## 1surea2023003 - EXECUTIVE SUMMARY

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### Context
- Program went off-track in mid-2022 due to delayed parliamentary approval of the VAT law and subsequent spending overruns that injected local currency liquidity, fueling currency depreciation and inflation.
- Authorities actions to restore discipline:
  - Passage of a 2023 budget.
  - Central bank tightened monetary conditions.
  - Progress made on restructuring both official and privately-held public debt.
- Key mission coverage: May 8-16, 2023.

### Recent macroeconomic developments and outlook
- Activity and prices:
  - Monthly economic activity indicator: downward trend for most of 2022.
  - SRD/USD exchange rate depreciated by 75 percent since April 2022.
  - Real effective exchange rate appreciated by 8.5 percent over the same period.
  - Usable international reserves: 4.7 months of imports at end-December 2022.
- Growth and inflation projections (assuming full implementation of the program):
  - Growth: 2.3 percent in 2023 and 3 percent in 2024.
  - Inflation: gradual decline to 36 percent by end-2023.
  - Real GDP expected to remain below its pre-pandemic level until 2028.
- Risks:
  - Near-term: policy implementation challenges and potential worsening social discontent.
  - External: renewed worsening in the terms of trade.
  - Longer-term: potential large new oil-field development (no final investment decision made).

### Fiscal performance and adjustment strategy (Restoring Fiscal Discipline)
- 2022 fiscal outcome and variance:
  - Primary surplus of 1.1 percent of GDP (first primary surplus since 2011) versus program target of 1.7 percent of GDP.
  - Overspending drivers: fuel subsidies (1.8 percent of GDP) and wages (0.9 percent of GDP).
- Adjusted fiscal stance for 2023:
  - Primary balance target lowered from 3.5 to 1.7 percent of GDP.
  - 2023 budget passed consistent with adjusted target.
  - Consolidation spread over 2023 and 2024 while protecting vulnerable groups and investment.
  - Average gross financing needs remain under 9 percent of GDP over the medium to long term.
- Key measures to meet 2023–24 targets:
  - VAT:
    - Sales tax previously yielded 2.9 percent of GDP.
    - Authorities submitted an amended VAT Act that (i) converts all zero-rated products (except exports and ancillary supplies to exports) to exempt ones and (ii) reduces exemptions so the standard 10 percent VAT rate applies to at least 60 percent of household consumption (prior action, pending).
    - Amendments expected to be enacted by end-July 2023 (proposed new structural benchmark).
  - Wage bill:
    - After a 52 percent wage increase in the previous year, nominal public sector wages unchanged from August 2022 to April 2023.
    - Agreement in May to increase wages through cost-of-living bonuses; government committed not to increase wages or hiring further in 2023.
    - Target to reduce public wage bill to 7 percent of GDP or lower by end-2024.
  - Subsidies and tariffs:
    - Fuel subsidies discontinued in March; fuel prices set by automatic pricing mechanism; specific duties on fuel imposed.
    - Electricity: average tariff increase of 28 percent announced and phasing out lump-sum billing discounts (prior action, completed); tariffs to be adjusted quarterly to reach cost-recovery by end-2024.
    - Offsetting social assistance planned; IMF technical assistance to assess distributional impacts.
  - Social and capital spending:
    - Social spending increased by 1 percent of GDP; capital spending higher by 0.5 percent of GDP.
    - Wage taxes lowered by 0.6 ppt of GDP.
    - Cash transfers: 60,000 poor and vulnerable households to receive SRD 1800 per month.
    - By end-April 2023 transferred additional SRD 154 million to poor and vulnerable households in 2023.
    - Review of social protection public expenditure and publication of time-bound strategic plan (end-September 2022 SB proposed to be reset to end-July 2023).
  - Procurement:
    - Plan to incorporate a procurement module into the Integrated Financial Management Information System with IFI technical support.

### Debt restructuring, arrears clearance, and financing
- Restructuring progress:
  - Agreement with Paris Club creditors in June 2022; bilateral agreements completed except Italy (signing pending).
  - Restructuring offers presented to China and India in July 2022; EXIM India credit line agreed March 2023, and loan backed by EXIM India agreed May 2023.
  - Good faith negotiations ongoing with EXIM China.
  - Agreement-in-principle with bondholders on May 4 (see bond terms below).
- Bondholder terms (agreement-in-principle):
  - 25 percent nominal haircut.
  - Coupon: 4.95 percent until January 2026 with additional 3 percent per year capitalized; 7.95 percent afterwards.
  - Value recovery mechanism linked to a new revenue stream from an expected oil development project.
- Arrears and domestic clearance:
  - Cleared arrears on domestic debt of SRD 1.2 billion in December 2022 and USD 21 million in January 2023.
  - Action plan to complete payment (or restructuring) of remaining domestic debt arrears by end-2023.
  - Audit of 2015-21 supplier arrears recorded stock of SRD 2.1 billion at end-2021 (3.7 percent of GDP lower than previously estimated).
  - Authorities cleared SRD 0.7 billion so far in 2023 and plan to clear at least SRD 0.3 billion more by end-year.
- Financing and access:
  - Proposed reduction in total access under the extended arrangement from 366.8 percent of quota to 297.8 percent of quota (SDR 383.9 million) and rephasing across the remainder of the arrangement.
  - Fund credit outstanding will peak in 2024 at 43.1 percent of usable reserves (14.3 percent of GDP).
  - External arrears at end-2022 estimated at USD 385 million (14 percent of GDP): USD 107 million to China; USD 13 million to India; USD 8 million to Paris Club creditors; USD 257 million to private creditors.

### Debt restructuring impact and DSA highlights
- Debt targets and anchors:
  - Overarching objective: reduce public debt to 60 percent of GDP by 2035.
  - Intermediate target: 120 percent of GDP by 2024 (end of program).
  - GFNs target: average of 9 percent and upper limit of 12 percent over 2023-2035.
- Baseline public debt path (percent of GDP):
  - 2022: 119.2
  - 2023: 116.0
  - 2024: 102.2
  - 2025: 91.5
  - 2026: 85.2
  - 2027: 79.3
  - 2028: 75.7
  - 2029: 71.9
  - 2030: 67.9
  - 2031: 64.0
  - 2032: 60.1
- Gross financing needs (GFN, percent of GDP):
  - 2022: 10.0
  - 2023: 12.0
  - 2024: 9.3
  - 2025: 6.3
  - 2026: 5.1
  - 2027: 7.7
  - 2028: 8.4
  - 2029: 9.4
  - 2030: 9.6
  - 2031: 9.8
  - 2032: 9.6
- DSA risk assessment:
  - Overall risk of sovereign stress: High.
  - Medium-term risks: High; Long-term: Moderate.
  - Fanchart width: 162.5; Probability of debt not stabilizing: 10.0.
- Staff recommendations:
  - Continue fiscal adjustment, maintain liquidity buffers, plan recapitalization carefully, and do not assume oil revenue until FID.

### Monetary policy, reserves, and FX management
- Monetary stance and tools:
  - Monetary policy under reserve money targeting constrained by structural banking features and asset quality concerns.
  - CBvS conducted weekly open market operations; auctions of term deposits persistently undersubscribed.
  - Complemented term deposit auctions with direct issuance of central bank certificates to investors (CBCs).
  - On April 2023 the reserve requirement for LC deposits was increased from 39 to 44 percent.
  - Informal guidance to contain nominal local currency private sector credit growth to 20 percent measured after a one-year period from April, 2023.
  - CBvS to review impact by end-June 2023 and take further steps as needed.
- FX measures and outlook:
  - Government sold US$13 million in February (mostly to fuel importers).
  - Mineral companies allowed to pay some government mineral revenues in local currency to mitigate disruptions.
  - Authorities capped mineral revenues that can be paid in local currency at USD 15 million per quarter (proposed new QPC).
  - Exporter surrender requirement: exporters of gold (end-July 2022) and other goods (from September 9, 2022) required to surrender 35 percent of repatriated earnings to local banks with correspondent bank relationships.
- Reserves and FX cash flow projections (Millions of USD):
  - Inflow of FX (CBvS and Central Government): 590 504 580 1,674
  - Govt mineral and other FX revenues 1/: 260 174 175 609
  - IFI financing (budget support): 200 100 100 400
  - IMF financing: 55 159 25 520
  - Other (incl. project financing): 76 71 53 200
  - Use of FX (CBvS and Central Government): 386 337 342 1,063
  - Debt service 3/: 134 223 246 604
  - Change in Gross Foreign Reserves of CBvS (+: Increase): 202 167 238 607
  - Public sector: 204 167 238 609

### Financial sector vulnerabilities and actions (Banking sector risks)
- AQR and systemic indicators:
  - AQRs for all banks show substantial provisioning and recapitalization needs.
  - FSIs: capital adequacy for the banking system as a whole rose to 16.8 percent in December 2022, but four banks (27 percent of total bank assets) fell below the regulatory minimum.
  - NPLs: 12.4 percent of total loans.
  - Liquid assets: 54.3 percent of total assets, but liquidity unevenly distributed and concentrated in two large banks.
- CBvS and supervisory measures:
  - Draft Credit Institution Resolution Bill and amendments to the Credit Institution Supervision Act submitted to the State Council.
  - Roadmap to triage banks, apply conditions on use of public funds, and unwind regulatory forbearance finalized (prior action, pending).
  - CBvS to instruct banks to incorporate AQR results and review time-bound recapitalization and restructuring plans (proposed new SB for end-October 2023).
  - New governance framework for government-owned banks to be agreed (proposed new SB for end-December 2023).

### Capacity development, fiscal institutions, and data provision
- Key institutional improvements:
  - Large taxpayer unit established.
  - Audit of domestic supplier arrears completed.
  - Legal mandate of the debt management office expanded (SBs under the program).
- Structural benchmarks status:
  - Of 18 SBs due between March 2022 and May 2023: 9 implemented (3 on time, 6 with delay), 9 not yet implemented due to capacity constraints.
  - Not met: publication of audited financial reports of the ten largest SOEs (end-December 2022 benchmark proposed to be reset to end-December 2023).
- Proposed new SBs and commitments:
  - Establish central institutional repository listing all public entities (proposed new SB for end-June 2023).
  - Publish quarterly budget execution reports (proposed new SB for end-September 2023).
  - Issue State decree to provide Minister of Finance authority to access all bank accounts held by government entities at commercial banks (proposed new SB for end-December 2023).
  - Develop Treasury Single Account and strengthen cash forecasting and commitment controls with IMF TA.

### Social protection, welfare impacts, and compensation for subsidy reform
- Energy subsidy context:
  - In 2022, Suriname spent 5.3 percent of GDP on fuel and electricity subsidies.
  - Fuel subsidies eliminated in March 2023; electricity subsidy phasing out steps announced in May 2023.
- Welfare analysis (based on Suriname Survey of Living Conditions 2016-2017):
  - Scenario: diesel prices and electricity tariffs increased by 25 percent (2016 base).
  - Estimated average per capita welfare impact: bottom quintile ≈ SRD 10 per capita per month; top quintile ≈ SRD 80 per capita per month.
  - 39.2 percent of households classified as poor or vulnerable (incomes below 1.25 times the non-extreme poverty line) in 2017 survey.
  - Fully compensating the poorest 40 percent for a 25 percent energy price increase would cost around 0.16 percent of GDP (2016).
  - Net fiscal savings from removing subsidies while compensating the poorest 40 percent would be about 0.4 percent of GDP (2016).
- Social program rollout:
  - Social Beneficiary Program: eligibility net incomes lower than SRD 6,000 per month; target ~60,000 households; benefit SRD 1,800 per month.
  - In 2023 so far, SBP reached 31,038 households.
  - Government intends to expand social protection spending to 3 percent of GDP in 2023 and transferred SRD 154 million to poor and vulnerable households by end-April 2023.
  - IDB supporting creation of Monitoring and Evaluation Unit and expansion/digitalization of unified beneficiary database.

### Program implementation, conditionality adjustments, and monitoring
- Performance criteria and breaches:
  - End-December 2022 QPCs on cumulative central government primary balance and NDA of the central bank were missed.
  - Two continuous PCs and one standard continuous PC were breached.
  - Authorities requested waivers for missed end-December 2022 QPCs (primary fiscal balance floor; NDA ceiling of CBvS) and waivers for non-observance of continuous PCs on direct FX purchases/sales and non-accumulation of central government external debt arrears (based on temporary nature).
- Multiple currency practice (MCP):
  - MCP inadvertently introduced between September 19, 2022 and November 16, 2022; corrective instruction issued June 9, 2023.
  - Staff supports waiver request for non-observance of continuous PC against MCP given corrective action.
- Conditionality adjustments proposed:
  - QPCs and ITs to be adjusted in line with revised macro-framework.
  - New QPC proposed to cap mineral revenue paid in local currency.
  - Quarterly QPCs proposed through end-June 2024.
  - Missed SBs proposed to be reset with later deadlines.

### Key program monitoring and reporting requirements (selected exact figures and timelines preserved)
- Net international reserves (floor) and net domestic assets (ceiling) monthly and quarterly reporting with numerous specified projected values and met/not met assessments in program tables.
- Social spending central government (floor) monthly projected path includes: 191; 382; 574; 765; 956; 1,147; 1,338; 1,529; 1,721; 1,912; 2,103; 2,294; 508; 1,017; 1,525; 2,034; 2,542; 3,050 (PC/IT series for 2023–2024).
- FX cash flow and gross international reserves projected monthly and annually (see Reserves and FX outlook section for key inflow/use figures and gross reserves projected series: 1,195; 1,361; 1,599; 1,600; 1,579; 1,561 for 2023–2028).

### Staff appraisal and policy priorities (summary)
- Recovery and vulnerabilities:
  - Slow post-pandemic recovery; higher commodity and food prices in H2 2022 worsened policy challenges, led to debt and supplier arrears, and injected local currency liquidity pressuring the exchange rate.
  - Economic environment fragile: rapid exchange rate depreciation and high inflation; social and political climate challenging for reforms.
- Fiscal policy:
  - Approved 2023 budget targets lower deficit with concrete revenue and expenditure measures; fiscal policy described as increasingly pro-poor and better targeted.
  - Distortionary electricity subsidies being phased out; untargeted fuel subsidies eliminated; PFM reforms underway.
  - Debt judged to be on a firmly downward trajectory and sustainable conditional on proposed debt treatments.
- Monetary and exchange rate policy:
  - Central bank tightened via increased reserve requirement and informal credit guidance.
  - Authorities committed to flexible exchange rate and to refrain from direct FX intervention except in disorderly conditions.
  - Review of Foreign Exchange Regulation to align with Central Bank Act underway.
- Financial sector reforms:
  - AQR and post-AQR roadmap finalized; expected adoption of Credit Institutions Resolution Bill and amendments by end-2023.
  - Focus on bank restructuring, recapitalization, and improving governance of state-owned banks.
- Governance and AML/CFT:
  - AML/CFT law enacted in November 2022; Anti-Corruption Commission installed May 2023.
  - Enacting new procurement law to mandate publication of beneficial ownership information prioritized.
- Risks and upsides:
  - Major downside risks: delays in reforms, rising NPLs and insufficient financial sector restructuring, insufficient debt relief.
  - Upside: potential oil developments could boost growth, revenues, and debt dynamics; value recovery mechanism for bondholders contingent on oil revenues.

