## 1. Impact of Adjustments on the Above-the-Line Government Data, 2020 ## Source details **Canonical URL:** [1. Impact of Adjustments on the Above-the-Line Government Data, 2020](https://www.imf.org/-/media/files/publications/cr/2022/english/1surea2022003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1surea2022003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1surea2022003.pdf.json) --- ### Summary of mission outcomes and priority recommendations - Mission timing and objective: - A remote technical assistance (TA) mission took place during December 6–17, 2021, at the request of the Suriname authorities; it was conducted in coordination with the IMF’s Western Hemisphere Department. - Main objective: assist the Ministry of Finance and Planning (MFP) and the Central Bank of Suriname (CBS) to improve the quality of the Government Finance Statistics (GFS) in view of the IMF program. - Main tasks of the mission: - conduct a diagnostic assessment of the current GFS and public debt compilation process; - explain and reduce statistical discrepancies; - analyze data on arrears and reassess their treatment in GFS; - review the integration of stocks and flows of the gross debt; - update the public sector institutional table; - deliver a workshop on GFSM 2014 framework and Public Sector Debt Statistics (PSDS). - Institutional responsibilities and current practice: - Economic Affairs Department (EAD) in the MFP compiles above-the-line data. - Statistics Department in the CBS compiles below-the-line data. - Monthly GFS for Budgetary Central Government (BCG) is published on the National Summary Data Page on a cash adjusted basis, two months after the end of the reference month. - Key data-quality issues identified: - Large statistical discrepancies persist between above-the-line and below-the-line transactions, hampering reliability of main fiscal balances. - Absence of appropriate source data to compile revenue, expenditure, and financing—main source is the CBS accounting system covering transactions passing through BCG accounts; this reporting by the CBS is not developed to facilitate GFS compilation. - No integrated financial system in place and budget execution is not aggregated at the level of BCG, causing extremely ad hoc and manual GFS compilation with daily classification decisions. - Critical gaps in debt data from the Suriname Debt Management Office (SDMO): debt management system not up-to-date; debt data processed manually in an excel file; no formal procedure requiring government entities to report new debt disbursements and payments systematically; data not submitted by all BCGs to SDMO systematically, sometimes delayed by several months. - Foreign debt data expressed in the national currency (SRD): authorities use the same exchange rate (end of each month) for both stocks and transactions, whereas exchange rate prevailing at the time of transactions should be used for transactions. - Factors contributing to statistical discrepancies: - Inconsistent institutional coverage in various source data. - Large number of ad-hoc above-the-line adjustments not always communicated and agreed with below-the-line compilers. - Delays in submission of data from the tax authority and other source data providers. - Valuation/revaluation issues from conversion to SRD that ignore within-period valuation changes. - Arrears and floating debt: - MFP can produce data on arrears in external loans and government securities; Paymaster Department maintains a system for recording other accounts payable. - Mission started work to calculate floating debt in other accounts payable and related arrears. - Institutional and capacity needs: - Absence of (i) appropriate source data; (ii) systematic procedures for source data collection, quality checks, and processing; (iii) functional information systems maintaining up-to-date information and automatization—compilers substitute work that should be done by other departments/agencies, causing many revisions. - Recommendation for review of institutional framework to ensure suitable arrangements, improved capacity, and inclusion of all budget execution data in one system. - IFMIS and chart of accounts: - An integrated financial management information system (IFMIS) for BCG and a detailed chart of accounts would be the basis of sound GFS. - Implementation of IFMIS for BCG expenditures and revenues will be an important step; if all BCG transactions are processed through IFMIS, reconciliation of revenue/expenditure with financing and of flows and stocks would be ensured automatically. - Priority recommendations to ensure sound GFS when IFMIS is not yet available: - Target Date: As soon as possible - Priority Recommendation: Senior management should ensure suitable institutional arrangements to improve the collection and processing of the source data as required by GFS and to ensure sufficient resources and technical support for the compilation of GFS (IT tools) - Responsible Institution: MFP - Target Date: April 2022 - Priority Recommendation: Produce and maintain a database in excel including monthly data from the original source, and the adjustments to each revenue and expenditure item, with adequate explanations on the source data used for each adjustment. - Responsible Institution: MFP - Target Date: April 2022 - Priority Recommendation: Compile a financial balance sheet for BCG to enhance the quality of the below-the-line transactions and the integrity of stocks and flows. - Responsible Institution: CBS ### Main issues (detailed technical assessment) - Progress since May 2018: - Limited progress since the last GFS mission in May 2018; IFMIS did not support compilation of GFS as it processed part of expenditure and omitted revenues; insufficient documentation on Chart of Accounts; large discrepancies between above-the-line and below-the-line transactions noted in 2018 persisted. - Role of the EFF/Arrangement under the Extended Fund Facility: - Arrangement reinforced urgent need to improve fiscal reporting reliability; mission tasks reiterated (see Summary). - GFS compilation and responsibilities: - GFS compiled monthly by EAD within MFP (above-the-line: revenue and expenditure) and CBS statistics department (below-the-line: deposits, loans, debt securities). - Technical cooperation between departments is good, but inadequate institutional arrangements and source data outside compilers’ control hamper reliability. - Persisting discrepancies indicate deficiencies in compilation process and inaccuracy of government net lending / net borrowing. - Deficiencies in source data: - No comprehensive reporting consolidating all