserves were low at around 3 months of imports at the end of 2021 amid very low import levels due to import compression. - Import contraction remained strong, resulting in a higher current account surplus in 2021. - Public debt fell from 148 percent of GDP at end-2020 to 125 percent of GDP at end-2021. - 2021 primary balance: estimated 3.5 percent of GDP on a cash basis; -1.3 percent of GDP on an accrual basis. - Newly accumulated supplier arrears in 2021 are estimated to be around 5.7 percent of GDP; total arrears to domestic debt holders and suppliers are estimated to be around 11 percent of GDP. - As of mid-February 2022, about 45 percent of the population has received at least one dose of the COVID-19 vaccine and about 40 percent were fully vaccinated. ### Banking system vulnerabilities - Solvency deteriorated in two of the three banks that were already undercapitalized; they now report negative capital. - A fourth bank remains close to breaching the regulatory capital requirement. - Banking system has sufficient access to liquidity in different currencies, with banks dealing with an influx of cash foreign currency due to their increased role in the foreign exchange market following unification of the exchange rate. - Half of the banking sector still applies self-imposed withdrawal restrictions (various forms), and around half (predominantly the larger banks) are placing self-imposed limits or fees on the depositing of FX cash to manage inflows. ### Policy objectives of the program - Restore fiscal sustainability and strengthen fiscal management. - Bring debt down to sustainable levels. - Improve the social safety net to better-protect the most vulnerable. - Upgrade the monetary policy framework and adopt a flexible, market-determined exchange rate. - Improve the viability of the financial system (including, where needed, through recapitalization) and develop more effective bank oversight. - Tackle corruption, strengthen institutions and institutional governance, and enhance Suriname’s AML/CFT framework. ### Fiscal strategy and targets - Submit a supplemental 2022 budget fully aligned with the program; budget envisages a primary surplus of 1.7 percent of GDP (about SRD 1,351 million) in 2022. - Program target: primary surplus of 4.5 percent of GDP by 2024; program targets an improvement in the primary balance of 14 percent of GDP over 2021-2024. - Discretionary policy measures expected to generate around 13 percent of GDP in deficit reduction over 2021-2024 (remainder from increased mineral export receipts and real exchange rate depreciation). - Reduce wage bill to below 7 percent of GDP by 2024 through workforce reductions and caps on nominal growth of individual compensation below projected inflation. - Employment rationalization strategy to be published in April 2022 with clear quantitative targets. ### Key fiscal measures (implemented or planned) - Sales tax: - A 2-percentage point increase in the sales tax on goods and services was passed in January and subsequently unified; tax raised further in October by 4 percentage points (to 12 percent) levied on all goods and services. - Plan to replace the sales tax with a new value-added tax (VAT) on July 1, 2022. All accompanying laws needed to implement the VAT will be passed by end-March 2022. - Royalties and mining sector: - Royalty rate for small-scale gold exporters increased from 2.75 percent to 7.5 percent by decree in January 2021; phased approach adopted with a decree to raise royalties to 4.5 percent at the beginning of 2022 before reaching 7.5 percent by July 2022. - A multi-departmental task force commissioned last November to review revenue collection from small-scale gold exporters; task force to publish recommendations by April 2022. - Proposal to remove structural benchmark on raising royalty rate for large-scale gold exporters by end-March 2022 and instead introduce a new structural benchmark to publish a plan to scale back a range of tax exemptions by end-March 2022. - Measures expected to generate additional revenue around 0.4 percent of GDP in 2022 (equivalent to that from a 1.5-percentage point increase in the royalty rate). - Tax exemptions: - Review and scrutiny of existing exemptions; exemptions deemed inappropriate would be discontinued starting April 1, 2022 following the review. - Hire an international reputable firm to conduct an audit on exemptions granted from 2019 to 2021; audit expected to complete before August 2022 (interim results by June if available); legal actions including claw back and penalties will follow as appropriate. - One-time solidarity tax: - A one-time solidarity tax of 10 percent on household and business income in excess of SRD 150,000 in the 2021 calendar year. - Civil service compensation: - Limit nominal increase in total wage and benefits bill in 2022 to 25 percent. Budgeted civil service compensation in 2022 is SRD 5,845 million (a 25 percent increase from the 2021 level). Total compensation in 2021 grew 16 percent to around SRD 4.7 billion. - Electricity sector: - Increase average electricity tariff to achieve full cost recovery by end-2024; increased average tariff by 103 percent in July and will further raise it by 25 percent in May 2022. - Publish a comprehensive financial assessment of Energie Bedrijven Suriname (EBS) by end-May 2022 with technical support from the IDB (a new structural benchmark). - Draw up a financial and operational restructuring plan for EBS by September 2022 and implement the plan by end-2023. - Equip the Suriname Energy Authority to serve as an independent regulatory agency implementing quarterly tariff adjustments starting in January 2023. - Retain a low “social” electricity tariff for economically vulnerable customers determined by a means test; recipients of means-tested cash transfer programs will automatically start receiving the social tariff in their EBS billing accounts by end-2022. - Subsidies and transfers: - Reduce transfers and subsidies (excluding electricity subsidies) from about 4 percent of GDP to around 3 percent of GDP by 2024 by improving spending efficiency of public agencies. - Revenue measures: - Reduce tax exemptions starting April 2022 to raise additional revenue. - Introduce a revenue-neutral withholding tax (on interest payments, royalties, and service fees) in 2022. ### Financial sector and supervisory actions - Intervened in banks by further intensifying supervision and started an Asset Quality Review for all banks assisted by an independent reputable international firm based on Terms of Reference agreed with IMF staff. - Progressed with adjustments to financial sector legislation. - Will operationalize a Financial Stability Committee to facilitate coordination and information exchange between the Ministry of Finance and Planning (MoFP) and the Central Bank of Suriname (CBvS) and a Bank Resolution Unit at the CBvS. ### Governance, accountability, and communication - Established a social partnership (private sector, public sector, unions, academia, civil society) to monitor program implementation and an independent, home-grown assessment of progress. - As part of communication strategy, held frequent discussions with broad society on the EFF-supported program and the government’s economic recovery plan; intend to publish this letter on the websites of the MoFP and CBvS. - Embarked on extensive capacity development programs with IMF support. ### Requests and program implementation - Request completion of the first review of the extended arrangement under the EFF to make available an amount equivalent to SDR 39.4 million (30.6 percent of quota or about USD 55 million) upon approval, out of which SDR 14.5 million (about USD 20 million) would be for budget support. - Request the financing assurance and LIA/LIOA review. - Request to include three new structural benchmarks into the program, remove one structural benchmark, and reset the target date for one existing structural benchmark. - Government commits to provide IMF staff with all relevant information required to complete scheduled program reviews and monitor performance on a timely basis. - Government will observe the standard continuous performance criteria regarding exchange restrictions, multiple currency practices, bilateral payment agreements inconsistent with Article VIII, and import restrictions for balance of payments reasons. *Appendix I. Letter of Intent, Paramaribo, Suriname, March 9, 2022.