*Source: EXECUTIVE SUMMARY and selected chapters (1surea2023003) — International Monetary Fund, June 2, 2023.*

### EXECUTIVE SUMMARY

### 1surea2023003 - EXECUTIVE SUMMARY

### Context
- Program went off-track in mid-2022 due to delayed parliamentary approval of the VAT law and subsequent spending overruns that injected local currency liquidity, fueling currency depreciation and inflation.
- Authorities took actions to restore fiscal discipline, including passage of a 2023 budget; the central bank tightened monetary conditions; progress made on restructuring both official and privately-held public debt.
- Key meetings and mission coverage occurred during May 8-16, 2023.

### Recent macroeconomic developments and outlook
- Monthly economic activity indicator: downward trend for most of 2022.
- SRD/USD exchange rate depreciated by 75 percent since April 2022.
- Real effective exchange rate appreciated by 8.5 percent over the same period.
- Usable international reserves: 4.7 months of imports at end-December 2022.
- Growth and inflation projections (assuming full implementation of the program):
  - Growth: 2.3 percent in 2023 and 3 percent in 2024.
  - Inflation: gradual decline to 36 percent by end-2023.
  - Real GDP expected to remain below its pre-pandemic level until 2028.
- Risks:
  - Near-term: policy implementation challenges and potential worsening social discontent.
  - External: renewed worsening in the terms of trade.
  - Longer-term: potential large new oil-field development (no final investment decision made).

### Financial sector and external vulnerabilities
- Asset quality reviews (AQRs) for all banks show a substantial recapitalization need; some smaller banks facing liquidity pressures as funding tightens.
- Despite depreciation and inflation pressures, usable reserves rose, bolstered by the EFF, IFI financing, and higher government mineral revenues paid in FX.

### Program implementation and compliance
- End-December 2022 quantitative performance criteria (QPCs) on the cumulative central government primary balance and the net domestic assets (NDAs) of the central bank were missed.
- Two continuous PCs and one standard continuous PC were breached.
- Authorities requested waivers for missed end-December 2022 QPCs:
  - Floor on the primary fiscal balance (cash basis).
  - Ceiling on the net domestic assets (NDA) of the central bank (CBvS).
  - Waivers requested for non-observance of continuous PCs on direct FX purchases/sales by CBvS or central government from/to SOEs and private sector, and on the ceiling on non-accumulation of central government external debt arrears (based on temporary nature).
- A multiple currency practice (MCP) was introduced inadvertently in September 2022 and removed; MCP existed between September 19, 2022 and November 16, 2022.
- Of 18 structural benchmarks due between March 2022 and May 2023: 9 implemented (3 on time, 6 with delay), 9 not yet implemented due to capacity constraints.
- Critical reforms implemented with delay: removal of fuel subsidies, AQRs of banks, enactment of the Central Bank Act, and implementation of VAT.

### Fiscal performance and adjustment strategy (A. Restoring Fiscal Discipline)
- 2022 fiscal outcome and program variance:
  - Authorities achieved a primary surplus of 1.1 percent of GDP (first primary surplus since 2011) versus program target of 1.7 percent of GDP.
  - Overspending drivers: fuel subsidies (1.8 percent of GDP) and wages (0.9 percent of GDP).
- Given weaker growth, rising poverty, and social tensions, the fiscal approach for 2023 was made less procyclical:
  - Primary balance target for 2023 lowered from 3.5 to 1.7 percent of GDP.
  - A 2023 budget consistent with the adjusted target was passed.
  - Adjusted strategy allows a smoother consolidation spread over 2023 and 2024, while protecting vulnerable groups and growth-enhancing investment.
  - Despite smaller primary surplus, average gross financing needs remain under 9 percent of GDP over the medium to long term.
- Key fiscal adjustments and measures to meet 2023–24 targets:
  - VAT:
    - Enactment of VAT in 2022 was a major achievement, but replacing the sales tax (which yielded 2.9 percent of GDP) will not by itself achieve the desired additional savings of 0.9 percent of GDP by end-2024 without a sufficiently broad base.
    - Authorities submitted an amended VAT Act to the National Assembly that (i) converts all zero-rated products (except exports and ancillary supplies to exports) to exempt ones and (ii) reduces the scope of exemptions so that the standard 10 percent VAT rate applies to at least 60 percent of household consumption (prior action, pending).
    - These amendments expected to be enacted by end-July 2023 (proposed new structural benchmark).
    - Tax administration speeding up company registration for VAT and working to ensure timely and accurate VAT refunds for eligible exporters.
  - Wage bill:
    - After a 52 percent wage increase in the previous year, nominal public sector wages were unchanged from August 2022 to April 2023.
    - In May, agreement reached with unions to increase wages through cost-of-living bonuses.
    - Government committed not to increase wages or hiring further in 2023, aiming to reduce the public wage bill to 7 percent of GDP or lower by end-2024.
    - Government completed registration process for all civil servants and submitted an amendment to the Personnel Act to allow payment to be halted for those not registered; voluntary separation packages offered (savings not in baseline).
  - Subsidies and tariffs:
    - Fuel subsidies discontinued in March; fuel prices now set by an automatic pricing mechanism based on international prices; specific duties on fuel imposed.
    - Electricity subsidies: renegotiated power purchase agreements; announced average electricity tariff increase of 28 percent and phasing out of lump-sum billing discounts (prior action, completed).
    - Tariffs to be adjusted quarterly to reach cost-recovery by end-2024.
    - Authorities plan offsetting social assistance to limit impact on poorest households; IMF technical assistance to assess distributional impacts.
  - Social and capital spending:
    - Social spending increased by 1 percent of GDP; capital spending higher by 0.5 percent of GDP.
    - Government lowered wage taxes by 0.6 ppt of GDP.
    - Cash transfers: 60,000 poor and vulnerable households to receive SRD 1800 per month.
    - By end-April 2023, authorities transferred an additional SRD 154 million to poor and vulnerable households in 2023, complementing traditional social protection programs.
    - Government will complete a review of social protection public expenditure and publish a time-bound strategic plan to improve efficiency and effectiveness of social benefits (end-September 2022 SB proposed to be reset to end-July 2023).
  - Procurement:
    - With IFI technical support, authorities intend to incorporate a procurement module into their Integrated Financial Management Information System to improve spending efficiency.

### Debt restructuring, monetary, and financial sector measures (summary highlights)
- Progress in restructuring both official and privately-held public debt noted.
- Authorities seeking waivers and corrective actions to address missed fiscal and monetary QPCs, supported by conservative 2023 budget and monetary tightening by CBvS.
- Financial sector vulnerabilities acute: AQRs indicate substantial recapitalization needs; some smaller banks face liquidity pressures.
- CBvS actions included tightening monetary conditions; inadvertent MCP introduced and later removed.

*Source: EXECUTIVE SUMMARY (1surea2023003) — International Monetary Fund, June 2, 2023.*

### 10.      Capacity development is being provided to improve fiscal institutions and data

### 10.      Capacity development is being provided to improve fiscal institutions and data provision

### Capacity development and fiscal institutions
- A large taxpayer unit has been established.
- An audit of domestic supplier arrears has been completed.
- The legal mandate of the debt management office has been expanded (SBs under the program).
- The end-December 2022 benchmark on the publication of audited financial reports of the ten largest SOEs has not been met; it is proposed to be reset for end-December 2023.
- To further strengthen fiscal institutions, the authorities are committed to:
  - establishing a central institutional repository which lists all public entities (proposed new SB for end-June 2023) to improve fiscal data quality;
  - publishing quarterly budget execution reports (proposed new SB for end-September 2023) to improve fiscal transparency;
  - issuing a State decree to provide the Minister of Finance the authority to access all banks accounts held by government entities at commercial banks (proposed new SB for end-December 2023) to limit the accumulation of new expenditure arrears.
- Improvements are being made in cash management and commitment controls; the recently-established Treasury Department is working to strengthen cash forecasting.
- The government is developing the Treasury Single Account and improving the paymaster system, including through the IMF’s technical assistance; the program envisages stronger discipline and monitoring of supplier arrears when the government’s capacity is improved.

### Social protection and compensation
- Staff analysis suggests that the welfare loss from a 25 percent increase in electricity and diesel prices for the poorest 60 percent of households can be fully compensated by targeted cash transfers costing 0.3 percent of GDP.
- To improve targeting and coverage:
  - the IDB is supporting the government in creating a Monitoring and Evaluation Unit within the Ministry of Social Affairs and Housing, and in expanding and digitalizing a unified beneficiary database.
  - IMF technical assistance on electricity subsidies will evaluate the design of the Social Beneficiary Program and suggest reforms as needed.

### Debt restructuring and arrears clearance
- The authorities accumulated sizable domestic debt and supplier arrears in 2022 and are now clearing these arrears.
- The authorities have cleared arrears on domestic debt of SRD 1.2 billion in December 2022 and USD 21 million in January 2023.
- A concrete action plan has been prepared to complete the payment (or restructuring) of the remaining domestic debt arrears by end-2023.
- Negotiations to restructure legacy debts to the central bank are ongoing and should be finalized by September 2023.
- The audit of 2015-21 supplier arrears recorded a stock of SRD 2.1 billion at end 2021 (3.7 percent of GDP lower than previously estimated).
- The authorities have cleared SRD 0.7 billion so far this year and plan to clear at least SRD 0.3 billion more by end-year.
- Measures to prevent erroneous payments and ensure comparability of treatment:
  - Following an erroneous payment of USD 7 million by Telesur to EXIM China, the government has requested full reimbursement and put controls in place, including requiring MoFP officials to be present at meetings between Telesur and EXIM China and issuing a Presidential Decree prohibiting Telesur payments until a restructuring agreement is reached.
  - The authorities committed to reflect such payments to EXIM China in the eventual debt restructuring.

- Debt negotiation progress:
  - Agreement reached in June 2022 with Paris Club creditors for a two-step debt treatment; bilateral agreements completed except for Italy (signing pending).
  - Restructuring offers presented to China and India in July 2022.
  - Agreement on the official credit line from EXIM India made in March 2023 and an agreement on the loan backed by EXIM India reached in May 2023; financing assurances from India are fully consistent with program parameters.
  - Good faith negotiation ongoing with EXIM China.
  - An agreement-in-principle with bondholders was reached on May 4, encompassing:
    - a 25 percent nominal haircut,
    - a coupon rate of 4.95 percent until January 2026 with an additional 3 percent per year capitalized and of 7.95 percent afterwards,
    - a value recovery mechanism linked to a new revenue stream from an expected oil development project.
  - Conditional on proposed debt treatments for both official and private debt, Suriname’s debt is judged to be sustainable on a forward-looking basis (Annex I).

### Fiscal adjustment contributions (key figures preserved from table)
- Original prog. 1/ 2022 2023 2024 Total Total
- Annual change of Primary Balance 2.3 0.7 1.8 4.8 5.8
- Adjustment from Policy Changes 1.8 2.6 4.2 8.5 7.6
- Revenue measures 1.1 0.7 1.9 3.7 4.0
- Replacing sales tax with VAT 0.0 0.3 0.6 0.9 1.4
- Sales tax increase on G&S 0.2 0.0 0.0 0.2 0.4
- Royalties increase for gold miners 0.4 0.2 0.3 0.9 1.5
- Income tax 0.2 -0.4 0.1 -0.1 0.3
- Corporate tax 0.2 0.0 0.1 0.3 0.3
- Customs duties administration 0.0 0.1 0.0 0.1 0.1
- Scaling back exemptions 0.0 0.2 0.2 0.4 ...
- Air navigation charge increases 0.0 0.3 0.0 0.3 ...
- Land lease fee increases 0.0 0.0 0.6 0.6 ...
- Expenditure measures 0.7 1.9 2.2 4.8 3.6
- Wage bill restraint -0.5 1.5 0.1 1.1 2.2
- Goods and services expenditure 1.5 0.0 0.2 1.7 -0.3
- Phased electricity subsidy elimination 0.5 1.0 1.7 3.2 2.8
- Phased fuel subsidy elimination -1.8 1.6 0.3 0.0 ...
- Social programs spending -0.5 -1.0 0.0 -1.5 0.0
- Other transfers and subsidies 2.0 -0.2 0.0 1.9 0.6
- Capital spending -0.6 -1.0 0.0 -1.6 -1.7
- Contribution by Non-Policy Factors 0.5 -1.9 -2.4 -3.7 -1.8
- Revenue 0.6 -1.5 -2.4 -3.3 -1.8
- Expenditure -0.1 -0.4 0.0 -0.5 0.0
- Memo: Primary Balance 1.1 1.7 3.5
- Primary Balance at 1st Review 1.7 3.5 4.5
- Annual change of Primary Balance at 1st Review 3.1 1.7 1.0 5.8

### Tackling inflation and monetary policy
- Monetary policy effectiveness under the reserve money targeting framework has been restrained by structural features of the financial system and lingering asset quality concerns.
- To contain local currency liquidity the CBvS has conducted weekly open market operations; however, auctions of term deposits have persistently been undersubscribed leading to higher-than-targeted reserve money outturns. 11
- Banks have been reluctant to increase exposure to CBvS’ liabilities; liquidity is unevenly distributed across banks and demand for local currency is unstable, resulting in large swings of short-term interest rates and very limited transmission to deposit or lending rates. 12
- CBvS measures to date:
  - Complemented wholesale auctions of term deposits with direct issuances of central bank certificates to investors (CBCs); these largely resulted in reallocation from term deposits to CBCs without meaningfully reducing liquidity concentrated in larger banks.
  - On April 2023 the reserve requirement for LC deposits was increased from 39 to 44 percent. 13
  - Informal guidance, in consultation with banks, to contain the growth in bank credit over the next 12 months; objective to contain growth in nominal local currency private sector credit to 20 percent as measured after a one-year period from April, 2023. 14
  - The CBvS will review the impact of these measures by end-June 2023 and, in consultation with staff, take further steps as needed to meet their reserve money targets.
- The CBvS has refrained from FX interventions but the government has taken steps to provide FX resources to importers of essential goods:
  - The government sold US$13 million in February (mostly to fuel importers).
  - Mineral companies have been allowed to pay some government revenue obligations in local currency to mitigate disruptions to supply of fuel and basic goods.
  - A new quantitative performance criterion (paragraph 19) is proposed to limit the sale of FX mineral revenues to the market.
- Exporter surrender requirement:
  - As of end-July 2022, exporters of gold, and from September 9, 2022, exporters of other goods are required to surrender 35 percent of their repatriated earnings to local banks with correspondent bank relationships.
- The government and CBvS are reviewing the Foreign Exchange Regulation of 1947 (FER) to make it consistent with the new Central Bank Act:
  - Aspects of the FER that are not aligned with the Central Bank Act are being identified and a legislative amendment will be submitted to the National Assembly (proposed new SB for end-December 2023).
  - A full review of the FER will be conducted with all relevant stakeholders by May 2024.