operations performed by the budgetary central government sector. - Financial reporting limited to annual budget execution reporting of line ministries; no aggregated consolidated report exists. - Compilation of GFS relies mainly on output from CBS accounting system—a time-consuming procedure and unusual practice for cash-based GFS when IFMIS is absent. - CBS bank statements partially show aggregated amounts preventing full split into GFS economic categories; some transactions do not go through CBS accounting system. - Compilation supplemented by numerous adjustments based on fragmented data across MFP departments, commercial banks, and other institutions. - Figure 1 in source illustrates the impact of adjustments in revenue and expenditure of central budgetary organizations in 2020 (SRD, million). - Deficiencies in institutional arrangements: - Data collection and exchange between departments/institutions is not systematic and partially based on personal relationships between technical staff. - Some data are not submitted to the GFS team in time, or are of poor quality, or are frequently revised. - GFS team overloaded by manual data processing, ad-hoc adjustments, and revisions—raising potential errors and data-quality risks. - Need to review institutional framework to ensure suitable arrangements, improved capacity for collection/processing, and sufficient resources/technical support (IT tools). - Sources of discrepancies (identified by the mission): - Inconsistent coverage of government entities across different source data. - Large number of ad-hoc above-the-line adjustments with limited background information not communicated to below-the-line compilers. - Gross debt data in original currency adequate; data expressed in SRD problematic because authorities use the same exchange rate (end of each month) for stocks and flows, ignoring within-month valuation changes. Revaluation issues also affect taxes and some non-tax revenues collected in foreign currencies. - Some government operations financed from a ‘suspense’ account in the CBS (off-balance) are not covered by reporting. - Coverage: - Suriname’s GFS currently covers only the budgetary central government (BCG). - Institutional table shared by authorities presents components of individual subsectors but not clarity on which institutions are included in main and supplementary source data or which units are covered above- and below-the-line. - While GFS should ultimately cover full general government (including extrabudgetary units and SOEs not operating on a market basis), the first step is aligning BCG data to GFSM 2014 and resolving BCG-level discrepancies. - Important to produce a comprehensive list of entities to be included in general government sector as defined in GFSM 2014; provisional list included in Annex I of source. ### Above-the-line transactions - Main source and limitations: - Main source: daily cash-based CBS accounting report covering government accounts group 31 (operational activities) and group 32 (specific projects and special purpose spending, e.g., loan disbursements and some grants). - Coding distinguishes between cash deposits, cash settlements, transfers, and other/miscellaneous operations. - Most operations coded by inflow types (direct and indirect taxes, non-tax revenues, repayments, and T-bills) and outflows (wages/pensions, business trips, goods and services, interest on domestic and foreign debt, amortization of debt, and T-bills). - Group 31 in USD and Euro (except one operational account), and group 32, do not provide descriptions on economic type of transactions—classification insufficient for GFS needs. - In practice, CBS accounting system information is not always accurate (e.g., mixing direct and indirect taxes). - Consistency expectation and observed deviations: - By convention, CBS accounting report should ensure consistency between above- and below-the-line operations because it covers inflows/outflows passing through CBS accounts 31 and 32; flows should integrate with stock of deposits. - Deviations observed between MFP-calculated above-the-line transactions and CBS GFS compiler-calculated above-the-line transactions—differences may be modest for total revenue and expenditure but require reconciliation and agreement on classification prior to compiling GFS. - Current adjustments made by MFP (require crosschecking with below-the-line transactions): - Taxes: - Taxes are collected by the CBS and by commercial banks. Most but not all taxes collected by commercial banks are at some point transferred to the CBS. Because the CBS account report only reflects taxes transferred from commercial banks, an appropriate adjustment needs to be made to also cover taxes remaining in commercial bank accounts. - Wage taxes payable by civil servants: monthly wages paid by BCG to employees are recorded on a net basis (payable wage tax is deducted), therefore the tax must be added to total tax and wage aggregates. The adjustment should be consistent with transactions in deposits in the government accounts in the CBS and commercial banks. - Goods and services and capital expenditures: - Some government investments in nonfinancial assets financed by external debt are performed outside CBS accounts as creditors pay suppliers directly (payments do not pass through CBS accounts). Data on such transactions come from SDMO and should be consistently reflected in government expenditure and government debt. - Mission noted substantial differences between MFP data used to compile above-the-line transactions and data available to the CBS to compile below-the-line transactions. - Interest: - Small adjustments are made by MFP to align interest based on the CBS report with SDMO data. Authorities should clarify reasons for differences and crosscheck adjusted expenditure amounts with amounts recorded below-the-line. - Non-tax revenues from royalties: - Adjustments are made to include royalties paid by the Newmont company into government non-tax revenue. Collections are made by Finabank and, since receipts do not go through the CBS account, they are added to government non-tax revenue. The value of this adjustment should be crosschecked with below-the-line transactions in government deposits in Finabank. ### Current adjustments which should not imply discrepancies (no impact on fiscal balance) - Wages and salaries: - CBS report figures on wages and salaries are on a net basis as taxes and social contributions payable by BCG´s employees are deducted. - GFS reporting should record revenues and expenditures on a gross basis. Figures are adjusted to impute the related tax and social contributions