* ### 11. The government intends to strengthen the institutional framework for fiscal policy by: ### 11. The government intends to strengthen the institutional framework for fiscal policy ### Improving fiscal planning, reporting, and execution - Improve the existing medium-term fiscal framework, with technical assistance from international partners, by end-December 2022 to guide the annual budgeting process. - Publish a medium-term fiscal strategy by December 2022 that establishes clear expenditure and debt targets which are consistent with the program; the strategy will: - define a binding spending envelope for ministries and agencies and the mechanism to ensure this envelope is observed; - be published on the website of the MoFP after approval from the Council of Ministers, the State Council, and the National Assembly. - 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). - Before end-2021, the government published January 2021 to October 2021 monthly central government outturn data and published November and December outturn on February 28th, 2022. - 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. - Create a large taxpayer unit to increase taxpayer compliance by end-June 2022. - Undertake a comprehensive review of work processes and the legal framework for tax administration processes; publish a time-bound plan to implement identified improvement measures by end-September 2022. - Improve customs administration’s approach to risk management, post-clearance audit, and the monitoring and verification of duty concessions, waivers, and exemptions; publish a time-bound improvement plan by end-September 2022. ### Public financial management, SOEs, treasury, and arrears - Increase accountability of SOEs by defining the scope of the MoFP’s financial control over public corporations’ decisions and establishing regular reporting and monitoring of financial performance and quasi-fiscal activities of SOEs. - Publish audited financial reports for FY2017-FY2021 of the ten largest state-owned enterprises (by asset size) by December 2022, including identification of the 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); - published a time-bound improvement plan before end-January 2022; - continue partnering with international technical assistance providers to improve liquidity forecasting, debt management, cash planning, arrear monitoring and commitment control. - Finalized terms of reference to hire specialists for an audit of all outstanding supplier arrears; expect the audit to commence by end-April 2022. - Conduct a comprehensive review of the expenditure control systems with technical assistance 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). - Monthly publication of central government obligations on the SDMO’s website resumed 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 published monthly central government debt information from January to December 2021 based on a data template agreed with IMF staff before end-January 2022. - Commence monthly publication on the SDMO’s website, starting in December 2022, providing 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. ### IV. Restructuring public debt ### Debt restructuring objectives and commitments - Require debt relief from creditors and have approached both official and commercial creditors to initiate orderly restructuring discussions. - Appointed financial and legal advisors in September 2020 to negotiate restructuring of privately-held external debt. - Committed debt targets: - reduce public debt to below 120 percent of GDP by 2024 and 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. - Follow best practices in sovereign debt restructuring, considering inter-creditor equity and comparability of treatment of all official bilateral creditors. - Engaged with private external creditors in good faith, sharing relevant, non-confidential information and providing early opportunity for creditor input. - Paris Club creditors have provided specific and credible assurances to provide debt relief in line with program parameters. - China and India provided assurances to work towards restructuring consistent with sustainability and have provided consent to Fund financing notwithstanding arrears. - Commit to resolving debt to all official bilateral creditors on comparable terms and to refrain from making payments on any official bilateral debt on terms more favorable than those provided to other official bilateral creditors. - Domestic debt actions: - repay some legacy debt owed to CBvS by June 2024; - will not provide guarantees to debt contracted by other parties during the program, nor contract new debt collateralized by natural resource revenues, nor allow the public sector to contract such debt on behalf of the central government. - CBvS has discontinued issuance of new FX-linked or FX-denominated debt. - Provided Fund staff with contracts for all public sector borrowing under external law—including that of Staatsolie—from official and private creditors. ### V. Strengthening the social safety net ### Poverty, cash transfers, and social protection reforms - Poverty context: - Estimated 26 percent of the population living in poverty as of 2017 (based on the 2017 Suriname Survey of Living Conditions). - The economic crisis likely increased hardship and inequalities; timely and reliable data on poverty extent is not available. - Policy and program measures: - In July 2021, expanded the size of existing targeted cash transfer amounts to compensate economically vulnerable citizens for higher cost of living and subsidy reductions. - Administrative and digitalization efforts to identify eligible recipients not currently receiving benefits and to eliminate duplication. - Spending on social cash-transfer programs is estimated to have fallen short of the December indicative target by 0.3 percent of GDP due to logistical difficulties and slower-than-expected expansion of coverage. - Commit to disbursing the delayed payments in 2021 by March 2022 and to maintain social spending on major cash transfer programs above 1.9 percent of GDP per year. - In March 2022, increase the cash transfer amount to individual recipients in three major cash transfer programs by at least 25 percent to keep pace with inflation. - Expand digital payment capacity to cover all beneficiaries living in the coastal areas and complete digitalizing the files of beneficiaries of all four cash transfer programs. - Connect MoFP database with the list of vulnerable households identified in the electricity customer database. - Review all social protection expenditures and publish a time-bound, strategic plan to improve efficiency and effectiveness of social assistance programs by end-September 2022 (a new structural benchmark). ### VI. Upgrading monetary policy and exchange rate management ### Reserve money targeting, inflation, and monetary operations - Reserve money targeting framework