### Reserves and FX outlook (key figures preserved)
- Reserves are expected to remain adequate but at a lower level than previously envisaged due to lower IFI financing, higher projected debt service outflows, and a decline in mineral FX revenue from the 2022 outturn.
- The authorities have capped the amount of mineral revenues that can be paid in local currency (at USD 15 million per quarter) which provides a partial offset (proposed new QPC). 18
- Implementation of an electronic platform for foreign exchange trading has been delayed (end-June 2022 SB that is proposed to be reset to end-September). 19

- FX cash flow projections (Millions of USD):
  - Inflow of FX (CBvS and Central Government): 590 504 580 1,674
  - Govt mineral and other FX revenues 1/: 260 174 175 609
  - SDR allocation: 0 0 0 0
  - IFI financing (budget support): 200 100 100 400
  - IMF financing: 55 159 25 520
  - Other (incl. project financing): 76 71 53 200
  - Use of FX (CBvS and Central Government): 386 337 342 1,063
  - Debt service 3/: 134 223 246 604
  - Transfers to CG units: 97 114 96 307
  - PBOC swap reversal: 15 40 0 154
  - Private sector (net): -200 -2
  - Commercial banks' transfers (net) 2/: -200 -2
  - FX purchases by CBvS: 0 0 0 0
  - FX sales by CBvS/CG: 0 0 0 0
  - Change in Gross Foreign Reserves of CBvS (+: Increase): 202 167 238 607
  - Private sector: -200 -2
  - Public sector: 204 167 238 609

### Addressing banking sector risks
- The banking system suffers from chronic vulnerabilities:
  - FSIs indicate capital adequacy for the banking system as a whole rose to 16.8 percent in December 2022, 20 but four banks (27 percent of total bank assets) fell below the regulatory minimum.
  - AQRs finalized show substantial provisioning and recapitalization needs, albeit below the 5 percent GDP assumed in the program.
  - Capital shortfall largely arises from fair value adjustments of government debt and debt arrears (AQR did not take into account the government arrears accumulated in 2022).
  - Bank asset quality is low, with NPLs at 12.4 percent of total loans.
  - Banks are highly liquid (54.3 percent of total assets are liquid), but excess reserves are concentrated in two large banks while others face liquidity constraints.
- CBvS actions to reduce vulnerabilities:
  - Draft Credit Institution Resolution Bill and amendments to the Credit Institution Supervision Act have been submitted to the State Council.
  - A roadmap to triage banks, apply conditions on the use of public funds, and unwind existing regulatory forbearance has been finalized (prior action, pending).
  - CBvS will instruct banks to incorporate the AQR results and review a time-bound recapitalization and restructuring plan for those that fall short of regulatory requirements (proposed new SB for end-October 2023).
  - A new governance framework for the government-owned banks is being prepared and will be agreed between CBvS and MoFP to ensure they are run on a fully commercial basis (proposed new SB for end-December 2023).

*Source: 1surea2023003 - 10.      Capacity development is being provided to improve fiscal institutions and data*

### 21.      The Central Bank Act of 2022, enacted in April 2023, will strengthen the CBvS’

### 21.      The Central Bank Act of 2022, enacted in April 2023, will strengthen the CBvS’

### Central bank audits, recapitalization, and governance
- The CBvS expects to publish its audited FY2020 financial statements by end-May.
- Delay in finalizing the FY2020 audit (the first one on IFRS basis) prevented preparation of the FY2021 audit by April 2023, requiring a reset of the SB with a new test date to December 2023.
- CBvS will expedite the FY2021-22 audits to ensure timely publication of the FY2022 audit (proposed new SB for December 2023).
- The delay in the CBvS audit requires resetting the structural benchmark (SB) to develop a recapitalization plan by September 2022.
- Based on audited financial statements, the MoFP and CBvS will finalize a recapitalization plan for the CBvS (proposed new SB for end-December 2023).
- The recapitalization plan will include:
  - a clear target level of capital,
  - a trigger point for recapitalization,
  - recapitalization through marketable instruments recorded on the central bank’s balance sheet at fair value.
- Losses incurred from the agreement to restructure the government debt to CBvS (¶12) will be incorporated into the CBvS’ recapitalization plan.
- The Central Bank Act of 2022, enacted in April 2023, strengthens the CBvS’ mandate, autonomy, and decision-making and should be implemented without delay to insulate the CBvS from political interference.

### AML/CFT, anti-corruption, and procurement reforms
- Following ratification of the United Nations Convention Against Corruption (UNCAC), in May 2023 the authorities installed the Anti-Corruption Commission for a term of 5 years to evaluate the Anti-Corruption Act and propose amendments (end-September 2023 SB).
- The revised Anti-Corruption legislation will facilitate routine verification of income and asset declarations for high-ranking and high-risk public officials.
- Authorities ratified CARICOM’s Protocol on Public Procurement in July 2022 and, with IDB support, will enact a new procurement law (end-June 2022 SB, proposed reset to end-September 2023) to mandate publication of beneficial ownership information of awarded procurement contracts.
- A 2022 CFATF assessment identified several technical compliance deficiencies and placed Suriname on enhanced follow up.
- In November 2022, the authorities enacted a new AML/CFT law (SB implemented with a delay) to align with international standards and address technical compliance deficiencies.
- To comply with FATF requirements, Suriname must implement recommendations and improve effectiveness, including:
  - (i) enhancing AML/CFT supervision for all financial institutions (credit union, insurance, and pension fund sectors) and developing and implementing a risk based supervisory framework for DNFBPs;
  - (ii) providing adequate human, financial, and technological resources to the Financial Intelligence Unit;
  - (iii) amending the framework for targeted financial sanctions;
  - (iv) increasing ML/TF related investigations, prosecutions and confiscations;
  - (v) amending the International Sanctions Framework to update legal framework regarding UN Security Council Resolution Resolutions for Terrorism and Proliferation Financing.
- CFATF: Suriname received low effectiveness rating by CFATF in all areas except one; negative assessment ratings can result in reputational risks and have a negative impact on correspondent banking relationships (CBRs).

### Program issues, conditionality adjustments, and missed benchmarks
- Waivers requested for nonobservance of PCs include:
  - a waiver for breach of end-December 2022 QPCs based on corrective actions taken by the authorities to bring the program on track,
  - waivers for breach of continuous PCs based on their temporary nature.
- Prior actions for completion of the second review (see LOI/MEFP) include:
  - Submission to the National Assembly of the amended VAT law converting all zero-rated products (except exports and ancillary supplies to exports) to exempt and imposing the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption (pending).
  - Finalization of a roadmap to triage banks based on AQR results, including recapitalization and restructuring and revisions of provisioning guidance (pending).
  - Public announcement of planned 28 percent average electricity tariff increases and phasing out lump-sum billing account (completed).
- Staff propose adapting program conditionality:
  - QPCs and ITs proposed to be adjusted in line with the revised macro-framework.
  - A new QPC proposed to put a ceiling on the amount of mineral revenue that can be paid in local currency (Table 12).
  - Quarterly QPCs proposed through end-June 2024.
  - New SBs proposed in public financial management, banking sector reforms and foreign exchange regulation (Table 13).
  - Missed SBs proposed to be reset with later deadlines (Table 13).

### Access, financing, arrears, and restructuring
- Proposed reduction in total access under the extended arrangement from 366.8 percent of quota to 297.8 percent of quota (SDR 383.9 million) and rephasing across the remainder of the arrangement (Table 10).
- Fund credit outstanding will peak in 2024 at 43.1 percent of usable reserves (14.3 percent of GDP, Table 11).
- Annual debt service to the Fund peaks in 2029 at 3.8 percent of exports of goods and services and 11.1 percent of usable reserves.
- External arrears at end-2022 estimated at USD 385 million (14 percent of GDP), including:
  - USD 107 million to China,
  - USD 13 million to India,
  - USD 8 million to Paris Club creditors,
  - USD 257 million to private creditors.
- Technical arrears of USD 0.6 million to multilateral creditors at end-2022 were cleared by March 2023 (¶5).
- Agreement with India reached in May 2023; China provided consent to proceed with Fund financing despite official arrears.
- Authorities reached an agreement-in-principle with bondholders on May 3.
- Authorities intend not to make payments to official creditors until a debt treatment is finalized and aim to maintain comparable treatment across official creditors.
- Assessment: remaining arrears do not undermine the medium-term external viability and capacity to repay the Fund; staff will monitor progress in debt restructuring in financing assurances reviews.

### Proposed program financing (text table highlights)
- Financing gap by year (2021–2024) and total:
  - 2021: 2
  - 2022: 374
  - 2023: 234
  - 2024: 244
  - Total: 1,526
- Official financing:
  - 2021: 3
  - 2022: 42
  - 2023: 55
  - 2024: 259
  - Total: 899
- O/w: IMF:
  - 2021: 34
  - 2022: 55
  - 2023: 159
  - 2024: 251
  - Total: 499
- Purchases:
  - 2021: 55
  - 2022: 55
  - 2023: 159
  - 2024: 251
  - Total: 520
- O/w: for budget support:
  - 2021: 56
  - 2022: 53
  - 2023: 102
  - 2024: 50
  - Total: 261
- Repurchases:
  - 2021: 2
  - 2022: 100
  - 2023: 21
- Financing from external arrears accumulation (net): 203, 168, -103, 71 (by year)
- Financing from external debt restructuring 1/: 0, 0, 164, 93, 257 (by year and total)
- Note: 1/ Calculated as a difference between the debt restructuring scenario and a scenario without debt restructuring.

### Staff appraisal — macroeconomic and policy assessment
- Recovery and vulnerabilities:
  - Suriname is continuing its slow post-pandemic recovery.
  - The shock of higher commodity and food prices in the second half of 2022 exacerbated pre-existing policy challenges, eroded program performance, led to accumulation of debt and suppliers arrears, and injected local currency liquidity that pressured the exchange rate.
  - The economic environment remains fragile with rapid exchange rate depreciation and high inflation; the social and political climate is challenging for reform implementation.
- Fiscal policy:
  - The approved 2023 budget targets a lower deficit with concrete revenue and expenditure measures.
  - Fiscal policy is increasingly pro-poor and better targeted, creating some fiscal space for investment in physical and human capital.
  - Distortionary electricity subsidies are being phased out; untargeted fuel subsidies eliminated; reforms to strengthen fiscal institutions underway.
  - Progress in debt restructuring and measures to prevent future accumulation of arrears noted.
  - The challenge is to fully implement the budget and resist pressures for additional spending.
  - Debt remains on a firmly downward trajectory and is judged sustainable.
- Monetary and exchange rate policy:
  - The central bank tightened monetary conditions via an increase in local currency reserve requirement and informal guidance to contain private sector credit growth.
  - Uneven distribution of system liquidity and asset quality concerns at banks continue to interfere with monetary transmission.
  - Authorities committed to a flexible exchange rate and to refrain from direct FX intervention except in disorderly market conditions.
  - Scope provided for mineral exporters to sell part of FX tax revenues to importers of essential goods; government prioritizes rebuilding international reserves.
  - Authorities reviewing the Foreign Exchange Regulation to ensure the central bank is empowered under the new Central Bank Act; efforts continue to improve the functioning of the FX market.
- Financial sector reforms:
  - The AQR for the banking sector and the post-AQR roadmap for corrective actions have been finalized.
  - Legislation amending the Credit Institutions Supervision Act and introducing a Credit Institutions Resolution Bill expected to be adopted by end 2023.
  - CBvS and MoFP focused on bank restructuring and recapitalization and improving governance of state-owned banks.
- Governance and AML/CFT:
  - Recent passage of the AML/CFT law and operationalization of the Anti-Corruption Commission are important steps.
  - Enacting a new procurement law that mandates publication of beneficial ownership information would be an important improvement.
  - Work to amend the anti-corruption legal framework should proceed expeditiously.
- Risks and upsides:
  - Downside risks remain elevated, including:
    - (i) delay in key reforms (e.g., reducing electricity subsidies or further increasing public sector wages) due to political constraints;
    - (ii) rising NPLs, insufficient financial sector restructuring, or materialization of financial system risks leading to capital outflows and instability;
    - (iii) insufficient debt relief from debt restructuring.
  - Weak capacity creates a material risk of future misreporting.
  - Upside: potential for new oil developments to boost growth, increase export and fiscal revenues, strengthen balance of payments and debt dynamics, and expand envelope for debt restructuring (including agreed value recovery mechanism for private bondholders).

*Source: IMF staff report excerpt (1surea2023003).*

### 38.      The efforts of the authorities to re-establish macroeconomic discipline merit Fund

### 38.      The efforts of the authorities to re-establish macroeconomic discipline merit Fund

### Fund staff assessment and requests supported
- Staff supports the authorities’ request for rephasing and reduction of access under the EFF arrangement.
- Staff supports the authorities’ request for waivers for the nonobservance of:
  - two end-December 2022 PCs,
  - two continuous QPCs,
  - the continuous PC on MCP.
- In view of actions taken and commitments made by the Surinamese authorities, staff supports the requests for:
  - completion of the second review under the EFF arrangement,
  - completion of financing assurances review.

### Fiscal developments and public debt
- Total revenues improved markedly in 2021–22, driven by a marked increase from mining revenue and enhanced tax collection effort.
- 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 prices.
- Government expenditure growth has been restrained while fiscal positions improved in 2022 and public debt is estimated to have declined.
- Selected central government fiscal indicators (percent of GDP):
  - Revenues: 2023 = 26.9 percent.
  - Total expenditure: 2023 = 27.7 percent.
  - Primary expenditures: 2023 = 25.1 percent.
  - Overall balance (net lending/borrowing): 2023 = -0.9 percent.
  - Primary balance: 2023 = 1.7 percent.
  - Non-resource primary balance: 2023 = -11.0 percent.
  - Public (central government) debt: 2023 = 116.0 percent of GDP.
    - Domestic: 2023 = 28.4 percent of GDP.
    - External: 2023 = 87.6 percent of GDP.
- Central government operations (SRD, selected totals):
  - Revenues (2023): 35,429 million SRD.
  - Expenditures (2023): 36,571 million SRD.
  - Overall balance (2023): -1,143 million SRD.
  - Net incurrence of liabilities (2023): 1,143 million SRD.
  - Primary expenditures (2023): 33,135 million SRD.
  - Interest (2023): 3,437 million SRD.

### External sector and balance of payments
- Suriname experienced a substantial current account correction after the deterioration in 2019.
- Financial account strengthened due to the SDR allocation and IFI financing.
- Oil imports rose substantially reflecting higher global prices and local fuel subsidies; exports also improved.
- After significant depreciation, the REER began to appreciate since mid-2021.
- International reserves increased with IFI disbursements and higher FX mineral revenue.
- Selected external sector indicators:
  - Current account balance (percent of GDP): 2023 = 1.9 percent.
  - Gross international reserves (USD millions): 2023 = 1,195.
  - Usable gross international reserves (USD millions): 2023 = 1,032.
  - Usable gross international reserves (in months of imports): 2023 = 5.7 months.
  - External debt (USD millions): 2023 = 4,070.
  - External debt (percent of GDP): 2023 = 149.2 percent.
  - Trade balance, goods (USD millions): 2023 = 816.
  - Exports of goods and services (USD millions): 2023 = 2,548.
  - Imports of goods and services (USD millions): 2023 = 2,165.

### Monetary and financial sector developments
- OMO auctions, reserve and liquidity operations, and CBS auction mechanics are documented, with indicators showing auction allocations, over/under subscription, and weighted average allotted rates across 7-day, 30-day, and 90-day tenors.
- Monetary aggregates and reserve money growth:
  - Broad money (percent change): 2023 = 19.6 percent.
  - Broad money (percent of GDP): 2023 = 75.3 percent.
  - Reserve money (percent change): 2023 = 20.6 percent.
  - Reserve money (percent of GDP): 2023 = 29.8 percent.
- Currency in circulation, required reserves, and excess reserves are tracked against SRD required/excess reserves metrics.