to gross-up the amount of wages as well as taxes and other revenues for the same amount. - Impact: adjustments in revenues are offset by equal adjustments in expenditures (no impact on the fiscal balance). - Subsidies and grants: - Wages paid to teachers in private schools are reclassified from wages to grants provided by government to the private schools (reclassification within expenditures; no impact on the fiscal balance). - Payment of the Rosebelt company to the Electricity company is rerouted through government accounts (an imputation is made on tax revenues from Rosebelt and subsidies payable by the central government to the Electricity company). - Impact: revenues and expenditures are adjusted for the same amount (no impact on the fiscal balance). ### Missing adjustments — findings and impact - Spending financed from a suspense account: - Government withdrew funds from a CBS’ suspense account to finance spending. Operations passing through ‘suspense accounts’ are not covered in the CBS report and were omitted in GFS. - Available information from May 2021: the value of unrecognized debt incurred in the past was more than 3 billion SRD. - Result: government debt and spending had been underestimated and may have affected discrepancies. - Spending financed from tax revenues: - Some tax revenues collected by commercial banks were never transferred to the government account in the CBS and were spent by the banks to finance government operations; these were not reflected in GFS. - Example amounts: - Negligible monthly omitted expenditure: 0.3 million SRD in January 2020. - Off-budget spending financed by direct taxes: 29.6 million SRD in 2020. - Recommendation: such amounts should be included in adjustments of goods & services, or other types of government expenditures. ### Transparency and systematic recording - Mission recommendation: - Compile, on a regular basis, a table showing the transition from the main source data (CBS report) to the final GFS data, presenting transparently all adjustments to individual revenue and expenditure categories, and indicating the impact on the fiscal balance. - Purpose: enable crosschecking consistency of above-the-line data with below-the-line operations compiled by the CBS, identify potential sources of discrepancies, and present ‘off-budget’ government operations. - The mission compiled with the MFP such a reconciliation table for January 2021 (see Table 1). ### Recommendations (above-the-line compilation) - Before starting monthly above-the-line data compilation, MFP should agree with CBS on: - The amount of total revenue and expenditures and on the indicative amounts of different types of revenue and expenditure, based on the CBS report. - All adjustments made above-the-line to keep consistency with the below-the-line transactions. - Data timeliness and classification: - Compilers need to receive on time the data on collected taxes from the tax authority even if classification by type is not ready; after cross-checking, the tax authority should send final data including final classification by type. - Modify tax adjustments: - Include amounts of collected taxes by commercial banks (instead of only those transferred to the CBS account) and add government expenditure made through commercial banks and financed by tax revenue. - Suspense accounts: - All operations performed from such an ‘off-budget’ account should be included in the main source data and reflected in GFS. ### Below-the-Line Transactions — data sources and issues - Source data used by CBS: - BCG accounts in CBS group 31 and 32: all transactions passing through these accounts are available in SRD; exchange rate (ER) used to convert foreign currency transactions into SRD is the ER of the day of the transaction. - Monetary and financial statistics (MFS): reports monthly data on stocks of financial assets and liabilities of BCG held by CBS and commercial banks. MFS reports do not provide data on transactions and revaluations; stocks reported in SRD can be split into national currency and foreign currency, but original currency amounts cannot be identified. To break down change in foreign currency stocks into transactions and revaluations, total flows are corrected for change in the ER during the month assuming that all are in US dollar. - SDMO: reports stock and flow data on external and domestic loans, government securities and domestic suppliers. Valuation of transactions in foreign currencies expressed in SRD is not based on ER of the day; flow data from SDMO is not always used and is replaced by data on transactions recorded in BCG accounts in CBS. - Special information from escrow accounts in commercial banks and in the CBS where royalties are received — data not received regularly. - Key issue: - Valuation of transactions in SRD originally performed in foreign currency other than USD cannot be identified; assumption is that the foreign currency is US dollars. - Mission recommendation: use the average ER of the month to calculate transactions expressed in SRD. ### SDMO data and integration problems - SDMO debt data: - Available in original currency; stocks and flows are expressed in SRD with the ER of the end of the month. - SDMO was not updating its debt management system until the mission; recording of debt stocks and flows had been uploaded manually in excel, and it was not possible to identify the date of each transaction. Transactions in foreign currency could not be valuated at the ER of the day. - Integration and financial balance sheet: - Integration of stocks and flows is not checked systematically; financial balance sheet is not compiled. - If a loan does not go through CBS accounts, GFS compilers may not be aware that a transaction should be included in GFS. - Recommendation: maintain historical series of financial balance sheet data (stocks of financial assets and liabilities) of the BCG to systematically check consistency between stocks and available data on transactions, identify missing or netted out transactions, and enhance compilation of below-the-line data. ### Recommendations (below-the-line and SDMO) - Produce a financial balance sheet as an extension to current GFS tables to reconcile stocks and flows (useful due to changing currency exchange rates). - Cross-check different source data related to the same category (e.g., differences between SDMO debt flows and BCG accounts in CBS). - SDMO reporting improvements: - Report foreign currency flows converted to SRD using the daily ER. If not possible (debt management system not updated), report using the average monthly ER instead of the ER at the end of the month. - Report