aims to lower inflation to 12 percent by end-2024. - Established prudent monthly targets for Net International Reserves (NIR) and Net Domestic Assets (NDA) to be monitored during the Fund-supported program. - CBvS met the NDA and NIR targets but reserve money grew at a faster-than-targeted rate by end-year due to overperformance in the build-up of NIR and lower than expected sterilization. - Met all monetary indicative targets under the program as well as reserve money targets in local currency set for end-January 2022. - Liquidity operations and interest rates: - CBvS drained liquidity from the banking system; 7-day interest rates rose to around 80 percent at end 2021 before declining to 57 percent by mid-February. - CBvS will expand auctions of certificates of deposits and term deposits to qualifying nonbanks to strengthen monetary transmission. - CBvS will remunerate local currency reserve requirements by mid-2022, depending on functioning of the interest rate mechanism; any impact on CBvS’ financial position due to remuneration will be addressed by planned recapitalization of the CBvS. ### Lending facilities, ELA, and data arrangements - CBvS established a standing lending facility and is developing an emergency liquidity assistance (ELA) framework for banks; ELA intended to be in place by April 2022. - Banks have unrestricted access to the standing facility but recurrent and sizeable users will face supervisory investigations and possible actions. - Facility priced at weighted average price of open-market operations plus a modest spread. - Any liquidity injection via the standing facility will be fully sterilized via issuance of CBvS certificates of deposits and/or term deposits. - CBvS improved liquidity monitoring and forecasting; 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 forecasting of government expenditure and revenue inflows. ### Exchange rate regime and FX market development - Maintain a fully flexible exchange rate and refrain from FX interventions except in disorderly market conditions. - All FX sales and purchases by CBvS undertaken via transparent fixed allotment/variable price auctions operationalized in December 2021. - Over-the-counter sales or purchases to/from SOEs or private sector entities discontinued. - Nominal exchange rate traded in a narrow range; parallel market trades close to the official rate. - Government sells all net FX receipts to CBvS only, at prevailing market exchange rate, receiving a counterpart deposit in domestic currency. - FX intervention limits and conditions: - Foreign currency sales by CBvS permitted only if the SRD-USD exchange rate records an intraday depreciation in excess of 2 percent; in that event CBvS may sell up to USD 2 million during the day via competitive auctions (sales would not be sterilized and would reduce reserve money one-for-one). - Gross FX sales by CBvS capped at USD 20 million per quarter. - CBvS does not foresee the need to purchase FX in the market in the foreseeable future but could intervene to purchase private FX inflows via transparent auctions and sterilize those purchases. - FX market infrastructure and regulations: - An electronic trading platform for interbank FX trading (open to commercial banks and cambios) expected to be established by June 2022 (structural benchmark). - FX surrender requirements for exporters and cambios to sell part of FX proceeds to CBvS have been suspended; will amend FX surrender regulations to redirect FX inflows from exporters to the interbank market and remove FX surrender requirements for cambios. - Note: This is an FX denominated loan (USD 160 million) with the maturity of eight years. ### VII. Bolstering the banking system ### Banking sector vulnerabilities and asset quality - Key vulnerabilities: - Reported combined capital adequacy ratio per November 2021: 13.3 percent. - Several banks are under-capitalized. - Non-performing loans are high: 12.0 percent of gross total lending and 12.7 percent of net total lending respectively as of November 2021. - Foreign currency loans make up around 55.5 percent of total lending and prior to 2016 were extended largely without a natural FX hedge or with an insufficient hedge. - Expectation that non-performing loans are likely to continue to rise as the impact of the economic contraction materializes. ### Asset quality reviews, restructuring roadmap, and supervisory measures - CBvS initiated an asset quality review for all banks assisted by an internationally reputable specialist firm based on Terms of Reference agreed with Fund staff. - Asset quality review for the largest two banks has started and will be completed by September 2022. - Further asset quality reviews covering the remainder of the banking system will be completed by December 2022. - Develop a roadmap for financial sector restructuring and governance reform of banks to be finalized by May 2022: - Roadmap to set out scenarios for triaging banks depending on asset quality review outcomes. - Reviewed banks required to submit time-bound plans to address breaches of prudential requirements, including business, recapitalization and restructuring plans with implementation milestones. - CBvS to review plans for credibility and, if credible, oversee implementation. - Government (as shareholder) will catalyze governance reforms to ensure publicly owned banks operate at arm’s length and on a commercial basis. - CBvS will impose prompt corrective actions and has increased the intensity of supervision of all banks. *Italicized source: 1surea2022001 - 11. The government intends to strengthen the institutional framework for fiscal policy by:* ### 22. To enable the CBvS to address problems in the banking sector, the resolution ### 1surea2022001 - 22. To enable the CBvS to address problems in the banking sector, the resolution ### Strengthening the resolution framework and CBvS operational capacity - The government is expected to submit the Credit Institutions Resolution Act to the State Council in March 2022 with a view to adoption by the National Assembly by September 2022. - The law will increase the CBvS’ powers and tools for early intervention, recovery, and resolution of financial institutions and will give the CBvS powers to directly intervene in a bank. - To implement the new mandate, a new Bank Resolution Unit within the CBvS will be operationalized in March 2022 with appropriate governance arrangements, staffing, funding, and clear internal guidelines on crisis management and enforcement actions. ### Enhancing bank supervision and crisis management capacity - Operationalize in March a new Financial Stability Committee made up of representatives from the MoFP and the CBvS to exchange information, diagnose risks to financial stability, and coordinate and develop concrete plans to manage and mitigate those risks. - Review and revise the Banking and Credit Supervision Act; the revision is expected to be submitted to the State Council in March 2022 with a view to adoption by the National Assembly by September 2022. - The revision will facilitate risk-based supervision by providing the 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. - This will allow supervisors to better determine a bank’s compliance with regulatory requirements. ### Measures to safeguard financial stability and potential restrictions - For the foreseeable future, although self-imposed limits on withdrawals have mostly been abandoned or relaxed, some commercial banks intend to keep in place existing limits on transactions in foreign currency and domestic currency to manage their liquidity position. - The CBvS, in consultation with Fund staff, is prepared to consider measures if