### Macroeconomic projections (selected)
- Real GDP (percent change): 2023 = 2.3 percent; 2024–2028 = 3.0 percent (each year shown as 3.0 for 2024–2028).
- Nominal GDP (percent change): 2023 = 52.1 percent; 2024 = 2.1 percent; 2025 = 18.3 percent; 2026 = 13.9 percent; 2027 = 11.9 percent; 2028 = 8.1 percent.
- GDP deflator (percent change): 2023 = 48.7 percent; 2024 = 8.3 percent; 2025 = 14.9 percent; 2026 = 10.6 percent; 2027 = 8.6 percent; 2028 = 5.0 percent.
- Consumer prices (period average): 2023 = 7.3 percent; 2024 = 0.7 percent; 2025 = 0.7 percent; 2026 = 4.6 percent; 2027 = 3.6 percent; 2028 = 1.8 percent.
- Unemployment rate: 2023 = 10.6 percent; 2024 = 10.3 percent; 2025 = 10.0 percent; 2026 = 9.9 percent; 2027 = 9.9 percent; 2028 = 8.5 percent.
- Gross international reserves (USD millions) projected:
  - 2023 = 1,195,
  - 2024 = 1,361,
  - 2025 = 1,599,
  - 2026 = 1,600,
  - 2027 = 1,579,
  - 2028 = 1,561.

### Key macro-fiscal risks and financing
- Gross financing needs (incl. IMF debt service) as percent of GDP:
  - 2023 = 12.0 percent (Table 4 memorandum: Gross financing needs 12.0).
  - Table 3 (SRD terms) shows Gross financing needs (2023) = 15,835 million SRD.
- Non-resource primary balance remains large in deficit: 2023 = -11.0 percent of GDP.
- External arrears (net) recorded in prior years, with 2020 = 6.8 (percent of GDP) and 2021 = 4.8 (percent of GDP); 2022 onward = 0.0 (percent of GDP) in projections.
- Financing composition reflects IFI disbursements and a role for debt restructuring in altering financing needs.

### Policy implications and priorities implied by the data
- Restore and maintain macroeconomic discipline to secure program financing and build reserves (supported by staff recommendation to complete reviews and waivers).
- Strengthen revenue mobilization and sustain expenditure restraint while addressing targeted social spending and subsidized electricity costs.
- Continue measures to rebuild international reserves, manage external debt, and reduce reliance on arrears accumulation.
- Advance monetary operations and market-based issuance to improve liquidity management and policy signaling.

*Source: Suriname — IMF staff report and statistical annex (selected tables and figures).*

### 1. Gross external financing requirements 557-11982214151182116177289314

### 1. Gross external financing requirements (Suriname)

### Major components (levels, in millions of US dollars)
- 1. Gross external financing requirements: 557-11982214151182116177289314
- A. Current account deficit: 448-260-176-67-52-11256192125
- B. Public sector debt amortization: 12214625927420319390116197189
  - (i) Central government: 9746159174103936566172188
  - (ii) CBvS: 0000000001
  - (iii) SOEs: 251001001001001002550250
- C. Other outflows: -13-5-17000000

### Major components (percent of GDP)
- 1. Gross external financing requirements: 14.0-4.12.86.14.75.12.94.26.46.5
- A. Current account deficit: 11.3-9.0-5.9-1.9-1.6-0.30.61.42.02.6
- B. Public sector debt amortization: 3.15.18.77.86.35.42.32.74.33.9
  - (i) Central government: 2.41.65.34.93.22.61.71.63.83.9
  - (ii) CBvS: 0.00.00.00.00.00.00.00.00.00.0
  - (iii) SOEs: 0.63.53.32.83.12.80.61.20.50.0
- C. Other outflows: -0.3-0.20.00.20.00.00.00.00.00.0

### 2. Sources of financing

### Major inflows (levels, in millions of US dollars)
- 2. Sources of financing total: 611-4821-89-88-467493-316426
- A. Asset sales (net) (Other investment account): 244-1684331000000
- B. Foreign direct investment (net): -80-1247-12156473139138
- C. Portfolio flows (net): 1173547-19000000
  - (i) Central government: 125000000001
  - (ii) SOEs: 05100000000
  - (iii) Other: -9-1647-1900000-1
- D. Public sector debt financing: 20198557971535495155177
  - (i) Central government: 20198557971535495155177
  - (ii) SOEs: 0000000000
- E. Other inflows (net): 57-140-187-148-114-43-75-610111

### Major inflows (percent of GDP)
- 2. Sources of financing: 15.3-1.70.7-2.5-2.7-1.31.92.2-6.98.9
- A. Asset sales (net): 6.1-5.81.50.90.00.00.00.00.00.0
- B. Foreign direct investment (net): -0.20.0-4.20.2-0.40.41.61.73.02.9
- C. Portfolio flows (net): 2.91.21.6-0.60.00.00.00.00.00.0
  - (i) Central government: 3.10.00.00.00.00.00.00.00.00.0
  - (ii) SOEs: 0.01.80.00.00.00.00.00.00.00.0
  - (iii) Other: -0.2-0.51.6-0.60.00.00.00.00.00.0
- D. Public sector debt financing: 5.03.41.92.32.21.51.42.33.43.7
  - (i) Central government: 5.03.41.92.32.21.51.42.33.43.7
  - (ii) SOEs: 0.00.00.00.00.00.00.00.00.00.0
- E. Other inflows (net): 1.4-0.50.0-5.3-4.6-3.2-1.1-1.8-13.42.3

### Balance excluding reserves accumulation (percent of GDP)
- Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+): 1.42.4-2.0-8.6-7.4-6.4-1.1-2.0-13.32.3

### 3. Central Bank gross reserves change and errors

- 3. Expected change in gross reserves of the CBvS; accumulation (-) (in millions of US dollars): 25493-271-92-167-238-1211853
- 3. Expected change in gross reserves (percent of GDP): 6.43.2-9.1-2.6-5.2-6.70.00.50.41.1
- 4. Errors and omissions (levels, in millions of US dollars): -289-12395-27000000
- 4. Errors and omissions (percent of GDP): -7.2-4.33.2-0.80.00.00.00.00.00.0

### 4. Financing needs and allocation

- 5. Financing needs -(2-1+3+4) (levels, in millions of US dollars): -20-402374234064654362588-165
- 5. Financing needs (percent of GDP): -0.5-1.47.912.012.613.11.11.512.9-3.4

Allocation by:
- (i) Official financing (levels): -20-40342552593510-13-22-55
  - a. IMF (levels): -20-4034551592510-13-22-55
    - Purchases: 0055551592510000
    - O/w: for budget support: 005653102500000
    - Repurchases: 2040210000132255
  - b. IFIs (levels): 0002001001000000
- (ii) External arrears (net): 203168-100000
- (iii) Financing from external debt restructuring 1/: 1481144375610-110

Notes:
- 1/ Calculated as a difference between the debt restructuring scenario and a scenario without debt restructuring.

### 5. Monetary Survey and Central Bank (selected levels, in millions of SRD unless stated)

### Monetary Survey (Est./Proj. series)
- Net foreign assets: 5,86711,67423,82747,47380,17394,252106,123121,376130,248137,931
  - Net international reserves (Held by the CBvS): 4,3457,90520,72736,87658,43165,62270,83274,68477,10279,110
  - Net other foreign assets: 1,5223,7693,10010,59621,74228,63135,29146,69253,14658,822
- Net domestic assets: 13,43120,11922,35819,54419,12224,49832,92038,41946,13452,781
- Credit to the private sector: 7,3109,28811,00718,23925,08130,37135,87042,38049,19554,739
- Broad money: 19,26931,79346,18567,01699,295118,750139,043159,796176,382190,712
- Currency in circulation: 1,9733,4984,3975,5786,6068,0409,46411,22312,29713,012

### Central Bank (CBvS) selected items (levels)
- Net foreign assets: 2,3944,03911,26628,02045,60451,59955,64158,65960,55162,117
- Net international reserves: 4,3457,90520,72736,87658,43165,62270,83274,68477,10279,110
- Gross International Reserves: 4,7908,19920,73037,93462,57280,25486,60190,51092,06691,108
- Liabilities: -445-294-3-1,058-4,141-14,632-15,769-15,826-14,964-11,999
- Net domestic assets: 7,1988,7777,701-549-6,288-4,1843694,8169,73213,877
- Reserve money: 9,59312,81718,96727,47039,31647,41556,01063,47570,28475,994

### Memorandum and velocity
- Velocity (GDP/broad money; end of period): 1.61.21.31.31.31.51.51.51.51.5
- Broad money (Percent of GDP): 61.282.978.577.375.368.167.468.067.167.1
- Credit to private sector (Percent of GDP): 23.224.218.721.019.017.417.418.018.719.3

### 6. Financial Soundness Indicators (selected; in percent)

- Regulatory capital to risk-weighted assets: 9.3, 9.6, 11.4, 11.8, 14.5, 16.8 (2017–2022 Dec.)
- Regulatory Tier 1 capital to risk-weighted assets: 8.7, 9.0, 10.8, 10.5, 13.1, 15.5
- Tier 1 capital to total assets (leverage ratio): 5.0, 4.9, 4.9, 4.3, 5.7, 6.1
- NPL to gross loans: 13.0, 12.0, 10.6, 14.6, 12.8, 12.4
- Provisions to total NPLs: 53.2, 61.6, 60.5, 46.0, ..., 39.9
- Return on assets (ROA, annualized): 0.9, 0.1, 1.0, 2.0, 1.8, 2.7
- Return on equity (ROE, annualized): 16.2, 1.9, 16.7, 34.8, 29.6, 44.8
- Liquid assets to total assets: 37.9, 40.2, 46.8, 51.5, 58.8, 54.3
- Net open positions in foreign currency to capital 1/: 7.1, 22.2, 11.5, 20.8, 39.4, 23.2
- Foreign currency loans to total loans: 66.8, 62.8, 59.2, 49.1, 55.5, 61.5

### 7. Program monitoring—Indicators of Fund credit under the EFF (In millions of SDR, unless otherwise indicated)

### Prospective drawings and outstanding credit (selected)
- Prospective Drawings (Est., 2022–2024): 39.4, 118.2, 186.9 (2022, 2023, 2024); subsequent years: 0.0
- Percent of quota (drawings): 30.6, 91.7, 145.0
- Outstanding Credit (eop): 78.8, 197.0, 383.9, 383.9, 374.1, 357.6, 317.0, 253.0, 189.1, 125.1, 70.9, 23.4, 0.0
- Percent of quota (outstanding): 61.1, 152.8, 297.8, 297.8, 290.2, 277.4, 245.9, 196.3, 146.7, 97.0, 55.0, 18.1, 0.0

### Repurchases and debt service (selected)
- Repurchases schedule (SDR millions, 2026–2034): 9.8, 16.4, 40.6, 64.0, 64.0, 64.0, 54.1, 47.6, 23.4
- Total Interest / Charges (SDR millions, 2022–2034): 2.0, 8.2, 16.3, 23.9, 24.1, 23.3, 22.2, 19.2, 14.7, 11.5, 8.6, 6.1, 4.1
- Total Debt Services (SDR millions): 2.0, 8.2, 16.3, 23.9, 33.9, 39.7, 62.9, 83.2, 78.6, 75.5, 62.7, 53.7, 27.5
- Percent of exports (debt service): 0.1, 0.4, 0.8, 1.2, 1.7, 2.0, 3.0, 3.8, 3.5, 3.2, 2.5, 2.0, 1.0
- Percent of usable reserves (debt service): 0.3, 1.1, 1.7, 2.5, 3.6, 4.3, 7.2, 10.1, 10.7, 11.3, 10.2, 9.1, 4.3

### Reserves and exports (memo)
- Exports of G&S (US$ million, 2022–2034 series samples): 2,599; 2,548; 2,581; 2,608; 2,647; 2,741; 2,819; 2,915; 3,023; 3,191; 3,359; 3,540; 3,732
- Gross International Reserves (US$ million, 2022–2034): 1,195; 1,360; 1,599; 1,601; 1,580; 1,563; 1,510; 1,442; 1,324; 1,226; 1,157; 1,124; 1,187
- Gross International Usable Reserves (US$ million): 865; 1,031; 1,269; 1,271; 1,251; 1,234; 1,181; 1,113; 994; 897; 827; 794; 857
- Nominal GDP (SRD million, projections): 86,719131,936174,309206,180234,889262,815284,168307,277332,326359,410388,789420,536454,840

### 8. Quantitative Performance Criteria and Indicative Targets (selected outcomes)

### Fiscal/debt targets (central government primary balance, cash basis; in millions of SRD)
- Selected reported outcomes and assessments:
  - Act./PC/Adj. PC/Act. sequences include values such as -2,321; -719; 334; 3,007 (Met)
  - Other Act./IT entries: 110; 159; 140 (Not Met)
  - Additional reported outcomes: 221; -110; 19 (Met); 331; -3; 166 (Met)

### Monetary targets (selected)
- 5. Gross credit to the central government by the central bank (continuous ceiling): reported as 10,229 (Act.), then 0 showing "Met" in subsequent rows.
- 6. Net international reserves of the central bank (floor) (millions of U.S. dollar): -154; 348; 310; 319 (Met); later cells: 11; -2; 5 (Met); 103; 2; 16 (Met); 114; 30; 19 (Not Met)
- 7. Net domestic assets of the central bank (ceiling): 8,777; -343; 161; 203 (Not Met); later: -6; 180; -6 (Met); -1,134; 272; 113 (Met); -1,137; 39; -118 (Met)
- Indicative target for social spending (central government floor): values reported include 604; 1,070; 922 (Not Met); 371; 269 (Not Met); and later 742; 832 (Met)

### Memorandum items (selected)
- Reserve money (levels across reporting dates): 12,817; 18,294; 18,967; 18,629; 18,950; 19,061; 19,180; 19,597; 18,881
- Gross international reserves (millions of U.S. dollar) reported in program tables: 585; 968; 992; 979; 986; 1,071; 848; 1,139; 899

*Source: IMF staff estimates and projections; Central Bank of Suriname data as reported in the source document.*

### 8. Direct purchases/sales of FX by the central bank and/or central government

### 8. Direct purchases/sales of FX by the central bank and/or central government

### Quantitative performance criteria — direct FX transactions (continuous ceiling)
- Target (all months shown): 0 (millions USD) (continuous ceiling)
- Actual compliance status (repeated entries in table): Met (for the months where actual = 0)
- Note in table footnotes: 6/ Non-observance for the month February 2023