comprehensive monthly data on on-lending on a regular basis, including stocks and flows passing through all accounts in the CBS and commercial banks. - Enforce use of codes describing transactions in the BCG accounts in CBS accounting system (MFP should inform CBS about appropriate code on each government operation). ### Public Sector Debt — valuation and coverage deviations - Current practice: - Suriname’s government debt published by SDMO is not compiled in accordance with PSDS Guide 2011 (PSDSG 2011); SDMO compiles and publishes according to Suriname’s Act on the State’s debt. - Despite 2016 changes to be more in line with international definitions, deviations remain from PSDSG 2011. - Main deviations: - Valuation of debt: - PSDSG 2011 prescribes valuation at nominal value (para 2.116 in the PSDSG 2011). Nominal value reflects value at issuance plus subsequent economic transactions, excluding market price fluctuations. - Suriname’s debt definition does not consider interest accrued but not paid. Example: SDMO values T-bills at issuance price and its value does not change over time to equal face value at maturity. - SDMO converts debt in foreign currencies to SRD using the ER at the end of the last year for which an estimate for GDP by the National Statistical Office has been published. PSDSG 2011 prescribes the use of the exchange rate prevailing at the time where the stock of debt refers to. - Coverage of debt instruments: - Current debt data includes external and domestic loans and government securities, and some loans from suppliers, but other accounts payable are not included. - Recommendation: - Statistical authorities should publish government debt on a gross basis according to PSDSG 2011. The Act of the State’s debt and the role of SDMO should not be a barrier to publishing debt according to international statistical standards. Dissemination in line with statistical principles would allow revising public sector debt backwards when missing data in previous publications exist. ### Recommendations (public debt reporting and procedures) - Produce a report with monthly time series of stocks and flows. Flow data should include: - disbursements, principal paid, principal in arrears, interest paid, and interest in arrears. - Breakdown by residency, then by instrument and by creditor. - Valuation rule: stocks of instruments in foreign currency should be valuated at the ER at the end of each month, while flows at the average ER of the month. - Interest in arrears: - Interest in arrears has been recognized and included in the stock of debt. To ensure consistency between stocks and flows, and between above and below the line data, recognition of the interest in arrears (which had not been recorded so far) should be added to expense and capitalized under the related debt instrument. - The monthly interest to be considered as an expense should be the total interest paid in cash plus the change in the stock of interest in arrears. - Rationale: provisional solution to record interest on modified cash basis until SDMO implements a debt management system compiling monthly data on accrued interest. - Revisions and timeliness: - Revisions of historical debt data should be reported to GFS compilers as soon as data is available. - Administrative procedure should be amended to ensure SDMO receives timely information on loan disbursements; otherwise SDMO should inform GFS compilers on newly reported loans as soon as information is available including the date of debt issuance. - Non-cash disbursements and on-lending: - SDMO should report loans not disbursed in cash where creditor pays directly to suppliers; such transactions should be recoded above-the-line by imputing expenditures to avoid statistical discrepancies. - SDMO should report stocks and flows of on-lending to other sectors; SDMO receives amortization and interest payments not only through CBS accounts and sometimes payments are made directly to SDMO accounts in other commercial banks (GFS compilers currently do not receive information on such payments). ### Arrears — definitions, sources, and recommendations - Definition: - Suriname’s authorities define arrears as amounts not yet paid related to transactions more than three months before the reporting period. - GFSM 2014 (para 2.247) defines arrears as amounts unpaid and past the due date for payment, which could be less than three months after a transaction. Given unknown due dates in contracts, the practical three-month rule is considered reasonable. - Source data on arrears: - SDMO reports on arrears in principal and interest of external loans and government securities issued abroad. - Paymaster system: collects information on requested payments on trade credits; registers date when request was entered and date when payment was done. Payments done after three months after the requested date are classified as payments of arrears. - Recommendations on arrears reporting: - Calculate monthly stocks of other accounts payable from the Paymaster system: closing stock = all payment requests minus payments made before the end of the month. - Report data on the arrears in other accounts payable. ### Appendix II. List of Officials Who Attended the GFS Workshop (selected) - Ministry of Finance and Planning — Economic Affairs: - Georgetine Tjalim; Marlene Troenosetro; Tevany Westenburg; Devisha Bansraj; Nancy Echteld; Maheswari Tjikoeri; Siomara Anasai; Enrico Kramp; Madhavi Gajadin; Ivanildo Schattevoo; Fabian Noordwijk; Robert de Clercq; Aartie Sewsaran; Elisa Djahari - Ministry of Finance and Planning — Budget: - Ivanda Cummingsborg; Meliesa Prijor; Roebina Plet - Ministry of Finance and Planning — Treasury: - Liane Halfhide; Monica Kramawitana - Ministry of Finance and Planning — Central Paymaster: - Sabrina Waterberg - Ministry of Finance and Planning — Central Bookkeeping: - Shanti Radja - Ministry of Finance and Planning — Tax Office: - Atman Kuldipsingh - Central Bank of Suriname — Statistics: - Maltie Kishna - Suriname Debt Management Office (SDMO): - Sarajane Omouth; Jonathan Vangee; Charlene Soentik; Radjin Wens; Cindy Eersel; Francisca Carrilho; Angela Ghisaidoobe *Source: IMF technical assistance mission report extracted from 1surea2022003* ### 1. Impact of Adjustments on the Above-the-Line Government Data, 2020________________________8 ### 1. Impact of Adjustments on the Above-the-Line Government Data, 2020 ### Summary of mission outcomes and priority recommendations - A remote technical assistance (TA) mission took place during December 6–17, 2021, at the request of the Suriname authorities; it was conducted in coordination with the