needed to stabilize pressures on the balance of payments. - 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 will work with Fund staff to adapt the program and provide a clear roadmap toward the gradual elimination of such exchange restrictions/MCPs. ### Broader financial sector modernization initiatives - Government commitment to improve supervision of the insurance sector and of pension and provident funds, establish credit reporting, deposit insurance, and improve electronic transactions. Draft laws in these areas are under preparation. - Ongoing efforts to strengthen the AML/CFT framework will support the financial sector. - Given limited resources, authorities will prepare a comprehensive plan to coordinate and integrate the various reform initiatives to ensure timely implementation, supported by technical assistance by the IMF and other parties. ### Transparency, audits, and CBvS governance reforms - Special audits of program monetary data used as performance criteria are being conducted; an audit for end-December 2021 was completed and will be performed for each future test date. - The CBvS has commenced internal audit activities with assistance of an external consultant contracted to co-source the function. - The CBvS published FY 2016-2018 audited financial statements on February 7, 2022. FY 2019 statements will be published in March 2022. The audited FY 2020 and 2021 financial statements will be prepared in line with International Financial Reporting Standards and published by end-November 2022. - A new MoU between the Governor of the CBvS and the Minister of Finance was signed to preclude all new, direct or indirect, gross CBvS financing of the government. - The CBvS Board adopted a Governance Reform Implementation Plan to strengthen governance and control, including: - (i) legal amendments; - (ii) strengthening collegiality in decision making and implementation of the Handbook of Sound Governance; - (iii) establishing critical functions such as compliance, risk management, and internal audit; - (iv) introducing a reporting mechanism to the Board and its committees. - The Supervisory Board continues to monitor the roadmap’s implementation; the most recent review was completed in December and is published on the CBvS’ website. - The National Assembly is expected to adopt amendments to the CBvS Act by April to permanently prohibit monetary financing of the government and improve the governance structure of the CBvS by: - Clarifying and strengthening the mandate of the CBvS. - Bringing the 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. ### Foreign Exchange Regulation (FER) review - The government and the CBvS will review the FER to document any license requirements currently in place and determine whether its provisions: - (i) are still fit and proper, - (ii) are in line with Suriname’s obligations under the Articles of Agreement, - (iii) need to be amended to enable the CBvS to effectively manage the official reserves and conduct foreign exchange policy in support of price stability without external interference. - This review and amendments of the FER will be undertaken in consultation with IMF staff and concluded by end-June 2022. ### Recapitalization plan for the CBvS - The MoFP and the CBvS will jointly develop a recapitalization plan that includes a clear target level of capital, a trigger point for recapitalization, and a binding time frame to complete the recapitalization. - The plan will be completed by end-September 2022 following an assessment of the CBvS’ policy solvency and capital adequacy to establish the size of the capital shortfall (to be finalized by end-June 2022). ### Tackling corruption, governance, and AML/CFT enhancements - Amend the Anti-Corruption Act by June 2022 to ensure criminalization of all corrupt acts in line with the requirements of the UNCAC. - Amendments will strengthen the income/asset declaration framework and allow routine verification of income and asset declarations for high-level and high-risk public officials, with public disclosure and proportionate sanctions for non-compliance. - Operationalize the Anti-Corruption Commission by March 2022 as required by the 2017 Anti-Corruption Act. - Enact, by end-June 2022, a new procurement law to centralize publication of all tenders and contract awards and expand the Integrated Financial Management Information System to cover procurement, audits, and controls. - By end-August 2022, 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 the contracts, and an ex-post validation of delivery of the contracted services. - Address gaps identified in the 2019 National Risk Assessment (NRA) for AML/CFT; amend AML/CFT legislation and other relevant laws and regulations by end-August 2022 to bring them into line with FATF international AML/CFT standards (including treatment of politically exposed persons and beneficial ownership requirements). - Ensure requirements for transparency of beneficial ownership are in line with the FATF international AML/CFT standard. - Strengthen extractive sector governance and transparency: ongoing EITI-related actions including reforming the mining law and legally compelling companies in the extractive industry to disclose their beneficial owners. ### International cooperation and technical assistance - The government will work closely with donors and providers including the IMF, UNODC, and the World Bank to strengthen anti-corruption and AML/CFT frameworks. - The government will seek technical assistance to support ongoing reform efforts in the anti-corruption legal framework and procurement laws. ### Statistics improvements - Commit to improving the quality and dissemination of economic data, supported by IMF technical assistance. - Recognize timeliness issues such as the long lag of publication of annual GDP and lack of quarterly GDP statistics. - Need to improve data quality for the Consumer Price Index, fiscal sector statistics, and public debt data, ensuring consistency with other data sources. - Commit to accurate reporting of all domestic arrears on a monthly basis. - Work towards broadening institutional coverage of fiscal statistics to the public sector and seek technical assistance from international partners. ### Program monitoring and quantitative targets (selected points and exact figures preserved) - Monitoring through prior actions, reviews, quantitative and continuous performance criteria, indicative targets, and structural benchmarks. Reviews scheduled quarterly beginning on or after March 15, 2022. - Quantitative performance criteria and indicative targets (selected items and figures as presented): - Fiscal/debt targets - Primary fiscal balance (cash basis) of central government (floor): Act. -2,321; PC Adj. -719; PC Act. 3343; Met/Not met: Met; IT Adj. 110; IT Act. TBD; subsequent monthly figures shown in table: 331, 442, 552, 663, 773, 884, 994, 1,105, 1,215, 1,326. - Monetary targets - Gross credit to the central government by the central bank (continuous ceiling): Act. 10,229; PC Adj. 0; PC Act. 0; Met/Not met: Met; subsequent targets all 0. - Net international reserves of the central bank (floor) (millions of U.S. dollar): Act. -154; PC Adj. 348; PC Act. 310; PC Met: 317 Met; IT Adj. 11-25; IT Act. Met 103; monthly floor targets: 114, 118, 122, 156, 158, 160, 192, 194, 196, 226. - Net domestic assets of the central bank (ceiling): Act. 8,777; PC Adj. -343; PC Act. 161; Met: 34 Met; IT monthly ceiling targets: -1,137; -1,040; -941; -1,263; -1,142; -1,016; -1,316; -1,193; -1,063; -1,332. - Indicative targets - Social spending of central government (floor): Act. 604; PC Adj. 1,070; PC Act. 922; Met/Not met: Not met; IT and subsequent months: TBD. - Memorandum items (selected figures) - Reserve money: 12,817; 18,294; 18,967; 18,629; 18,950; 19,061; TBD. - Reserve money (local currency portion only): 7,342; 9,188; 9,271; 9,341; 9,338; 9,494; TBD. - Reserve money (constant exchange rates): 12,817; 14,838; 15,776; 14,991; 15,670; 15,144; TBD. - NFA (constant exchange rates): 4,039; 6,403; 6,934; 6,563; 6,878; 7,844; TBD. - Gross international reserves (millions of U.S. dollar): 585; 968; 992; 979; 986; 1,071; TBD. - Usable international reserves (millions of U.S. dollar): 129; 501; 512; 513; 505; 604; TBD. - Program exchange rate: 14.018 for all listed dates. *International Monetary Fund — content as provided in the source PDF.