### Monetary targets and related indicators (selected exact figures from the table)
- Net international reserves of the central bank (floor) (millions of U.S. dollar)
  - 2022 end-Jul.: 194
  - 2022 end-Aug.: 169
  - 2022 end Sep.: 204
  - 2023 end-Jan. (Proj./PC series): 5
  - 2023 end-Feb. (Proj./PC series): -9
  - 2023 end-Mar. (Proj./PC series): -9
  - 2023 end-Apr. (Proj./PC series): -17
  - 2023 end-May. (Proj./PC series): -33
  - 2023 end-Jun. (Proj./PC series): -57
  - 2023 end-Jul. (Proj./PC series): -55
  - 2023 end-Aug. (Proj./PC series): -54
  - 2023 end-Sep. (Proj./PC series): -62
  - 2023 end-Oct. (Proj./PC series): -50
  - 2023 end-Nov. (Proj./PC series): -41
  - 2023 end-Dec. (Proj./PC series): 42
  - 2024 end-Jan. (Proj./PC series): -7
  - 2024 end-Feb. (Proj./PC series): -16
  - 2024 end-Mar. (Proj./PC series): -32
  - 2024 end-Apr. (Proj./PC series): -37
  - 2024 end-May. (Proj./PC series): 4
  - 2024 end-Jun. (Proj./PC series): -12
- Net domestic assets of the central bank (ceiling)
  - 2022 end-Jul.: -1,193
  - 2022 end-Aug.: -845
  - 2022 end Sep.: -111
  - 2023 end-Jan. (Proj./PC series): 1,217
  - 2023 end-Feb. (Proj./PC series): 383
  - 2023 end-Mar. (Proj./PC series): 457
  - 2023 end-Apr. (Proj./PC series): 1,427
  - 2023 end-May. (Proj./PC series): 2,818
  - 2023 end-Jun. (Proj./PC series): 3,602
  - 2023 end-Jul. (Proj./PC series): 4,006
  - 2023 end-Aug. (Proj./PC series): 4,397
  - 2023 end-Sep. (Proj./PC series): 4,866
  - 2023 end-Oct. (Proj./PC series): 4,998
  - 2023 end-Nov. (Proj./PC series): 5,181
  - 2023 end-Dec. (Proj./PC series): 4,389
  - 2024 end-Jan. (Proj./PC series): 552
  - 2024 end-Feb. (Proj./PC series): 1,096
  - 2024 end-Mar. (Proj./PC series): 1,700
  - 2024 end-Apr. (Proj./PC series): 2,138
  - 2024 end-May. (Proj./PC series): 1,889
  - 2024 end-Jun. (Proj./PC series): 2,430

### Indicative targets and social/fiscal metrics (selected exact figures)
- Social spending of central government (floor)
  - 2022 entries: 1,112 (Met)
  - Later in table: 1,483; 1,717 (Met)
  - Projected monthly path (PC/IT series for 2023–2024): 191; 382; 574; 765; 956; 1,147; 1,338; 1,529; 1,721; 1,912; 2,103; 2,294; 508; 1,017; 1,525; 2,034; 2,542; 3,050
- Primary fiscal balance (cash basis) of central government (floor)
  - 2022 end-Jul. / Aug. / Sep. entries: 1,105 / 2,102 / 658 (Not Met) and subsequent monthly values showing several "Not Met" assessments
  - Other specific entries: 1,215; 2,533; 1,172 (Not Met); 1,326; 3,003; 1,150 (Not Met)
- Gross international reserves (millions of U.S. dollar) — select values
  - 2022 end-Jul.: 1,097
  - 2022 end-Aug.: 991
  - 2022 end Sep.: 1,099
  - 2022 end-Oct.: 1,190
  - 2022 end-Nov.: 1,045
  - 2022 end-Dec.: 1,192
  - 2023 projected path (monthly series): 1,218; 1,188; 1,186; 1,138; 1,120; 1,153; 1,155; 1,156; 1,204; 1,216; 1,224; 1,361; 1,354; 1,345; 1,395; 1,390; 1,430; 1,480
- Usable international reserves (millions of U.S. dollar) 5/
  - 2022 end-Jul.: 771
  - 2022 end-Aug.: 667
  - 2022 end Sep.: 773
  - 2022 end-Oct.: 864
  - 2022 end-Nov.: 716
  - 2022 end-Dec.: 866
  - 2023 projected path (monthly series): 888; 858; 868; 820; 803; 835; 837; 838; 886; 898; 906; 1,043; 1,036; 1,027; 1,077; 1,072; 1,113; 1,163
- Reserve money (selected entries)
  - 2022 end-Jul.: 22,912
  - 2022 end-Aug.: 21,413
  - 2022 end Sep.: 23,444
  - 2022 end-Oct.: 24,277
  - 2022 end-Nov.: 25,205
  - 2022 end-Dec.: 24,660
  - 2023 projected monthly path (selected): 29,489; 28,890; 29,466; 31,356; 32,765; 33,964; 35,102; 36,147; 37,086; 37,888; 38,606; 39,316; 40,056; 40,756; 41,415; 42,074; 42,701; 43,306

### Structural benchmarks, prior actions, and FX market arrangements (selected items related to FX and central bank governance)
- Structural benchmark (December 2021): 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 — Status: Met — Objective: Ensure the CBvS has a mechanism to intervene in the FX market.
- Structural benchmark (June 2022): Establish an electronic trading platform for inter-bank/cambio FX trading — Status: Not met — Objective: Create a consolidated FX market.
- Proposed new structural benchmarks (September–December 2023): Establish an electronic trading platform for inter-bank/cambio FX trading with expanded scope to cover bank/cambio trading with gold exporters; Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements; Publish on the CBvS's external website the FY 2022 audited IFRS financial statements; Develop a time bound plan for the CBvS’s recapitalization agreed between the CBvS and the government; Submit a legislative amendment to the Foreign Exchange Regulation 1947 to the National Assembly in consultation with Fund staff — Objectives include creating a consolidated FX market, strengthening accountability and transparency, protecting the CBvS’s financial autonomy, and enabling the CBvS to effectively and independently manage its official reserves and conduct foreign exchange policy.

### Debt sustainability and risk signals (selected qualitative conclusions)
- Overall risk of sovereign stress: High
- Near term: n.a. (not applicable where there is a disbursing IMF arrangement)
- Medium term: High
- Long term: Moderate
- Commentary excerpt (verbatim phrases preserved): "The authorities' debt restructuring scenario suggests that public debt and GFNs would be sustainable. However, even after restructuring, public debt would remain high (above 100 percent of GDP) until 2024 and highly vulnerable to macro-fiscal shocks, including recapitalization needs of the banking system and the Central Bank of Suriname (CBvS). The vulnerability is particularly highlighted by the high risk signal of the fanchart, which is mainly caused by the past fluctuations in real exchange rate and inflation. The FX vulnerability can be mitigated by the significant share of government revenues received in foreign currency and potential future oil revenues that are not incorporated in the DSA following the international practice."
- DSA summary assessment: "The projected debt path is expected to stabilize and GFNs will remain at manageable levels. ... Medium-term risks are assessed as high. The GFN tool suggests low risk due to declining GFN path and contained bank exposure to the government. On the other hand, the fanchart tool gives a high risk signal mainly driven by the width of the chart suggesting a high historical volatility of the macro-fiscal shocks. Long-term risks are assessed as moderate. ... The overall risk of sovereign stress is high."

*Source: Authorities and IMF staff calculations and projections (extracted from the specified IMF table and accompanying text).*

### 1. Debt coverage in the DSA: 1/

### 1. Debt coverage in the DSA: 1/

### Coverage and consolidation
- Chosen coverage: central government (CG).  
- Are non-central government entities insignificant? No.  
- Subsectors captured in baseline:
  - Budgetary central government: Yes
  - Extra budgetary funds (EBFs): No
  - Social security funds (SSFs): No
  - State governments: No
  - Local governments: No
  - Public nonfinancial corporations: No
  - Central bank: No
  - Other public financial corporations: No
- Commentary: Suriname's public debt under the DSA refers to central government debt including loans to IMF and CBvS. There is no estimate of local governments' and social security funds' debts but they should be considered minimal if any. There is no estimate of SOE debts, but the government has passed a law to expand the legal mandate of SDMO to include the whole NFPC and is expected to publish audited financial reports of 10 largest state-owned enterprises in 2023.

### Public debt structure and composition (stocks as of end-2022)
- Public debt: 119 percent of GDP as of 2022.
- FX debt: 102 percent of GDP.
- External public debt: 90 percent of GDP.
- External debt composition:
  - Multilateral debt: 34 percent of GDP (about 3/4 of which is owed to Inter-American Development Bank (IADB)).
  - Other official debt: bilateral debt 16 percent of GDP; ECA-backed debt 8 percent of GDP.
  - Creditor country shares: China 20 percent of GDP; Paris Club 3 percent of GDP; India 1 percent of GDP.
- Private external debt:
  - Two international bonds (placed in 2015 and 2019): 30 percent of GDP.
  - Non-ECA backed securities: 1 percent of GDP.
- Arrears:
  - External arrears: 14 percent of GDP as of end-2022.
  - Domestic arrears (including supplier arrears): 8 percent of GDP as of end-2022.
- Domestic debt (end-2022): 30 percent of GDP, of which:
  - Debts owed to CBvS: 13 percent of GDP
  - Debts to commercial banks: 6 percent of GDP
  - Debts to non-banking institutions: 10 percent of GDP

### Baseline projection highlights (public debt as percent of GDP)
- Public debt path (Percent of GDP):
  - 2022: 119.2
  - 2023: 116.0
  - 2024: 102.2
  - 2025: 91.5
  - 2026: 85.2
  - 2027: 79.3
  - 2028: 75.7
  - 2029: 71.9
  - 2030: 67.9
  - 2031: 64.0
  - 2032: 60.1
- Change in public debt (Percent of GDP): 2022: 2.4; 2023: -3.2; 2024: -13.9; 2025: -10.7; 2026: -6.3; 2027: -5.9; 2028: -3.6; 2029: -3.7; 2030: -4.0; 2031: -3.9; 2032: -3.9.
- Contribution of identified flows to change in public debt (Percent of GDP): 2022: -15.9; 2023: -6.7; 2024: -7.5; 2025: -7.5; 2026: -4.8; 2027: -4.2; 2028: -3.6; 2029: -3.8; 2030: -3.9; 2031: -4.0; 2032: -4.0.
- Primary deficit (Percent of GDP): 2022: -1.1; 2023: -1.7; 2024 onward: -3.5 (2024–2032: -3.5 each year).
- Noninterest revenues (Percent of GDP): 2022: 28.1; 2023: 26.9; 2024: 26.4; 2025–2032: 25.6 each year.
- Noninterest expenditures (Percent of GDP): 2022: 27.1; 2023: 25.1; 2024: 22.9; 2025–2032: 22.1 each year.
- Automatic debt dynamics (Percent of GDP): 2022: -17.7; 2023: -8.9; 2024: -5.3; 2025: -2.4; 2026: -1.3; 2027: -0.7; 2028: -0.1; 2029: -0.3; 2030: -0.4; 2031: -0.5; 2032: -0.5.
- Real GDP growth (percent, memo): 2022: 1.3; 2023: 2.3; 2024–2032: 3.0 each year (2024–2032 shows 3.0).
- Inflation (GDP deflator; percent, memo): 2022: 45.6; 2023: 48.7; 2024: 28.3; 2025: 14.9; 2026: 10.6; 2027: 8.6; 2028–2032: 5.0 each year.
- Effective interest rate (percent, memo): 2022: 5.1; 2023: 3.3; 2024: 4.8; 2025: 4.8; 2026: 5.3; 2027: 5.7; 2028: 5.6; 2029: 5.5; 2030: 5.4; 2031: 5.4.

### Gross Financing Needs (GFN) and debt service (Percent of GDP)
- Gross financing needs (including arrear clearance, base):
  - 2022: 10.0
  - 2023: 12.0
  - 2024: 9.3
  - 2025: 6.3
  - 2026: 5.1
  - 2027: 7.7
  - 2028: 8.4
  - 2029: 9.4
  - 2030: 9.6
  - 2031: 9.8
  - 2032: 9.6
- Debt service (of which, Percent of GDP): 2022: 10.6; 2023: 9.8; 2024: 11.5; 2025: 9.5; 2026: 8.6; 2027: 11.2; 2028: 11.9; 2029: 12.9; 2030: 13.1; 2031: 13.3; 2032: 13.1.
- Local currency debt service (Percent of GDP): 2022: 1.0; 2023: 1.6; 2024: 1.6; 2025: 1.8; 2026: 2.3; 2027: 2.6; 2028: 3.1; 2029: 3.3; 2030: 3.3; 2031: 3.5; 2032: 3.9.
- Foreign currency debt service (Percent of GDP): 2022: 9.7; 2023: 8.2; 2024: 9.9; 2025: 7.7; 2026: 6.3; 2027: 8.6; 2028: 8.7; 2029: 9.6; 2030: 9.9; 2031: 9.8; 2032: 9.3.

### One-off and below-the-line items affecting 2023
- Recapitalization assumption (not realized): adds 10 percent of GDP on the public debt stock in 2023 (5% for CBvS and 5% for commercial banks).
- Nominal haircut by restructuring: reduces public debt stock by 6.9 percent in 2023.
- IMF BOP finance: added to the debt stock (IMF finance: BOP shows 2023: 1.7 in table; IMF finance entry shows 0.0 for many years but staff commentary notes its addition).

### Staff commentary on baseline dynamics
- The public debt is projected to decline below 100 percent of GDP by 2025 and fall to below 70 percent in 2030 and below 50 percent by 2035, driven by fiscal adjustment and restructuring agreements.
- GFN to GDP peaks at 12.0 percent in 2023 and is expected to decline to 5.1 percent in 2026; however, it is projected to gradually increase in the medium to long run to "just below 10 percent of GDP" because repayments to restructured external debts as well as the Fund loans would commence after grace periods.
- The GFN path is anchored by sustained primary surpluses (3.5 percent of GDP from 2024).
- It is essential to continue fiscal adjustment efforts in the medium to long term and to keep liquidity buffers, including the government's deposit, against increasing long-run GFN.

### Realism, assumptions, and model alerts
- Tools signal rapid reduction in public debt and improvement in primary balance, underpinned by authorities' commitments to fiscal adjustment, ongoing debt restructuring, and COVID-19 recovery.
- Real interest rate is projected negative in 2023 (reflecting roll-over of T-bill/T-note arrears with original interests) but assumed positive from 2024.
- Real appreciation (real exchange rate) assumption: fixed at 0.6 percent due to Balassa-Samuelson effects in medium to long term.
- DSA does not incorporate potential oil production impacts because available information does not provide assurances about economic viability.

### Medium-term risks and stress analysis
- Debt Fanchart module indicates high risk of debt distress mainly driven by wide fanchart width.
  - Fanchart width: 162.5
  - Probability of debt not stabilizing (pct): 10.0
  - Average GFN in baseline: 8.1
  - Banking claims on government (pct bank assets): 7.2
  - Change in claims on government in stress (pct bank assets): 6.8
  - GFN financeability index: 7.4
- Probabilities and diagnostic signals:
  - Prob. of missed crisis, 2023-2028 (if stress not predicted): 54.5 pct.
  - Prob. of false alarm, 2023-2028 (if stress predicted): 3.4 pct.
- Staff commentary on risks:
  - Risk from debt non-stabilization is relatively contained due to steady decline in public debt and fiscal adjustments, but terminal debt level in 2028 remains relatively high (76 percent of GDP as noted in commentary).
  - GFN financeability module suggests low risk of debt distress, supported by declining GFN in the medium term.
  - Fragile domestic banks could increase liquidity risks; recapitalization needs for CBvS and commercial banks could raise GFN substantially under stress.
  - Recapitalization modalities matter: direct equity injections increase immediate GFN materially; use of securities could reduce immediate GFN and spread financing over time.
  - Risks can be mitigated by significant share of government revenues received in foreign currency and potential future oil revenues.