IMF’s Western Hemisphere Department. - Main objective: assist the Ministry of Finance and Planning (MFP) and the Central Bank of Suriname (CBS) to improve the quality of the Government Finance Statistics (GFS) in view of the IMF program. - Main tasks of the mission: - conduct a diagnostic assessment of the current GFS and public debt compilation process; - explain and reduce statistical discrepancies; - analyze data on arrears and reassess their treatment in GFS; - review the integration of stocks and flows of the gross debt; - update the public sector institutional table; - deliver a workshop on GFSM 2014 framework and Public Sector Debt Statistics (PSDS). - Institutional responsibilities and current practice: - Economic Affairs Department (EAD) in the MFP compiles above-the-line data. - Statistics Department in the CBS compiles below-the-line data. - Monthly GFS for Budgetary Central Government (BCG) is published on the National Summary Data Page on a cash adjusted basis, two months after the end of the reference month. - Key data-quality issues identified: - Large statistical discrepancies persist between above-the-line and below-the-line transactions, hampering reliability of main fiscal balances. - Absence of appropriate source data to compile revenue, expenditure, and financing—main source is the CBS accounting system covering transactions passing through BCG accounts; this reporting by the CBS is not developed to facilitate GFS compilation. - No integrated financial system in place and budget execution is not aggregated at the level of BCG, causing extremely ad hoc and manual GFS compilation with daily classification decisions. - Critical gaps in debt data from the Suriname Debt Management Office (SDMO): debt management system not up-to-date; debt data processed manually in an excel file; no formal procedure requiring government entities to report new debt disbursements and payments systematically; data not submitted by all BCGs to SDMO systematically, sometimes delayed by several months. - Foreign debt data expressed in the national currency (SRD): authorities use the same exchange rate (end of each month) for both stocks and transactions, whereas exchange rate prevailing at the time of transactions should be used for transactions. - Factors contributing to statistical discrepancies: - Inconsistent institutional coverage in various source data (e.g., CBS accounting system coverage versus reporting of stocks by CBS and commercial banks). - Large number of ad-hoc above-the-line adjustments not always communicated and agreed with below-the-line compilers. - Delays in submission of data from the tax authority and other source data providers. - Valuation/revaluation issues from conversion to SRD that ignore within-period valuation changes. - Arrears and floating debt: - MFP can produce data on arrears in external loans and government securities; Paymaster Department maintains a system for recording other accounts payable. - Mission started work to calculate floating debt in other accounts payable and related arrears. - Institutional and capacity needs: - Absence of (i) appropriate source data; (ii) systematic procedures for source data collection, quality checks, and processing; (iii) functional information systems maintaining up-to-date information and automatization—compilers substitute work that should be done by other departments/agencies, causing many revisions. - Recommendation for review of institutional framework to ensure suitable arrangements, improved capacity, and inclusion of all budget execution data in one system. - IFMIS and chart of accounts: - An integrated financial management information system (IFMIS) for BCG and a detailed chart of accounts would be the basis of sound GFS. - Implementation of IFMIS for BCG expenditures and revenues will be an important step; if all BCG transactions are processed through IFMIS, reconciliation of revenue/expenditure with financing and of flows and stocks would be ensured automatically. - Priority recommendations to ensure sound GFS when IFMIS is not yet available (Table 1: Priority Recommendations): - Target Date: As soon as possible - Priority Recommendation: Senior management should ensure suitable institutional arrangements to improve the collection and processing of the source data as required by GFS and to ensure sufficient resources and technical support for the compilation of GFS (IT tools) - Responsible Institution: MFP - Target Date: April 2022 - Priority Recommendation: Produce and maintain a database in excel including monthly data from the original source, and the adjustments to each revenue and expenditure item, with adequate explanations on the source data used for each adjustment. - Responsible Institution: MFP - Target Date: April 2022 - Priority Recommendation: Compile a financial balance sheet for BCG to enhance the quality of the below-the-line transactions and the integrity of stocks and flows. - Responsible Institution: CBS ### Main issues (detailed technical assessment) - Progress since May 2018: - Limited progress since the last GFS mission in May 2018; IFMIS did not support compilation of GFS as it processed part of expenditure and omitted revenues; insufficient documentation on Chart of Accounts; large discrepancies between above-the-line and below-the-line transactions noted in 2018 persisted. - Role of the EFF/Arrangement under the Extended Fund Facility: - Arrangement reinforced urgent need to improve fiscal reporting reliability; mission tasks reiterated (see Summary). - GFS compilation and responsibilities: - GFS compiled monthly by EAD within MFP (above-the-line: revenue and expenditure) and CBS statistics department (below-the-line: deposits, loans, debt securities). - Technical cooperation between departments is good, but inadequate institutional arrangements and source data outside compilers’ control hamper reliability. - Persisting discrepancies indicate deficiencies in compilation process and inaccuracy of government net lending / net borrowing. - Deficiencies in source data: - No comprehensive reporting consolidating all operations performed by the budgetary central government sector. - Financial reporting limited to annual budget execution reporting of line ministries; no aggregated consolidated report exists. - Compilation of GFS relies mainly on output from CBS accounting system—a time-consuming procedure and unusual practice for cash-based GFS when IFMIS is absent. - CBS bank statements partially show aggregated amounts (e.g., for tax receipts or debt servicing) preventing full split into GFS economic categories; some transactions do not go through