* ### 1. Social spending of central government (floor) 2/3717421,1121,483 ### 1. Social spending of central government (floor) 2/3717421,1121,483 ### Memorandum items — monetary and reserve indicators - Reserve money: 19,597 21,223 21,856 22,390 22,912 23,444 23,858 24,277 24,660 25,047 - Reserve money (local currency portion only): 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): 15,297 16,306 16,459 16,612 16,765 16,918 17,071 17,224 17,377 17,529 - NFA (constant exchange rates): 8,000 8,220 8,277 8,739 8,778 8,811 9,253 9,289 9,316 9,478 - Gross international reserves (millions of U.S. dollar): 1,139 1,000 1,004 1,094 1,097 1,099 1,187 1,190 1,192 1,260 - Usable international reserves (millions of U.S. dollar): 5/673 674 678 768 771 773 862 864 866 934 - Program exchange rate: 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 - Source note: Authorities and IMF staff calculations and projections. - Footnotes present in source: 1/ Targets as defined in the Technical Memorandum of Understanding. 2/ Cumulative flows from begining of the year. 3/ The 2020 figure is a stock as of end-June. 4/ The 2020 figure is a stock as of end-December. 5/ Official reserve assets excluding the PBOC swap and ring-fenced reserves. ### Prior actions and structural benchmarks under the EFF — summary of measures, target dates, status, and objectives - Prior Action (Fiscal) - Submit to National Assembly a supplemental 2022 budget consistent with the parameters of the program. - Target date: (implied) prior action - Status: Expected to be met - Objective: Ensure fiscal adjustment in line with program parameters. - 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. - Target date: December 2021 - Status: Met - 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. - Target date: December 2021 - Status: Not met; implemented with a delay (February 2022) - Objective: Strengthen accountability and transparency, and reduce risk of misreporting. - National Assembly to pass amendments in line with IMF staff recommendations to strengthen CBvS mandate, autonomy, governance, accountability, transparency, accounting, profit distribution, reserves, recapitalization, and strict limits on monetary financing (with transitional rules). - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency. - Establish an electronic trading platform for inter-bank/cambio FX trading. - Target date: June 2022 - Objective: Create a consolidated FX market. - Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements. - Target date: June 2022 - Status: Proposed to extend to November 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. - Target date: 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. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - 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. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - Objective: Solidify oversight over the financial sector. - Operationalize the Financial Stability Committee, composed of representatives from the MoF and CBvS. - Target date: January 2022 - Status: Not met; expected to be implemented with a delay - Objective: Improve coordination on financial sector issues. - Operationalize a Bank Resolution Unit within the CBvS with governance arrangements, staffing, funding and internal guidelines. - Target date: February 2022 - Status: Not met; expected to be implemented with a delay - Objective: Strengthen the CBvS's role in crisis management. - Finalize the roadmap for financial sector restructuring and governance reform of banks. - Target date: May 2022 - Objective: Improve strength of the financial sector. - Undertake full asset quality review for the two largest (by assets size) banks (drawing on expertise of an internationally reputable specialist firm). - Target date: September 2022 - Objective: Diagnose the largest banks and potential recapitalization needs. - Undertake full asset quality review for the remaining banks (drawing on expertise of an internationally reputable specialist firm). - Target date: December 2022 - Objective: Diagnose the financial sector and potential recapitalization needs. - Structural benchmarks (Fiscal) - Publish a time-bound plan to implement recommendations from IMF technical assistance to streamline treasury functions through the Treasury Single Account (TSA). - Target date: January 2022 - Status: Met - Objective: Improve governance and increase transparency. - Develop terms of reference, with technical assistance, for hiring specialists to audit outstanding supplier arrears. - Target date: January 2022 - Status: Met - 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 yield additional revenue equivalent to raising the royalty rate to 7.5 percent). - Target date: March 2022 - Status: Proposed to remove - Objective: Ensure fiscal adjustment in line with program parameters. - Passage of laws needed to implement the VAT by the National Assembly. - Target date: March 2022 - Objective: Ensure fiscal adjustment in line with program parameters. - Publish a plan to scale back a range of tax exemptions aimed at raising additional revenue of 0.4 percent of GDP (assessment of existing exemptions, list to be discontinued starting April 1, 2022, and expected revenue impact). - Target date: March 2022 - Status: New - Objective: Ensure fiscal adjustment in line with program parameters. - Commence an audit on outstanding supplier arrears. - Target date: April 2022 - Objective: Improve governance and increase transparency; improve fiscal data reporting. - Publish the financial assessment of EBS that includes its legacy liabilities. - Target date: May 2022 - Status: New - Objective: Achieve full cost recovery in the electricity sector. - Pass laws and issue relevant decrees 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. - Target date: June 2022 - Objective: Improve debt data reporting. - Create a large taxpayer unit to increase taxpayer compliance. - Target date: June 2022 - Objective: Improve tax administration. - Review the social protection public expenditure and publish a time-bound strategic plan to improve the efficiency and effectiveness of social benefits. - Target date: September 2022 - Status: New - Objective: Strengthen social spending. - 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. - Target date: December 2022 - Objective: Contain fiscal risks. - Structural benchmarks (Governance — anti-corruption) - Ratify the United Nations Convention Against Corruption (UNCAC). - Target date: January 2022 - Status: Met - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Operationalize the Anti-Corruption Commission and adopt an operational framework for its implementation, in line with the UNCAC. - Target date: 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 with UNCAC) and strengthen income and asset declaration provisions for high-level and high-risk public officials, including publication and sanctions. - Target date: June 2022 - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Structural