### Long-term analysis and scenarios
- Long-term projections indicate GFN-to-GDP and public debt-to-GDP diverge quickly if government followed past 10-year path.
- Historical 10-year average scenario includes crisis period 2020–22 and is less informative, but highlights need for sufficient primary balance surplus to stabilize debt.
- Staff projection (baseline until 2035) aligns with "Baseline with t+5" case and suggests GFN to GDP returns to just below 10 percent from 2029 to 2033 due to repayments to restructured external debts and IFIs.
- Demographics and health cost scenarios: health-cost pressures could add fiscal risks in long run but would not be material if GFN and public debt continue declining with fiscal efforts.
- Climate scenarios (adaptation and mitigation): climate adaptation and mitigation costs could add additional fiscal costs and increase GFN to GDP in early 2030s; Suriname is outside hurricane belt but subject to flooding from storm tails. DSA refrains from natural resource module until FID of new oil development is confirmed.

### Key policy recommendations and implications (staff commentary)
- Continue fiscal adjustment efforts in the medium to long term to sustain declining debt trajectory.
- Maintain sufficient liquidity buffer, including government deposits, to meet rising GFN in the long run.
- Plan recapitalization carefully to avoid excessive solvency and liquidity risks for CBvS and commercial banks.
  - Consider modalities that spread recapitalization financing (use of securities) to reduce immediate GFN pressures.
- Do not assume oil revenue in DSA projections until FID and reliable information on viability are available.

*Source: 1surea2023003 - 1. Debt coverage in the DSA: 1/ (Suriname DSA content)*

### 1.      The goal of debt restructuring, in conjunction with fiscal consolidation, is to put public

### 1.      The goal of debt restructuring, in conjunction with fiscal consolidation, is to put public

### Program objectives and debt anchors
- Overarching objective: reduce public debt to 60 percent of GDP by 2035.
- Intermediate debt target: 120 percent of GDP by 2024 (end of program).
- GFNs (Gross Financing Needs) target: average of 9 percent and an upper limit of 12 percent over 2023-2035.
- A 60 percent debt-to-GDP target guided by precedent in recent IMF-supported restructurings in the region (example countries cited: Barbados and Jamaica).

### Baseline program scenario: key assumptions
- Debt perimeter for restructuring covers external commercial and official bilateral debt (including arrears), amounting to about 50 percent of GDP as of end-2021.
- Paris Club (PC) agreements:
  - Restructuring agreement with Paris Club creditors reached on June 24, 2022.
  - No face value reduction of official debt and ECA-backed commercial debt; amortization paused for 7 years (until 2028) and for 8 years (until 2029) respectively.
  - 60 percent of the PC arrears under the bilateral agreement were already paid and the remaining 40 percent is expected to be paid in 2024.
- EXIM India:
  - Agreement on official credit lines by EXIM India made in March 2023: 60 percent of the arrears already paid, remaining 40 percent expected to be paid in 2024.
  - In line with Paris Club agreements, amortization is paused for 7 years (until 2028) without face value reduction.
  - Agreement on loans backed by EXIM India was made in May 2023; financing assurances from India are fully consistent with program parameters.
- Non-PC official creditors: scenario envisages remaining debts restructured on comparable terms to PC creditors.
- China: scenario assumes agreements with China will be concluded in 2023 (delayed from end-2022); authorities continue best efforts to reach restructuring agreements with China.

### Debt restructuring with external private creditors (Eurobondholders)
- Agreement in principle (AIP) with bondholders reached on May 3, 2023.
- AIP key terms:
  - 25 percent nominal haircut of outstanding debt, including arrears.
  - Pause of amortization until 2026.
  - Interest payments expected to start from 2024 with a coupon of 4.95 percent in cash and with a coupon of 3 percent being capitalized until January 2026.
  - After January 2026, coupon rate is 7.95 percent.
  - Includes VRI (Value Recovery Instrument) that capitalizes 120 percent of the nominal haircut.
  - Payment to the VRI is conditional on new revenue stream from a specific oil development project currently under appraisal.
  - Allocation to the VRI is limited to a fraction of the new oil revenue: 30 percent of the royalty revenues from the oil development project, with the first USD 100 million secured for the government.
- Program baseline conservative assumptions:
  - Does not incorporate the additional oil revenue nor debt services on VRI given that a relevant FID has not been made.
  - Under the baseline (without VRI), restructuring results in NPV reduction of around 25 percent for official bilateral and 14.4 percent for external commercial creditors at a 5 percent discount rate.
  - NPV reduction of 51.7 percent for official bilateral and 39.5 percent for external commercial creditors at a 10 percent discount rate.
- Note: An agreement on the non-ECA backed loans with private external creditors has not been reached. The Eurobond comprises 95 percent of the total external debts with private external creditors.

### CBvS (Central Bank of Suriname) legacy debt restructuring
- MoFP and CBvS trying to reach an agreement on legacy debt owed to CBvS by September 2023 at the latest.
- Baseline assumes clearing all the CBvS advances in 2023 and all the interest arrears in 2024 with repayments starting from 2025.
- Losses arising from this agreement expected to be reflected in the CBvS recapitalization plan, to follow the restructuring agreement.

### Other domestic restructuring and arrears clearance
- As of end 2022, domestic debt arrears of SRD 2.1 billion (2.5 percent of GDP), excluding arrears with CBvS.
- Part of arrears already cleared:
  - SRD 1.2 billion cleared at the end of 2022.
  - USD 21 million cleared at the beginning of 2023.
- Authorities have prepared an action plan to complete ongoing domestic restructuring by the end of 2023, while clearing all domestic debt arrears except technical ones.
- Supplier arrears:
  - Audit confirmed supplier arrear of SRD 2.4 billion as of end 2021, estimated to decline to SRD 0.6 billion by end 2022.
  - Authorities accumulated new supplier arrears of SRD 1.5 billion in 2022, resulting in stock of supplier arrear of SRD 2.1 billion as of end 2022.
  - Authorities reduced SRD 0.7 billion of supplier arrears in 2023 and commit to clearing at least SRD 0.3 billion more in 2023 and to clearing all supplier arrears by 2025.
- Gold loan agreement in arrears evaluated at SRD 0.4 billion at end 2022; to be cleared in 2024 under a renewed agreement.
- Domestic arrear repayment schedule (selected items) — Suriname: Domestic Arrear Clearance Schedule in 2023 and 2024:
  - Arrear repayments: SRD millions 5,169 (3.9% of GDP) in 2023; SRD millions 2,315 (1.3% of GDP) in 2024.
  - CBvS: SRD millions 1,549 (1.2% of GDP) in 2023; SRD millions 1,122 (0.6% of GDP) in 2024.
  - Debt: SRD millions 2,620 (2.0% of GDP) in 2023; SRD millions 0 (0.0% of GDP) in 2024.
  - Gold: SRD millions 0 (0.0% of GDP) in 2023; SRD millions 648 (0.4% of GDP) in 2024.
  - Supplier: SRD millions 1,000 (0.8% of GDP) in 2023; SRD millions 544 (0.3% of GDP) in 2024.
- Authorities will improve capacity through PFM reforms and TA.

### Financing assumptions and buffers
- Financing requirements projected to decline significantly over the medium term due to external debt restructuring (face-value reduction and coupon reduction).
- Budget finance from multilateral creditors assumed until 2024 as a conservative assumption.
- Project financing from multilateral creditors assumed to decline gradually as Suriname switches to market financing of capital expenditures.
- External private financing assumed to resume gradually over the medium and long term.
- External market access assumed to resume from 2026 under baseline.
  - Potential financing gap in 2025 (when no budget support is assumed) expected to be filled by deposit withdrawal.
  - Government accumulated deposits of SRD 9.7 billion (11 percent of GDP) by end 2022, serving as large liquidity buffer.
- Domestic financing expected to be limited until 2024 due to ongoing restructuring and gradual market confidence recovery. Domestic finance in 2023 limited to roll-over finance (no net issuance) apart from domestic project finance.
- Recapitalization needs of CBvS and commercial banks conservatively assumed to add to public debt stock in 2023, increasing it by 10 percent of GDP (5 percent for CBvS and 5 percent for commercial banks).
  - Associated financing needs not incorporated in the DSA because of uncertainty regarding scale and modalities of recapitalization.
  - Use of securities could reduce immediate GFN needs and spread financing of recapitalization over a long-time horizon.

### Debt sustainability outlook (public debt and GFNs)
- Under the restructuring scenario, public debt projected path:
  - Below 100 percent in 2025.
  - Below 70 percent in 2030.
  - Below 50 percent in 2035.
- GFNs projected dynamics:
  - GFNs decline sharply from 12.0 percent in 2023 to 5.1 percent in 2026.
  - GFN would rise to about 10 percent in the medium to long term due to debt service to IFIs including the IMF and repayments of restructured claims, but remain at sustainable levels over the long term with GFN to GDP declining from 2033.

### External Debt Sustainability (External DSA) — selected projections and risks
- External debt projections:
  - External debt around 140.4 percent of GDP at end-2023, decreased from 149.2 percent at end-2022.
  - Total external debt forecast to decline to around 83.3 percent of GDP at end-2028.
  - Public sector external debt accounts for more than 50 percent of total external debt and is expected to decline substantially due to fiscal adjustment and public external debt restructuring.
- Risk assessment:
  - Macroeconomic shocks pose significant risks; various shock scenarios generally keep external debt below 150 percent of GDP.
  - Historical scenario suggests external debt would be considerably higher than baseline absent fiscal adjustment, public external debt restructuring, and macroeconomic stability (especially exchange rate).
  - Continued internal and external adjustment is critical for external sustainability.
- Selected figures from External DSA Table (2018–2028, percent of GDP unless otherwise indicated):
  - Baseline: External debt 88.0 (2018), 99.7 (2019), 165.0 (2020), 144.9 (2021), 149.2 (2022), 140.4 (2023), 122.1 (2024), 110.3 (2025), 100.3 (2026), 90.1 (2027), 83.3 (2028).
  - Change in external debt: -1.2 (2018), 11.7 (2019), 65.2 (2020), -20.1 (2021), 4.3 (2022), -8.8 (2023), -18.4 (2024), -11.7 (2025), -10.0 (2026), -10.2 (2027), -6.8 (2028).
  - Gross external financing need (in billions of US dollars): 0.3 (2018), 0.6 (2019), 0.9 (2020), 0.3 (2021), 0.4 (2022), 0.6 (2023), 0.3 (2024), 0.3 (2025), 0.2 (2026), 0.3 (2027), 0.4 (2028).
  - Gross external financing need (in percent of GDP): 8.6 (2018), 14.6 (2019), 22.7 (2020), 11.3 (2021), 14.8 (2022), 10-Year10-Year15.6? (table formatting preserved exactly as in source).
- Scenario tests and shocks (descriptive outcomes preserved):
  - Interest rate shock, growth shock, current account shock, real depreciation shock, combined shock and historical scenarios illustrated in the DSA (figures and box averages referenced in source).

### Decomposition of public debt and debt service by creditor (summary notes)
- Table 1 in source decomposes debt stock excl. arrears, arrears, debt stock incl. arrears, and debt service by creditor for 2022–2025 under a Non-Restructuring Scenario; data are presented in USD and percent of GDP and include multilateral creditors, official creditors, bilateral creditors (including Paris Club, China, India), ECA-backed loans, private creditors (Eurobonds and non-ECA backed loans), and domestic creditors (held by Central Bank, local banks, local non-banks, supplier arrears).
- Source notes:
  - For external debts whose bilateral restructuring agreements were not completed by end-2022, reported debt stocks and debt services are based on original contracts. For those completed by end-2022 (France, Netherlands, Sweden), reported figures are based on these agreements and include arrear repayments where applicable.
  - Ongoing restructuring discussion with CBvS is reflected for domestic debt services.
  - Figures based on existing debts as of end-2022; debt services from newly contracted debt in 2023 onward not reflected.

### Capacity development (CD) strategy — priorities aligned with program
- CD efforts aligned with Fund-supported program reform objectives.
- Key CD priorities:
  - Improving institutional framework for fiscal policy.
  - Strengthening compilation of government financial statistics.
  - Developing an integrated public financial management information system.
  - Improving timeliness and quality of vital economic data and statistics.
  - Strengthening CBvS’s implementation of the reserve money targeting framework.
  - Improving governance and supervisory and crisis management frameworks.
  - Advancing structural reforms to enhance anti-corruption and AML/CFT frameworks.
- Implementation considerations:
  - Authorities are expected to make heavy use of CD from the Fund and other development partners.
  - Given absorptive capacity constraints, close integration of CD activities with program priorities and coordination among CD-providers are critical.

*Source: IMF staff estimates and content from the provided document.*

### 1.      Suriname faces systemic fiscal and external imbalances due to many years of economic

### 1.      Suriname faces systemic fiscal and external imbalances due to many years of economic

### Overview and Program Objectives
- The Executive Board on December 22, 2021, approved the country’s request for a 36-month arrangement under the Extended Fund Facility (EFF) to support the authorities’ economic recovery program.
- Central objective: restore macroeconomic stability and address systemic fiscal and external sector imbalances.
- Program aims:
  - (i) restore fiscal sustainability and strengthen fiscal management;
  - (ii) reduce public debt to sustainable levels;
  - (iii) improve the social safety net to better protect the most vulnerable;
  - (iv) upgrade the monetary policy framework and maintain a flexible, market-determined exchange rate adopted in June 2021;
  - (v) improve the viability of the financial system (including, where needed, through recapitalization), and develop more effective bank oversight and a financial crisis management frameworks;
  - (vi) tackle corruption, strengthen institutions and institutional governance, and enhance Suriname’s AML/CFT framework.
- Fund capacity development (CD) is described as instrumental in advancing these priority reforms.

### Role and Delivery of Fund Capacity Development (CD)
- Fund CD is critical in advancing priority reforms; limited data availability and weak data quality (government financial statistics and banking supervision) could hamper policy formulation and program performance assessment.
- CBvS governance and analytical capacity need strengthening urgently for implementation of the new reserve money targeting (RMT) framework with the goal of restoring price stability.
- Integration and coordination:
  - CD delivery has been integrated with surveillance priorities from previous Article IV consultations and stepped up under the Fund-supported program.
  - Country team and CD providers coordinate closely, including mission participation, to align CD with authorities’ reform priorities.
  - Given absorptive capacity constraints, sequencing and prioritizing of CD across reform streams is paramount.
- Collaboration with international partners includes coordination with CARTAC, IDB, CDB, UN agencies, OAS, World Bank Group, EU, CARICOM/CARIFORUM, US Treasury, USAID, Canada (Catalyste+), and the Dutch government (Dutch Ministry of Finance, Dutch Statistics Office and the Dutch Central Bank).
- Looking ahead: Suriname is expected to be a heavy user of CD, though absorptive capacity constraints pose challenges. The Fund’s resident representative office coordinates CD between authorities and CD providers.

### CD Priorities — Strengthen the Institutional Framework for Fiscal Policy
- Authorities’ economic plan targets an improvement in the primary balance of around 10 percentage points of GDP over 2021-2024, supported by a balanced mix of revenue and expenditure measures.
- Fund-supported program aims to improve fiscal institutions through more efficient revenue administration and public financial management, high-quality data reporting, and strengthened analytical and forecasting capacity.