CBS accounting system. - Compilation supplemented by numerous adjustments based on fragmented data across MFP departments, commercial banks, and other institutions. - Figure 1 in source illustrates the impact of adjustments in revenue and expenditure of central budgetary organizations in 2020 (SRD, million). - Deficiencies in institutional arrangements: - Data collection and exchange between departments/institutions is not systematic and partially based on personal relationships between technical staff. - Some data are not submitted to the GFS team in time, or are of poor quality, or are frequently revised. - GFS team overloaded by manual data processing, ad-hoc adjustments, and revisions—raising potential errors and data-quality risks. - Need to review institutional framework to ensure suitable arrangements, improved capacity for collection/processing, and sufficient resources/technical support (IT tools). - Sources of discrepancies (identified by the mission): - Inconsistent coverage of government entities across different source data. - Large number of ad-hoc above-the-line adjustments with limited background information not communicated to below-the-line compilers. - Gross debt data in original currency adequate; data expressed in SRD problematic because authorities use the same exchange rate (end of each month) for stocks and flows, ignoring within-month valuation changes. Revaluation issues also affect taxes and some non-tax revenues collected in foreign currencies. - Some government operations financed from a ‘suspense’ account in the CBS (off-balance) are not covered by reporting. - Coverage: - Suriname’s GFS currently covers only the budgetary central government (BCG). - Institutional table shared by authorities presents components of individual subsectors but not clarity on which institutions are included in main and supplementary source data or which units are covered above- and below-the-line. - While GFS should ultimately cover full general government (including extrabudgetary units and SOEs not operating on a market basis), the first step is aligning BCG data to GFSM 2014 and resolving BCG-level discrepancies. - Important to produce a comprehensive list of entities to be included in general government sector as defined in GFSM 2014; provisional list included in Annex I of source. ### Above-the-line transactions - Main source: daily cash-based CBS accounting report covering government accounts group 31 (operational activities) and group 32 (specific projects and special purpose spending, e.g., loan disbursements and some grants). - Coding distinguishes between cash deposits, cash settlements, transfers, and other/miscellaneous operations. - Most operations coded by inflow types (direct and indirect taxes, non-tax revenues, repayments, and T-bills) and outflows (wages/pensions, business trips, goods and services, interest on domestic and foreign debt, amortization of debt, and T-bills). - Group 31 in USD and Euro (except one operational account), and group 32, do not provide descriptions on economic type of transactions—classification insufficient for GFS needs. - In practice, CBS accounting system information is not always accurate (e.g., mixing direct and indirect taxes). - By convention, CBS accounting report should ensure consistency between above- and below-the-line operations because it covers inflows/outflows passing through CBS accounts 31 and 32; flows should integrate with stock of deposits. However, deviations are observed between MFP-calculated above-the-line transactions and CBS GFS compiler-calculated above-the-line transactions—differences may be modest for total revenue and expenditure but require reconciliation and agreement on classification prior to compiling GFS. - Current adjustments made by MFP with potential impact on discrepancies (these adjustments should be systematically crosschecked with below-the-line transactions): - Taxes: - Taxes are collected by the CBS and by commercial banks. Most but not all taxes collected by commercial banks are at some point transferred to the CBS. Because the CBS account report only reflects taxes transferred from commercial banks, an appropriate adjustment needs to be made to also cover taxes remaining in commercial bank accounts. - Wage taxes payable by civil servants: monthly wages paid by BCG to employees are recorded on a net basis (payable wage tax is deducted), therefore the tax must be added to total tax and wage aggregates. The adjustment should be consistent with transactions in deposits in the government accounts in the CBS and commercial banks. - Goods and services and capital expenditures: - Some government investments in nonfinancial assets financed by external debt are performed outside CBS accounts as creditors pay suppliers directly (payments do not pass through CBS accounts). Data on such transactions come from SDMO and should be consistently reflected in government expenditure and government debt. - Mission noted substantial differences between MFP data used to compile above-the-line transactions and data available to the CBS to compile below-the-line transactions. - Interest: - Small adjustments are made by MFP to align interest based on the CBS report with SDMO data. Authorities should clarify reasons for differences and crosscheck adjusted expenditure amounts with amounts recorded below-the-line. - Non-tax revenues from royalties: - Adjustments are made to include royalties paid by the Newmont company into government non-tax revenue. Collections are made by Finabank and, since receipts do not go through the CBS account, they are added to government non-tax revenue. The value of this adjustment should be crosschecked with below-the-line transactions in government deposits in Finabank. *Source: IMF technical assistance mission report extracted from the supplied chapter content.