benchmarks (Governance — procurement) - Enact the new procurement law to centralize publication of tenders and contract awards and expand the Integrated Financial Management Information System to cover procurement, audits, and controls. - Target date: June 2022 - Objective: Strengthen procurement efficiency. - 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 the contracts, and an ex-post validation of delivery of contracted services. - Target date: August 2022 - Objective: Strengthen procurement efficiency. - Structural benchmarks (Governance — AML/CFT) - Amend the AML/CFT legislation and other relevant laws and regulations to bring them into line with the FATF international AML/CFT standards (including treatment of politically-exposed persons and beneficial ownership requirements). - Target date: August 2022 - Objective: Mitigate the adverse effects of criminal economic activity and promote integrity in financial markets. ### Attachment II: Technical Memorandum of Understanding (TMU) — scope and valuation rules - TMU 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 LOI dated March 9, 2022 and MEFP. - Valuation rules: - All foreign currency-related assets, liabilities, and flows evaluated at “program accounting exchange rates” except items affecting government fiscal balances (measured at current exchange rates). - U.S. dollar denominated components of CBvS balance sheet valued at official exchange rate of the Surinamese dollar to the U.S. dollar of 14.0180 set by the CBvS as of December 31, 2020. - Cross-rates as of December 31, 2020 used for other currencies: - Euro: 1.2281 U.S. dollars - Pound Sterling: 1.3600 U.S. dollars - Chinese Yuan: 0.1532 U.S. dollars - Special Drawing Right (SDR): 1.4403 U.S. dollars - Official gold holdings valued at 1,892.0 U.S. dollars per fine ounce. ### Definitions relevant for program monitoring - Central government (CG): institutions and government units covered under the state budget; newly formed public sector entities included if they meet Government Finance Statistics Manual 2014 criteria. - State-Owned Enterprises (SOE): corporations where i) the CG is a shareholder or ii) are controlled by the CG directly or indirectly; control established through legislation or equity participation. - Debt: defined by residency criterion; a current contractual liability requiring future payments in assets or services. Principal forms include: - loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swaps), - suppliers’ credits, - leases (debt equals PV at inception of all lease payments expected during agreement, excluding operation/repair/maintenance payments). - Arrears, penalties, and judicially awarded damages that arise from failure to make payment under a contractual obligation that constitutes debt are counted as debt. - A debt is considered contracted when all conditions for its entrance into effect have been met, including National Assembly approval. Contracting of credit lines with no predetermined disbursement schedules or multiple disbursements is also considered contracting of debt. - Fiscal year: calendar year January 1 to December 31. ### Quantitative performance criteria — Primary fiscal balance (cash basis) of CG (Floor) - Primary fiscal balance (cash basis) definition: - Calculated as the cumulative CG interest payments minus total net borrowing requirements from the beginning of the year. - Net borrowing requirements (NBR) are measured at official (current) exchange rates and equal the sum of: i. The change in net CBvS credit to the CG, including changes in the government deposit position at the CBvS; ii. The change in net credit from depository corporations (includes changes in CG deposits and net issuance of treasury bills, lending, and other CG securities held by commercial banks); iii. The change in net non-bank credit to the CG (includes net issuance of Treasury bills and other CG securities to non-banks, and other CG claims and debts vis-à-vis nonbank institutions); iv. New external loan disbursements net of external loan amortization including repayment of external arrears; v. Net sale of government assets (financial including privatization receipts). - CG Interest payments: interest paid on CG domestic and external debt obligations on a cash basis. - Mineral revenue (definition): government’s tax and non-tax proceeds from 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 also included. ### Mineral revenue — cumulative flows from the beginning of the fiscal year (Millions of SRD) - End-January 2022: 860 - End-February 2022: 1,721 - End-March 2022: 2,581 - End-April 2022: 3,441 - End-May 2022: 4,301 - End-June 2022: 5,162 - End-July 2022: 6,022 - End-August 2022: 6,882 - End-September 2022: 7,742 - End-October 2022: 8,603 - End-November 2022: 9,463 - End-December 2022: 10,323 ### Budget and project financing in FX — cumulative flows from the beginning of the fiscal year (In millions of US$) - External loans from IFIs for budget financing 1/ (excluding IMF disbursements) - 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: 150 - External debt from bilateral and private creditors for budget financing 2/ (including international capital markets) - 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 - External loans for project financing - 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: 20 - End-August 2022: 23 - End-September 2022: 26 - End-October 2022: 29 - End-November 2022: 32 - End-December 2022: 35 - Footnotes: 1/ Excluding IMF disbursements. 2/ Including international capital markets. ### Reporting and adjusters for the primary fiscal balance QPC - Reporting: Fiscal data provided to the Fund with a lag of no more than six weeks after the end of the month. - Adjusters to the floor on the cumulative primary cash balance of the CG: 1. The floor will be adjusted downward (upward) to the full extent that cumulative project loans, relative to December 31, 2021, are more (less) than project loans given in Table 2. 2. The floor will be adjusted upward to the extent of any rise in mineral revenue above the cumulative baseline projections, relative to December 31, 2021, given in Table 1. ### Continuous ceiling — new natural resource revenue-collateralized debt - Definition: Continuous performance criterion ceiling applies to new natural resource revenue-collateralized debt (domestic and external) contracted on a gross basis by or on behalf of the CG and/or SOEs. - Natural resource revenue-collateralized debt: external or domestic debt that creates a security interest, charge or lien over any natural resource, natural resource receivables, or proceedings from sale/lease of natural resources. - Exclusions: - Use of a collection account where no charge or lien is created over such account. - External debt contracted due to external debt restructuring, to be agreed between authorities and creditors. - The ceiling also applies to prefinancing arrangements (debt contracted against future sales of natural resources). - Official exchange rate will apply to all non-SRD denominated debt. *Source: IMF staff and authorities (excerpts from the TMU and Tables in the provided chapter).