Key CD areas and activities
- Government finance statistics (GFS)
  - Obstacles: blurry definition of budgetary central government (BCG) and central government; lack of an integrated financial management information system.
  - December 2021 STA TA mission identified significant weakness in fiscal and public debt data compilation.
  - STA completed two follow up TAs in April and October 2022.
  - World Bank providing TA to the Suriname Debt Management Office (SDMO) to strengthen capacity on public debt data compilation and reporting.
  - CD will help establish and maintain an up-to-date list of public entities (Institutional Table), starting with central government entities.
  - Support to enhance institutional arrangements to improve collection and processing of source data for GFS.
- Public financial management (PFM)
  - Authorities’ PFM reform strategy (developed with IDB) prioritized: publishing quarterly budget execution reports; consolidating treasury functions; establishing a public investment management system; assessing and managing fiscal risks from state-owned enterprises.
- Budget execution
  - CD will support development of a comprehensive medium-term fiscal framework and a medium-term fiscal strategy to guide budget preparation and improve budget execution.
- Treasury management
  - CARTAC 2021 TA recommended consolidation of treasury functions and creation of a high-level financial controller within a new treasury unit in the MoFP.
  - Recommendation to modernize the chart of accounts and extend use of the treasury single account.
  - CARTAC TA on modernizing the chart of accounts completed in February 2023.
  - Work underway to improve the paymaster system and compilation of liabilities with domestic suppliers, including arrears.
- Public investment management system
  - Government lacks a public investment management system and coordinated asset management strategy.
  - With IDB support, a first assessment concluded in September 2022; additional follow-up TA and financial resources will be provided by the IDB.
- Tax policy and revenue administration
  - CD to support VAT implementation; establishment of large taxpayer units (Dutch government supporting); review fiscal regime for multinational gold mining companies; comprehensive review of revenue administration work processes and legal framework.
  - CD to strengthen natural resource taxation given potential oil revenues in the medium-term.
  - A general diagnostic mission on tax policy was completed in May (year not specified in excerpt); mission made recommendations for strengthening tax and revenue performance.
- Expenditure policy and governance of the electricity sector
  - CD to focus on rationalizing the government wage bill and untargeted social spending, including electricity subsidies.
  - State-owned electricity company (EBS) losses require significant fiscal transfers.
  - IDB provided assistance for independent financial assessment of EBS.
  - Authorities requested FAD TA on energy subsidies reform; mission planned for end-May 2023.
- Improving social safety net
  - CD to improve design and targeting of social transfer programs.
  - IDB social protection support program will work on enhancing efficiency and transparency of cash transfer programs.
  - ILO supporting a social expenditure review.
- Other economic statistics
  - CD to improve quality and timeliness of monetary, national accounts, price, and external sector statistics.
  - Monetary statistics: expand coverage to include other deposit-takers (credit unions) and other financial corporations (pension funds and insurance companies); STA mission delivered May 2023.
  - National accounts: currently only annual frequency published with an eight to nine-month lag; producing quarterly national accounts and shortening the time lag is vital. CARTAC supporting quarterly national accounts production.
  - Price statistics: support planned rebasing exercise and development of a residential property price index; STA April 2023 price statistic—residential property price index noted.
  - External sector statistics: CARTAC providing TA to address balance of payments data gaps and reduce errors and omissions.

### CD Priorities — Strengthen the RMT Framework
- Authorities adopted a flexible exchange rate regime and fully transitioned to the Reserve Money Target (RMT) framework.
- CD on central bank operations focuses on enhancing RMT functioning:
  - Dutch Central Bank provided a long-term expert, in coordination with MCM/WHD, providing TA on RMT, the auction process for RMT, and developing alternative instruments for interbank transactions.
  - Continuous CD needed to strengthen modelling and forecasting, monetary policy decision making, liquidity management, reserve management; design effective communication strategy; and develop a medium-term framework for foreign exchange operations and market development.
  - Authorities have requested TA on foreign exchange reserve management.

### CD Priorities — Strengthen Autonomy and Governance of the CBvS and Supervisory/Crisis Framework
- Legal and institutional reforms:
  - Authorities revised the CBvS law to improve governance, transparency, accountability, and oversight.
  - Bank supervision law being revised to facilitate risk-based supervision and grant powers to assess banks’ business strategies, governance, risk management, 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.
- Specific CD actions:
  - Governance of the CBvS: EG assisted in modifying and adopting CBvS law; FIN closely monitoring implementation of governance reform plan adopted in June 2021. CD needed to help MoFP and CBvS jointly develop a plan to recapitalize the CBvS. Authorities intend to align the Central Bank Law of 2022 with foreign exchange regulation 1947 in two stages and requested LEG TA to revise the FX regulation.
  - Financial reporting and recapitalization: MCM assisted CBvS in finalizing annual accounts for 2016 to 2019 and is providing TA to help CBvS transition to IFRS accounting. Once audited statements for 2020 and 2021 are finalized, MCM will assist in developing a recapitalization plan for CBvS.
  - Financial crisis management framework: LEG and MCM supporting development of bank resolution law and operationalizing the Bank Resolution Unit within CBvS; next step is assistance in developing and implementing regulations related to bank resolution.

### CD Priorities — Improving Governance, AML/CFT, and Anti-Corruption
- AML/CFT framework
  - CD focused on aligning Suriname’s AML/CFT framework with international standards.
  - Project funded by Phase III of the Fund’s AM/CFT Thematic Trust Fund.
  - LEG scoping mission in November 2021 and on-site mission in July 2022 identified support areas including legal drafting and risk-based supervision.
  - Staff provided a draft proposal for new AML/CFT law in Dutch and English and reviewed sectoral laws relevant to banking and casinos.
- Tackling corruption and public sector transparency
  - CD will be prioritized to support revision of anti-corruption and procurement laws.

### Challenges, Risks, and Mitigating Factors
- Authorities generally have good ownership of the Fund-supported program and view CD as critical to its success.
- Risks of delayed implementation are high due to:
  - limited skilled human resources;
  - weak information technology infrastructure;
  - absorption capacity constraints.
- Mitigating factors:
  - Three-year duration of the EFF arrangement is expected to catalyze support from IFIs and bilateral partners and incorporate critical CD activities as program structural benchmarks.
  - The Fund’s resident representative office plays a critical coordinating role.

### Capacity Development Activities (2013-2023) — Selected Highlights
- CD activities increased markedly since 2021 after authorities requested Fund support.
- Table of CD activities (2013-2023) covers multiple areas including:
  - Revenue Administration: FAD missions for VAT preparation and implementation (Mar 2017; Apr 2017; Oct 2017; May 2023).
  - Public Financial Management: CARTAC and FAD support on treasury single account, IFMIS, chart of accounts, MTEF, moving to a modern treasury function, accounting and financial reporting, strengthening budget planning and preparation, macrofiscal forecasting, Charts of Accounts (Feb 2023).
  - Financial Market Supervision and Stability: multiple CARTAC and MCM missions on deposit insurance, stress-testing, macroprudential indicators, emergency liquidity assistance, IFRS adoption, systemic risk monitoring, financial stability report.
  - Central Bank Operations: MCM missions on T-bills auctions, central bank modernization, payments systems, monetary framework operations, calibration of Reserve Money Targets (MCM Jun 2021).
  - National Accounts and Price Statistics: CARTAC and STA missions on national accounts; price statistics and residential property price index (STA Apr 2023).
  - External Sector Statistics: CARTAC/STA missions on balance of payments and IIP enhancement (2014–2020), desk reviews and follow-up (May 2021–Apr 2022).
  - Government Finance Statistics: STA missions (Dec 2015; May 2016; May 2017; May 2018; Dec 2021; Apr 2022; Oct 2022).
  - Other areas: e-GDDS (STA Feb 2017), AML/CFT and anti-corruption (LEG Jul 2022), Monetary and financial statistics (STA May 2023).

*Source: 1surea2023003 — Suriname capacity development chapter (IMF).*

### Annex III. The Welfare Impacts of Reforming Energy Subsidies

### Annex III. The Welfare Impacts of Reforming Energy Subsidies

### Background
- In 2022, Suriname spent 5.3 percent of GDP on fuel and electricity subsidies.  
- In March 2023 the government eliminated fuel subsidies, and in May 2023 announced further steps in phasing out electricity subsidies.  
- Removing energy subsidies is fiscally urgent given Suriname’s limited fiscal space and large downside risks, but raises concerns about adverse welfare impacts on poor and vulnerable households.

### Distributional patterns of energy consumption and subsidies
- Data source: Suriname Survey of Living Conditions 2016-2017 (most recent publicly available household survey).  
- Per capita monthly expenditure on energy products is substantially higher for higher income households: the top consumption quintile spends more than 5 times as much as the lowest quintile on energy in per capita terms.  
- The poorest quintile spends nearly 3 percent of their monthly expenditures on energy, compared to less than 1 percent for the richest quintile — implying subsidies are relatively more important for the poor even though total subsidy value is concentrated among higher-income households.

### Welfare impacts of price increases (example scenario)
- Scenario: diesel prices and electricity tariffs increased by 25 percent (2016 base).  
- Estimated average per capita welfare impact: bottom quintile ≈ SRD 10 per capita per month; top quintile ≈ SRD 80 per capita per month.  
- The indirect impact (higher prices of other goods and services) is concentrated in the top quintile, where nearly half of the welfare loss is due to second-order effects.  
- Methodological assumptions: Direct impact = Household Budget Share × Percentage Increase in Energy Price × 100. Indirect impacts assumed fully passed forward to domestic prices using the 2007 Suriname input-output table; welfare impacts computed using household budget shares; results assume zero demand price elasticity (interpretable as short-run impact or an upper bound of long-run impact).

### Fiscal cost and compensating the poor
- 39.2 percent of households were classified as poor or vulnerable (incomes below 1.25 times the non-extreme poverty line) in the 2017 survey.  
- Fully compensating the poorest 40 percent of households for a 25 percent increase in diesel and electricity prices would have cost the government around 0.16 percent of GDP (2016).  
- The net fiscal savings from removing subsidies while compensating the poorest 40 percent would be about 0.4 percent of GDP (2016).  
- Conclusion: Because lower income groups receive a small proportion of total energy subsidies, a well-targeted social safety net can fully protect them while allowing substantial net fiscal gains.

### Existing social assistance and the Social Beneficiary Program
- In 2022 Suriname had four major cash transfer programs with varying progressivity and coverage:  
  - Child Allowance: progressive with highest coverage for the poorest 60 percent of households, but some benefits still accrue to high income households.  
  - Support for Weak Households (FBZwHH): better targeted, but very limited coverage — less than 10 percent of households in the lowest quintile are covered.  
  - Elderly Allowance (AOV): high coverage but highly regressive.  
  - Disadvantaged Persons with Disabilities (FBMMEB): included among existing grants.  
- To address targeting gaps, authorities created the Social Beneficiary Program:  
  - Eligibility: households with net incomes lower than SRD 6,000 per month.  
  - Target population: intended to cover the 40 percent of households considered poor or vulnerable — around 60,000 households.  
  - Benefit size: SRD 1,800, intended to compensate for fully removing energy subsidies.

### Policy implications and recommendations (implicit in findings)
- Prioritize elimination or phasing out of energy subsidies to restore fiscal sustainability, while simultaneously:  
  - Strengthening and expanding a well-targeted social safety net to fully compensate poor and vulnerable households.  
  - Designing transfers to focus on the poorest 40 percent to achieve full protection at modest fiscal cost (illustrative cost: 0.16 percent of GDP in 2016).  
  - Improving coverage and targeting of programs such as Support for Weak Households and reforming regressive transfers (e.g., Elderly Allowance) to avoid leakage to higher-income households.

*Source: IMF staff estimates based on the Suriname Household Income and Expenditure Survey 2017.*

### 3.      We have been successful in implementing the program and stabilizing the economy

### 3.      We have been successful in implementing the program and stabilizing the economy

### Economic stabilization and program implementation (through mid-2022)
- Monthly economic activity indicator (12-month moving average) improved from -15 percent in early 2021 to 2 percent in June 2022.
- Inflation remained high at around 60 percent (y/y) in April 2022; core inflation excluding food and utility items showed signs of moderation.
- 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.
- Real effective exchange rate appreciated by 15 percent (cumulatively) since December 2021; appreciating trend since July 2021.
- Program reforms implemented to:
  - reduce fiscal imbalances;
  - adopt a new monetary policy framework allowing a flexible exchange rate;
  - tackle vulnerabilities in the financial system;
  - increase the independence of the central bank.
- Agreement reached with Paris Club creditors to restructure Suriname’s bilateral debt in June 2022.

### Shock and program slippage (second half of 2022)
- Delay in enacting the VAT law postponed the 2nd review despite staff level agreement on May 17, 2022; VAT law approved by National Assembly in August 2022.
- Exogenous shock from the war in Ukraine triggered food and energy price shocks.
- Government responses: untargeted fuel subsidy and increased public sector wages.
- Overspending effects:
  - Overspending on fuel subsidies and wages caused the primary balance (PB) to fall short of the end-December 2022 target.
  - End-December 2022 target on net domestic assets (NDA) was breached.
- Mechanism of deterioration:
  - Fiscal expansion created an overhang of local currency (LC) liquidity, pressuring the exchange rate.
  - Resulting depreciation created a burst of inflation and complicated CBvS efforts to restrain monetary aggregate growth.

### Arrears, domestic debt, and banking vulnerabilities
- Supplier arrear audit completed in May 2023: stock of supplier arrears as of end 2021 was SRD 2.4 billion.
- Actions and accumulation:
  - Cleared SRD 1.8 billion of legacy arrears in 2022.
  - Accumulated new supplier arrears of SRD 1.5 billion (based on preliminary estimates).
- Domestic debt arrears (excluding debt owed to CBvS) increased by SRD 0.5 billion from end-2021 to SRD 2.1 billion in 2022.
- Banking sector impacts:
  - Capitalization of the banking system has further eroded.
  - AQR results show five banks not meeting requirements, mainly due to increased provisioning needs on government exposures and reclassified loans.
  - Appetite for government debt has fallen due to constant reprofiling/restructuring of domestic securities.
  - Banking system broadly liquid but liquidity unevenly distributed with emerging pockets of vulnerability.

### Fiscal objectives and medium-term anchor
- Primary surplus in 2022 was 1.1 percent of GDP (first surplus since 2011), below the program target of 1.7 percent of GDP.
- Overspending on fuel subsidies and public sector wages amounted to 1.8 and 0.9 percent of GDP respectively, causing a miss of 0.6 percent of GDP relative to the end-December 2022 target.
- Adjusted fiscal stance:
  - Target primary balance of 3.5 percent of GDP in 2024 as the medium-term anchor consistent with debt sustainability.
  - Gross financing needs expected to remain under 9 percent of GDP over the medium-term.
  - Financing less constrained allows a more gradual fiscal consolidation to protect recovery and meet urgent spending needs.

### Social and capital spending adjustments
- Additional social spending measures:
  - New social beneficiary program targeting households with net incomes lower than SRD 6,000 per month.
  - Cash transfer of SRD 1800 per month to 60,000 poor households.
  - SRD 154 million transferred to poor and vulnerable households in 2023 (complementing traditional social protection programs).
  - Additional social programs sized at 1 ppt of GDP.
- Capital spending:
  - Higher capital spending by 0.5 ppt of GDP to recover from delays; capital expenditure fell from 6.6 percent of GDP in 2019 to an average of 2.1 percent of GDP during 2020-2022.
- Personal income tax thresholds increased to adjust for cumulative 400 percent increase in consumer price index over the past three years; expected to lower personal income tax revenue by 0.6 percent of GDP and incentivize greater labor force participation.