* ### 20. Current adjustments which should not imply discrepancies. The following adjustments ### 20. Current adjustments which should not imply discrepancies. The following adjustments ### Current adjustments (no impact on fiscal balance) - Wages and salaries: - CBS report figures on wages and salaries are on a net basis as taxes and social contributions payable by BCG´s employees are deducted. - GFS reporting should record revenues and expenditures on a gross basis. Figures are adjusted to impute the related tax and social contributions to gross-up the amount of wages as well as taxes and other revenues for the same amount. - Impact: adjustments in revenues are offset by equal adjustments in expenditures (no impact on the fiscal balance). - Subsidies and grants: - Wages paid to teachers in private schools are reclassified from wages to grants provided by government to the private schools (reclassification within expenditures; no impact on the fiscal balance). - Payment of the Rosebelt company to the Electricity company is rerouted through government accounts (an imputation is made on tax revenues from Rosebelt and subsidies payable by the central government to the Electricity company). - Impact: revenues and expenditures are adjusted for the same amount (no impact on the fiscal balance). ### Missing adjustments — findings and impact - Spending financed from a suspense account: - Government withdrew funds from a CBS’ suspense account to finance spending. Operations passing through ‘suspense accounts’ are not covered in the CBS report and were omitted in GFS. - Available information from May 2021: the value of unrecognized debt incurred in the past was more than 3 billion SRD. - Result: government debt and spending had been underestimated and may have affected discrepancies. - Spending financed from tax revenues: - Some tax revenues collected by commercial banks were never transferred to the government account in the CBS and were spent by the banks to finance government operations; these were not reflected in GFS. - Example amounts: - Negligible monthly omitted expenditure: 0.3 million SRD in January 2020. - Off-budget spending financed by direct taxes: 29.6 million SRD in 2020. - Recommendation: such amounts should be included in adjustments of goods & services, or other types of government expenditures. ### Transparency and systematic recording - Recommendation by the mission: - Compile, on a regular basis, a table showing the transition from the main source data (CBS report) to the final GFS data, presenting transparently all adjustments to individual revenue and expenditure categories, and indicating the impact on the fiscal balance. - Purpose: enable crosschecking consistency of above-the-line data with below-the-line operations compiled by the CBS, identify potential sources of discrepancies, and present ‘off-budget’ government operations. - The mission compiled with the MFP such a reconciliation table for January 2021 (see Table 1). ### Recommendations (above-the-line compilation) - Before starting monthly above-the-line data compilation, MFP should agree with CBS on: - The amount of total revenue and expenditures and on the indicative amounts of different types of revenue and expenditure, based on the CBS report. - All adjustments made above-the-line to keep consistency with the below-the-line transactions. - Data timeliness and classification: - Compilers need to receive on time the data on collected taxes from the tax authority even if classification by type is not ready; after cross-checking, the tax authority should send final data including final classification by type. - Modify tax adjustments: - Include amounts of collected taxes by commercial banks (instead of only those transferred to the CBS account) and add government expenditure made through commercial banks and financed by tax revenue. - Suspense accounts: - All operations performed from such an ‘off-budget’ account should be included in the main source data and reflected in GFS. ### C. Below-the-Line Transactions — data sources and issues - Source data used by CBS: - BCG accounts in CBS group 31 and 32: all transactions passing through these accounts are available in SRD; exchange rate (ER) used to convert foreign currency transactions into SRD is the ER of the day of the transaction. - Monetary and financial statistics (MFS): reports monthly data on stocks of financial assets and liabilities of BCG held by CBS and commercial banks. MFS reports do not provide data on transactions and revaluations; stocks reported in SRD can be split into national currency and foreign currency, but original currency amounts cannot be identified. To break down change in foreign currency stocks into transactions and revaluations, total flows are corrected for change in the ER during the month assuming that all are in US dollar. - SDMO: reports stock and flow data on external and domestic loans, government securities and domestic suppliers. Valuation of transactions in foreign currencies expressed in SRD is not based on ER of the day; flow data from SDMO is not always used and is replaced by data on transactions recorded in BCG accounts in CBS. - Special information from escrow accounts in commercial banks and in the CBS where royalties are received — data not received regularly. - Key issue: - Valuation of transactions in SRD originally performed in foreign currency other than USD cannot be identified; assumption is that the foreign currency is US dollars. - Mission recommendation: use the average ER of the month to calculate transactions expressed in SRD. ### SDMO data and integration problems - SDMO debt data: - Available in original currency; stocks and flows are expressed in SRD with the ER of the end of the month. - SDMO was not updating its debt management system until the mission; recording of debt stocks and flows had been uploaded manually in excel, and it was not possible to identify the date of each transaction. Transactions in foreign currency could not be valuated at the ER of the day. - Integration and financial balance sheet: - Integration of stocks and flows is not checked systematically; financial balance sheet is not compiled. - If a loan does not go through CBS accounts, GFS compilers may not be aware that a transaction should be included in GFS. - Recommendation: maintain historical series of financial balance sheet data (stocks of financial assets and liabilities) of the BCG to systematically check consistency between stocks and available data on transactions, identify missing or netted out transactions, and enhance compilation of below-the-line data. ### Recommendations (below-the-line and SDMO) - Produce a financial balance sheet as an extension to current GFS tables to reconcile stocks and flows (useful due to changing currency exchange rates). - Cross-check different source data related to the same category (e.g., differences between SDMO debt flows and BCG accounts in CBS). - SDMO reporting improvements: - Report foreign currency flows converted to SRD using the daily ER. If not possible (debt management system not updated), report using the average monthly ER instead of the ER at the end of the month. - Report comprehensive monthly data on on-lending on a regular basis, including stocks and flows passing through all accounts in the CBS and commercial banks. - Enforce use of codes describing transactions in the BCG accounts in CBS accounting