* ### 16. Reporting: Data will be provided to the IMF on a continuous basis. This would include any ### 1surea2022001 - 16. Reporting: Data will be provided to the IMF on a continuous basis. This would include any ### C. New Central Government Guaranteed Debt (Continuous Ceiling) - Definition: - Ceiling applies to guarantees issued by the CG for debt contracted by any agency or entity outside the CG (domestic and external). - Guarantee 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: - Non-accumulation of arrears by the CG on contractual debt obligations owed to non-resident creditors is a continuous performance criterion. - External payments arrears are defined as external debt obligations of the CG, not paid within 30 days after the contractual due date (taking into account any contractual grace periods). - Arrears for which a rescheduling or restructuring agreement is being sought, based on good faith negotiations, are excluded. - Calculation and reporting: - Stock of external arrears calculated from schedule of external payment obligations reported by the Ministry of Finance and Planning (MoFP). - Data reconciled with relevant creditors; adjustments incorporated as they occur. - Reporting: Data will be provided to the IMF on a continuous basis. ### E. Gross Credit to Central Government by the CBvS (Continuous Ceiling) - Definitions: - Ceiling applies to change in gross credit provided to the CG by CBvS (including any provision of overdrafts); continuous performance criterion. - Measured from end-June 2021 for 2021 and from beginning of the year for 2022. - Coins and notes issued by the MoFP excluded. - Stock of gross credit valued at fair value and at program exchange rates. - Changes in the stock of the COVID-19 Fund approved by Parliament in 2020 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 and measurement: - Floor applies to cumulative flows from the beginning of the year. - NIR defined as U.S. dollar value of difference between reserve assets and reserve liabilities. - Change measured relative to end-December 2021 level of NIR. - Reserve assets include: - (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. - Excluded: assets pledged, collateralized, or otherwise encumbered; CBvS claims on resident banks and nonbanks; claims in foreign exchange arising from derivatives vis-à-vis domestic currency; precious metals other than gold; assets in nonconvertible currencies; illiquid swaps; any reserve assets not readily available for intervention. - Reserve liabilities include: - (i) all short-term foreign liabilities of the CBvS vis-à-vis nonresidents in convertible currencies with original maturity ≤ one year; - (ii) all outstanding credit from the IMF resulting from purchases; - (iii) nominal value of all derivative positions of the CBvS implying 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. - Specifically included: reserve requirements (non-ringfenced), reserve requirements (the ring-fenced sovereign bond) in the amount of USD 10.283 million, CBvS credits in foreign exchange from the domestic market. - Valuation: - Stock of foreign assets and liabilities valued at fair value and converted at program exchange rates. - As of December 31, 2020, the stock of NIR amounted to USD-154.3 million (at the program exchange rates). - Reporting and audit: - CBvS to provide data on foreign reserves and foreign exchange cash flow to the Fund once a week. - Data in Table 3 provided monthly in both official and program exchange rates with lag ≤ two weeks after month end. - At each program test date, quarterly data on NIR submitted by CBvS to the IMF will be audited by CBvS external auditors per International Standards on Auditing; reports submitted to CBvS, with a copy to the IMF, no later than 60 days after each test date. - Table 3: Suriname: International Reserves (US$ Million, unless otherwise specified) — as of 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 - Source: Central Bank of Suriname. - Adjusters to NIR targets: 1. Upward (downward) by full amount of cumulative surplus (shortfall) in program loan disbursements from IFIs relative to baseline projections reported in Table 2. 2. Upward (downward) by full amount of cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to Table 2. 3. Upward (downward) by full amount of cumulative surplus (shortfall) in mineral and other FX revenues in foreign exchange transferred to the CG account at the CBvS relative to baseline projections reported in Table 4. - Mineral revenue defined to include: corporate tax, wage tax (including old age fund contributions), dividend tax, indirect taxes, dividends, royalties and others from Staatsolie Suriname and gold companies; royalties from small scale gold mining included. 4. Downward (upward) by full amount of cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to Table 5. 5. Downward by amount of FX sales by CBvS via competitive auctions in response to intraday depreciation > 2 percent and < USD 2 million per day; adjustor capped at USD 20 million per quarter. ### G. Net Domestic Assets of the CBvS (Ceiling) - Definitions: - Ceiling applies to cumulative flows from beginning of the year. - NDA = reserve money (defined below) − net foreign assets (NFA). - Items in foreign currencies valued at fair value and at program exchange rates. - Stock of NDA as of December 31, 2020: SRD 8,777.1 million (Table 6). - Reserve money at program exchange rates includes: - 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, - Gold certificates. - 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 valuation and definition: - NFA at program exchange rates = foreign assets − foreign liabilities. - Foreign assets: foreign exchange, monetary gold, IMF reserve position, SDR holdings. - Foreign liabilities: liabilities 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 implying sale of foreign currency or other reserve assets. - NFA as of December 31, 2020: SRD 4,039.5 million (Table 6). - Reporting and audit: - Data to be provided to the IMF with lag ≤ two weeks after month end. - Quarterly NDA data reviewed by CBvS external auditors; reports submitted to CBvS, with copy to IMF, no later than 60 days after each test date. - Adjusters to NDA targets (consistent with NIR adjusters): 1. Downward (upward) by full amount of cumulative surplus (shortfall) in program loan disbursements from IFIs relative to Table 2. 2. Downward (upward) by full amount of cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to Table 2. 3. Downward (upward) by full amount of cumulative surplus (shortfall) in mineral and other revenues in foreign exchange transferred to the CG account at the CBvS relative to Table 4. 4. Upward (downward) by full amount of cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to Table 5. 5. Downward by full amount of CBvS’ cumulative purchases of foreign exchange from the market relative to baseline projections reported in Table 7. - Valuation for adjusters: - For purposes of calculating adjusters, flows will be valued at program exchange rates. - Table 6: Suriname: NFA, NDA, and Reserve Money (SRD Millions) — as of 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 - Source: Central Bank of Suriname. ### H. Direct Purchases/Sales of FX by the CBvS and/or Central Government from/to SOEs and Private Sector (Continuous Ceiling) - Definitions: - Ceiling on direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and private sector is a continuous performance criterion. - 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 equivalent 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 - Prohibitions during 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; (iv) impose or intensify import restrictions for balance of payments reasons. - Table 7: Suriname: CBvS's Purchases of FX (Baseline Projection) — cumulative flows from beginning of the fiscal year (In millions of US$) - 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 ### III. Indicative Targets: Social Spending of Central Government (Floor) - Definition: - Social spending of central government includes all spending of the Ministry of Social Affairs and Public Housing on social protection programs. - Floor is cumulative from beginning of the year and defined as 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 - Debt definition and coverage: - In accordance with IMF Government Finance Statistics Manual (GFSM) 2014 and Public Sector Debt Guide, total gross debt covers all liabilities that are debt instruments. - A debt instrument is a financial claim that requires payment(s) of interest and/or principal by debtor to creditor at a future date(s). - Instruments considered debt instruments: - Special drawing rights (SDRs); - Currency and deposits; - Debt securities; - Loans; - Insurance, pension, and standardized guarantee schemes; - Other accounts payable. - Exclusions from debt: liabilities in form of equity and investment fund shares, financial derivatives, and employee stock options. - Budgetary Central Government (BCG) debt for program purposes includes: - Debt Securities including short term liquidity instruments; - Loans (including overdraft in bank accounts); - Other Accounts Payables. - Consolidation rules: - Liabilities issued by the BCG and held as assets by other entities of the BCG should be netted out. - Consolidation at BCG level includes central bank lending to the government in the stock of BCG debt. - Reporting: information to be provided - Daily/Semi-weekly items to the IMF include: - 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. *Source: Central Bank of Suriname.* ### 43. Weekly/bi-weekly ### 43. Weekly/bi-weekly ### Reporting requirements — 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. ### 44. Monthly ### Reporting requirements — Monthly - 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. ### 45. Quarterly ### Reporting requirements — Quarterly - 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. ### 46. Annual ### Reporting requirements — Annual - 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. ### Statement by the Staff Representative on Suriname (March 23, 2022) ### Key updates since staff report (March 10, 2022) - The prior action for completion of this review has been met. On March 14, the authorities submitted to the National Assembly a supplemental 2022 budget that is aligned with the program. - The authorities have continued making progress on debt restructuring. They have shared restructuring offers with China and India as of March 15 and are pursuing negotiations. ### Statement by Mr. Bevilaqua et al. on Suriname (March 23, 2022) ### Authorities’ overview and policy stance - Following the approval of the Extended Fund Facility (EFF) on December 22, 2021, the Government of Suriname (GoS) has continued to implement key adjustment measures and reforms agreed in the program. - The authorities acknowledge capacity constraints and note legislative and institutional reforms initiated in the first review cycle; all targets were met, although some with delay. ### Recent macroeconomic developments — Findings and data - A waning Covid-19 pandemic, rising commodity prices, and decisive policy action have contributed to a slow recovery in economic activity. - A negative current account balance is still estimated for 2022 due to a spike in goods imports (54 per cent of GDP—the highest in the past decade), driven by strong growth in domestic demand. - The debt-to-GDP ratio declined from 148 percent in 2020 to 125 percent in 2021; public debt remains very high and is still deemed as unsustainable. - Real GDP growth was still negative in 2021: -3.5 per cent, after a historic contraction in 2020: -15.9 per cent. - Inflation remains high despite exchange rate stability; the exchange rate remained stable for more than seven consecutive months since the floating exchange rate regime was adopted in June 2021. - Inflation drivers: global surge in oil prices and transportation costs, exacerbated by post-Covid supply constraints; surging inflation has led trade unions and other groups to mobilize for correction of loss of purchasing power. ### Policy considerations and measures under consideration - The GoS is exploring ways to mitigate effects from the war in Ukraine to address import-inflation pass-through into domestic prices. Measures under consideration include: - Promotion of local substitutes. - Deployment of tax-based incomes policies (TIPs). - Introduction of additional cash transfer modalities to compensate vulnerable households and individuals. - The authorities are focused on timely implementation of structural benchmarks, quantitative performance criteria (QPCs), indicative targets and data reporting. - Two monitoring units were established by Presidential Resolution: one for the homegrown Recovery Plan and one IMF Program Monitoring Unit (IMU) to monitor EFF implementation through 2024. ### Fiscal policy — Findings and measures - The authorities submitted a revised 2022 budget to parliament consistent with program parameters to achieve fiscal sustainability in the short run. - Program estimates indicated a 1.3 percent of GDP deficit for 2021 (on accrual basis); the year closed with a primary balance surplus of 1.4 percent of GDP (on cash basis). - Benchmarks on streamlining treasury functions and setting up terms of reference for a suppliers’ arrears audit were met; an external audit will be conducted. - Increasing the royalty rate on large-scale gold multinationals from 6 to 7.5 percent would require renegotiation of agreements with the Government and could lead to international arbitration; the Tax Service is exploring scaling back exemptions as an alternative. - Debt restructuring negotiations with commercial bondholders and bilateral creditors are proceeding; the two largest bilateral creditors gave their consent for the First Review, even as Suriname has stopped servicing their loans. ### Monetary and financial policies — Findings and measures - The Central Bank of Suriname is committed to achieve price stability through a new reserve money targeting regime (RMT). - Since the introduction of the new RMT regime in June 2021, backed by open market operations (OMOs) with term deposit (TD) auctions, the exchange rate has been relatively stable. - Initially, bids carried extremely high interest rates; OMO interest rates have steadily converged towards the expected inflation for 2022. - Groundwork to establish FX auctions for the central bank to intervene in disorderly market conditions is underway. - The new Central Bank Act will strengthen autonomy and governance of the Central Bank of Suriname, while strictly limiting monetary financing; the draft Act was submitted to parliament on time. ### Capacity development and governance — Risks and progress - Capacity constraints and political pressures are important downside risks that may jeopardize program implementation. - Requests for technical assistance have been placed; deliberations with the Netherlands and others are ongoing to provide experts to support local staff. - Ratification of the United Nations Convention on Anti-Corruption (UNCAC) was completed in December 2021 (scheduled for January 2022 originally). - The Anti-Corruption Commission is taking shape and is expected to be operational within the coming weeks to implement the anti-corruption law adopted in 2019, pending necessary amendments to align with UNCAC. ### Conclusion — Authorities’ view - Despite challenging conditions, the Surinamese authorities are confident that, with Fund financial and technical support, implementation of the homegrown recovery plan will continue to improve the lives of the Surinamese people. *Source: Statement by the Staff Representative and Statements by Surinamese authorities, March 23, 2022.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1surea2022001.pdf_