system (MFP should inform CBS about appropriate code on each government operation). ### D. Public Sector Debt — valuation and coverage deviations - Current practice: - Suriname’s government debt published by SDMO is not compiled in accordance with PSDS Guide 2011 (PSDSG 2011); SDMO compiles and publishes according to Suriname’s Act on the State’s debt. - Despite 2016 changes to be more in line with international definitions, deviations remain from PSDSG 2011. - Main deviations: - Valuation of debt: - PSDSG 2011 prescribes valuation at nominal value (para 2.116 in the PSDSG 2011). Nominal value reflects value at issuance plus subsequent economic transactions, excluding market price fluctuations. - Suriname’s debt definition does not consider interest accrued but not paid. Example: SDMO values T-bills at issuance price and its value does not change over time to equal face value at maturity. - SDMO converts debt in foreign currencies to SRD using the ER at the end of the last year for which an estimate for GDP by the National Statistical Office has been published. PSDSG 2011 prescribes the use of the exchange rate prevailing at the time where the stock of debt refers to. - Coverage of debt instruments: - Current debt data includes external and domestic loans and government securities, and some loans from suppliers, but other accounts payable are not included. - Recommendation: - Statistical authorities should publish government debt on a gross basis according to PSDSG 2011. The Act of the State’s debt and the role of SDMO should not be a barrier to publishing debt according to international statistical standards. Dissemination in line with statistical principles would allow revising public sector debt backwards when missing data in previous publications exist. ### Recommendations (public debt reporting and procedures) - Produce a report with monthly time series of stocks and flows. Flow data should include: - disbursements, principal paid, principal in arrears, interest paid, and interest in arrears. - Breakdown by residency, then by instrument and by creditor. - Valuation rule: stocks of instruments in foreign currency should be valuated at the ER at the end of each month, while flows at the average ER of the month. - Interest in arrears: - Interest in arrears has been recognized and included in the stock of debt. To ensure consistency between stocks and flows, and between above and below the line data, recognition of the interest in arrears (which had not been recorded so far) should be added to expense and capitalized under the related debt instrument. - The monthly interest to be considered as an expense should be the total interest paid in cash plus the change in the stock of interest in arrears. - Rationale: provisional solution to record interest on modified cash basis until SDMO implements a debt management system compiling monthly data on accrued interest. - Revisions and timeliness: - Revisions of historical debt data should be reported to GFS compilers as soon as data is available. - Administrative procedure should be amended to ensure SDMO receives timely information on loan disbursements; otherwise SDMO should inform GFS compilers on newly reported loans as soon as information is available including the date of debt issuance. - Non-cash disbursements and on-lending: - SDMO should report loans not disbursed in cash where creditor pays directly to suppliers; such transactions should be recoded above-the-line by imputing expenditures to avoid statistical discrepancies. - SDMO should report stocks and flows of on-lending to other sectors; SDMO receives amortization and interest payments not only through CBS accounts and sometimes payments are made directly to SDMO accounts in other commercial banks (GFS compilers currently do not receive information on such payments). ### E. Arrears — definitions, sources, and recommendations - Definition: - Suriname’s authorities define arrears as amounts not yet paid related to transactions more than three months before the reporting period. - GFSM 2014 (para 2.247) defines arrears as amounts unpaid and past the due date for payment, which could be less than three months after a transaction. Given unknown due dates in contracts, the practical three-month rule is considered reasonable. - Source data on arrears: - SDMO reports on arrears in principal and interest of external loans and government securities issued abroad. - Paymaster system: collects information on requested payments on trade credits; registers date when request was entered and date when payment was done. Payments done after three months after the requested date are classified as payments of arrears. - Recommendations on arrears reporting: - Calculate monthly stocks of other accounts payable from the Paymaster system: closing stock = all payment requests minus payments made before the end of the month. - Report data on the arrears in other accounts payable. *Source: 1surea2022003 - 20. Current adjustments which should not imply discrepancies. The following adjustments* ### Appendix II. List of Officials Who Attended the GFS Workshop ### Appendix II. List of Officials Who Attended the GFS Workshop ### Attendees by Organization and Department - Ministry of Finance and Planning — Economic Affairs - Georgetine Tjalim - Marlene Troenosetro - Tevany Westenburg - Devisha Bansraj - Nancy Echteld - Maheswari Tjikoeri - Siomara Anasai - Enrico Kramp - Madhavi Gajadin - Ivanildo Schattevoo - Fabian Noordwijk - Robert de Clercq - Aartie Sewsaran - Elisa Djahari - Ministry of Finance and Planning — Budget - Ivanda Cummingsborg - Meliesa Prijor - Roebina Plet - Ministry of Finance and Planning — Treasury - Liane Halfhide - Monica Kramawitana - Ministry of Finance and Planning — Central Paymaster - Sabrina Waterberg - Ministry of Finance and Planning — Central Bookkeeping - Shanti Radja - Ministry of Finance and Planning — Tax Office - Atman Kuldipsingh - Central Bank of Suriname — Statistics - Maltie Kishna - Suriname Debt Management Office (SDMO) - Sarajane Omouth - Jonathan Vangee - Charlene Soentik - Radjin Wens - Cindy Eersel - Francisca Carrilho - Angela Ghisaidoobe ### Officials Met During the Mission (Appendix III) - Georgetine Tjalim — Ministry of Finance and Planning, Economic Affairs - Marlene Troenosetro — Ministry of Finance and Planning, Economic Affairs - Maltie Kishna — Central Bank of Suriname, Statistics ### Document footer / identifier - SURINAME 24 INTERNATIONAL MONETARY FUND *Appendix II. List of Officials Who Attended the GFS Workshop — source PDF: 1surea2022003* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1surea2022003.pdf_