### Revenue and expenditure measures to reach PB targets (2023–2024)
- VAT:
  - Enactment in 2022 seen as major achievement; further base-broadening required.
  - Amended VAT Act to (i) convert all zero-rated products (except exports and ancillary supplies to exports) to exempt products and (ii) impose the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption (prior action, pending).
  - Amended VAT Act to be enacted by end-July 2023 (proposed new structural benchmark for end-July 2023).
  - Compliance efforts: outreach to non-registered companies, timely refunds, taxpayer education campaign.
- Wage bill:
  - Nominal public sector wages unchanged from August 2022 to April 2023 despite strong inflation.
  - Agreement with unions to increase wages in May 2023 through cost-of-living bonuses.
  - Commitment not to increase public wages/allowances beyond those already agreed for this fiscal year.
  - Targets: reduce wage bill to 7 percent of GDP or lower by end-2024; no increase in public sector employment in 2023 and 2024.
  - Registration process completed for civil service employees; amendment to Personnel Act to stop salaries for workers not registered (10 percent of public sector currently unregistered).
  - 800 workers accepted voluntary separation packages.
- Fuel subsidies:
  - Fuel subsidies fully eliminated in March 2023; fuel prices now set by an automatic pricing mechanism based on international prices.
- Electricity subsidies:
  - Renegotiated power purchase agreements and announced increases to average electricity tariffs by 28 percent; phasing out of lump-sum billing discounts (prior action, completed).
  - Tariffs to be further increased each quarter by the Energie Autoriteit Suriname to reach cost recovery by end-December 2024.
  - IMF technical assistance to ensure social acceptability and limit impact on poorest households; consensus-building committee established.
- Tax exemptions and other revenue measures:
  - Eliminated exemptions for import of capital goods in April 2023.
  - Further scaling back exemptions in mining, telecommunication, and SOEs could yield up to 0.2 percent of GDP in 2023 and a further 0.2 percent in 2024.
  - Royalty rate for small-scale gold miners increased from 4.5 percent to 5.5 percent in January 2023, yielding an additional 0.2 percent of GDP in 2023; further increases to be considered in 2024.
  - Air navigation charges increased by 24 percent on average beginning in May 2023; expected to yield 0.3 percent of GDP in 2023.
  - Land lease rate increases announced in March 2023 expected to yield 0.6 percent of GDP in 2024; rates to be more frequently adjusted toward market rates.

### Strengthening fiscal institutions and public financial management
- Procurement: incorporate a procurement module into the Integrated Financial Management Information System with IMF and IFI support to improve spending efficiency.
- Treasury management and arrears prevention:
  - Issue a State Decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks (proposed new structural benchmark for end-December 2023).
  - Require commercial banks to issue periodic financial statements to the Ministry of Finance for these accounts.
  - Close separate bank accounts and gradually bring them into a Treasury Single Account.
  - Expand Treasury functions beginning with monitoring supplier arrears.
- Revenue authority reform: begin converting the Tax Directorate, including Customs, into a semi-autonomous revenue authority; reorganization plan by external consultants funded by the IDB to be followed by legislation.
- Fiscal transparency:
  - Commit to publishing budget execution reports on a quarterly basis starting with end-June 2023 fiscal outturns to be published by end-September (proposed new structural benchmark for end-September 2023).
- SOE oversight:
  - Three-step approach for 10 largest SOEs: (1) collect and publish latest financial information; (2) prepare a report identifying and quantifying fiscal risk (end-December 2022 SB, proposed reset to end-December 2023); (3) initiate quarterly financial monitoring.
- Fiscal data quality:
  - Establish an Institutional Table to compile an up-to-date list of public entities, beginning with central government entities (proposed new structural benchmark for end-June 2023).
  - Sign a memorandum of understanding between the Directorate of Taxes, MoFP, Finabank, CBvS and SDMO specifying data provision requirements.
- Public investment management: begin establishing a public investment management system and coordinated asset management strategy; increase transparency of asset disposal rules.
- Medium-term macro-fiscal framework: implemented with CARTAC assistance and to be used from the 2024 budget cycle starting July 2023.
- Large Taxpayer Unit (LTU): expand functions to include account maintenance, client relationship management, filing and payment compliance with technical assistance.

### Public debt restructuring and sustainability commitments
- 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 fiscal position fully financed from 2023 to 2024.
- Sovereign restructuring approach: follow best practices, consider inter-creditor equity and comparability of treatment of official bilateral creditors.
- Private creditors:
  - Agreement-in-principle with the Bondholder’s Committee in May 2023 includes a 25 percent nominal haircut on fixed income instrument and a value recovery mechanism.
  - Fixed income instrument coupon reduced from 7.95 percent to 4.95 percent until January 2026 (gap capitalized).
  - Value recovery mechanism contingent on new oil revenue from Block 58, capitalizes 120 percent of the nominal haircut (USD 275.6 million).
- Paris Club and official creditors:
  - Agreement in principle with Paris Club creditors in June 2022; bilateral agreements reached with all Paris Club creditors except Italy (agreement-in-principle with Italy reached; signing expected before the Board).
  - Restructuring offers presented to China and India in July 2022; EXIM India signed an agreement on official bilateral loan in March 2023 consistent with the July 2022 offer.
  - Agreement on ECA backed loans with India reached in May 2023; financing assurances from India consistent with program parameters.
  - Ongoing engagement with China EXIM bank; no agreement yet.
  - China has provided consent to proceeding with Fund financing notwithstanding arrears to China, consistent with the Fund’s "ending Into Official Arrears" policy language.
- Telesur payment issue:
  - In January 2023 Telesur made an erroneous payment of USD 7 million to EXIM China.
  - Commitment not to make payments on any official bilateral debt under restructuring negotiation until process complete; ensure Telesur payments reflected in eventual restructuring with EXIM China.
  - Measures taken to prevent further such payments; Telesur restricted from meeting EXIM China representatives without MoFP officials present.
  - Presidential Decree to prohibit payments until restructuring agreement with China reached.
- Domestic debt restructuring and arrears clearance:
  - Reduced domestic arrears by SRD 1.2 billion in December 2022 and by USD 21 million in January 2023.
  - Time-bound action plan to complete ongoing domestic restructuring by end of 2023 and clear all domestic debt arrears except technical arrears on project finance by then.
  - Strengthen Treasury Unit within MoFP to project and manage cash flows to prevent further arrears accumulation.
  - Commit to concluding negotiations on legacy debts with CBvS by September 2023; government intends to clear all CBvS arrears by end 2024; outcome to inform CBvS recapitalization plan.
  - Cleared SRD 0.7 billion of supplier arrears from January to April 2023; commit to clearing at least total SRD 1 billion in 2023 (halving estimated stock as of end-2022) and to clear all supplier arrears by end 2025.
- Borrowing and guarantees:
  - Government will not provide guarantees to debt contracted by other parties during the program, nor contract new debt collateralized by natural resource revenues.
  - CBvS discontinued issuance of new FX-linked or FX-denominated debt to avoid influencing domestic FX market or complicating reserve money targeting.

### Strengthening the social safety net
- Use of additional fiscal space to increase social programs and protect stability for program implementation.
- Targeting and transfers:
  - New social beneficiary program for households with net incomes lower than SRD 6,000 per month.
  - Cash transfers of SRD 1800 per month to 60,000 poor households.
  - SRD 154 million transferred in 2023 to poor and vulnerable households to complement existing social protection.

*Source: IMF staff summary — 3. We have been successful in implementing the program and stabilizing the economy (1surea2023003).*

### 13.      We have intensified our efforts to protect the poorest households by significantly

### 13.      We have intensified our efforts to protect the poorest households by significantly

### Social protection expansion and coverage
- In 2017, 26 percent of households were living in poverty, with a further 14 percent of households considered to be vulnerable.
- In November 2020, value of existing targeted cash transfer payments was increased to support vulnerable households.
- Benefits were increased multiple times in 2021 and 2022 to provide protection in an inflationary environment while meeting the end-December indicative target on social spending of 2 percent of GDP.
- In January 2023, a new cash transfer program (the social beneficiary program) was created, intended to reach 60,000 poor and vulnerable households across Suriname.
- So far, the social benefits program has reached 31,038 households.
- The government intends to expand social protection spending to 3 percent of GDP in 2023 as a direct response to difficult economic conditions.

### Administrative strengthening, digitalization, and monitoring
- The Ministry of Social Affairs and Housing completed a re-registration to update its beneficiary database.
- Efforts undertaken to identify and register eligible recipients for four main social cash transfer programs increased recipient numbers.
- A digital register of recipients for all programs was compiled; beneficiaries are being shifted to digital payments using a government-provided debit card system.
- Initial registrations for the new social benefits program reached 60,000 households.
- With IDB support, a monitoring and evaluation unit will be instituted within the Ministry of Social Affairs and Housing in 2023.
- Given rapid inflation, options will be considered to transparently index cash transfer values and eligibility thresholds to a basket of goods and services updated regularly using monthly consumer price index data.
- Coverage across geographical regions will be evaluated to ensure regions with greater incidence of poverty receive adequate protection.
- A comprehensive expenditure and performance review of the social protection system will be published, followed by a time-bound strategic plan to improve efficiency and effectiveness of social assistance programs by end-September 2023.

### Efforts to reduce inflation and monetary policy actions
- The CBvS has conducted weekly term deposit auctions guided by the reserve money path aligned with program targets on Net Domestic Assets (NDA).
- Weak and uneven auction participation and weak interest rate transmission constrained monetary policy effectiveness; the end-December NDA target was breached with a wide margin.
- Expansion of open market operations (OMOs) to wholesale auctions and direct issuance of central bank certificates (CBCs) from mid-2022 supported tightening in parts of the banking system but largely resulted in reallocation from CBvS term deposits with limited impact on market deposit rates.
- In April 2023, measures taken included raising local currency reserve requirement by 5 percent (from 39 to 44 percent) and informal guidance to contain growth in private sector bank credit to 20 percent over a 12-month period.
- Effectiveness of new measures will be reviewed by end-June 2023; authorities stand ready (in consultation with IMF staff) to implement further tightening measures as needed.
- Authorities agree with IMF staff that a more accommodative reserve money and NDA target paths (as set out in Table 1) for the remainder of the program period would be appropriate.

### Liquidity backstops and emergency liquidity
- The CBvS standing lending facility provides banks unrestricted access to cover sudden short-term liquidity gaps; recurrent or sizeable use is subject to supervisory investigation and remedial action.
- The facility is priced on the basis of the weighted average price of open-market operations plus a modest spread.
- The CBvS will seek to sterilize liquidity from use of the facility through OMOs to minimize disruptions to reserve money targets.
- A revised circular on the ELA framework to provide emergency liquidity to banks has been issued.

### Exchange rate policy and FX market measures
- Authorities reiterate commitment to a flexible, market-determined exchange rate; CBvS refrained from direct exchange rate interventions under the program framework.
- Program targets on net international reserves (NIR) over 2022 were largely met, supported by higher government FX mineral revenue.
- Measures to support FX supply and ease shortages included introduction of a surrender requirement for exporters to sell 35 percent of export proceeds to the market.
- CBvS tightened enforcement of prudential limits on banks’ net open positions and issued guidance to support rules-based functioning of the FX market; this inadvertently resulted in a multiple currency practice (MCP) and a breach of a continuous program performance criterion, for which a waiver is requested.
- Authorities commit to consult with the Fund before issuing future regulatory guidance on FX market functioning.

### Conditionality on indirect FX interventions and caps
- From September 2022, mineral companies were allowed to pay some government revenue obligations in local currency from corresponding FX sales targeting essential good importers.
- In February 2023, the government sold US$ 13 million to support FX supply to local fuel importers, breaching a continuous zero-ceiling program target on direct FX sales; the sale occurred amid extraordinary circumstances of increased social tensions and violent street protests that risked fuel shortages.
- To ensure reserve accumulation and meeting program NIR targets, the government commits to cap the local currency portion of government mineral revenue to US$ 15 million on a quarterly basis (new program target as defined in the TMU), with monitoring via weekly reporting.
- The MoFP is committed to transfer all other government net FX receipts (including from IFI budget support) at the prevailing market exchange rate to the CBvS only, except transfers required to meet government’s domestic FX debt service obligations.
- Authorities will refrain from indirect or administrative interventions that could impede efficient FX market functioning or be inconsistent with the program or Article VIII, Sections 2 and 3 of the IMF’s Articles of Agreement.

### FX trading platform and inclusion of gold exporters
- Introduction of an electronic FX trading platform was delayed (end-June 2022 structural benchmark, proposed reset to end-September 2023) due to technical compliance requirements to open the platform to both banks and cambios; procurement completed in late-2022.
- Scope of the trading platform is being extended to include gold exporters that provide a significant share of FX supply, delaying implementation timeline to end-September 2023.

### Banking sector vulnerabilities and AQR findings
- Reported combined capital adequacy ratio at end-2022: [16.8] percent.
- Non-performing loans at [12.4] percent of gross total lending.
- Banks’ liquid assets to total assets at [54.3] percent, partly driven by high reserve requirements.
- The AQR confirmed additional provisioning needs and substantial potential recapitalization needs.
- Liquidity is unevenly distributed and skewed towards larger systemic banks; ongoing monetary tightening may increase liquidity pressures in some banks.
- CBvS will take appropriate measures for banks experiencing difficulties, including imposing prompt corrective actions and has increased supervisory intensity of all banks.

### Roadmap for recapitalization, restructuring, and governance
- CBvS is finalizing a roadmap to triage banks based on AQR outcomes, apply conditions on use of public funds, and unwind regulatory forbearance.
- Roadmap actions:
  - Instruct banks to incorporate AQR results and review recapitalization plans by end of October 2023 (proposed new structural benchmark).
  - Require plans to include time-bound actions and implementation milestones to address prudential breaches and, where appropriate, restructuring plans addressing root causes.
  - Agree with CBvS on a new governance framework for government-owned banks to ensure fully commercial operation, as a proposed new structural benchmark for end-December 2023.

### Strengthening supervisory and resolution frameworks
- Government submitted amendments to the Banking and Credit System Supervision Act and draft Bank Resolution Bill to the Ministry of Finance and Planning.
- In April 2023, CBvS discussed draft acts with the State Council; drafts to be sent to the Legislation Department of the Ministry of Justice and Police for final review and then to the National Assembly for adoption by end of 2023.
- The draft Resolution Act will strengthen CBvS powers and tools for early intervention, recovery, and resolution.
- Amendments to the Banking and Credit System Supervision Act will enhance risk-based supervision including governance, risk management (including provisioning policies and AML/CFT compliance), capital planning, budget forecasting, valuation of collateral, and profit and loss projections.
- Strengthened supervision will focus on determining and preventing concentration risk within the financial sector.

### Additional financial sector reforms
- Commitment to improve supervision of insurance and pension sectors, establish credit reporting, deposit insurance, and improve electronic transactions; CBvS is drafting acts and regulations.
- Ongoing efforts to strengthen the AML/CFT framework to support financial sector resiliency.
- A comprehensive plan will be prepared to coordinate and integrate reform initiatives, supported by IMF and other technical assistance.

### Fiscal and monetary governance, audits, and transparency
- Special audits of 2022 program monetary data for test dates end-December 2021 through end-December 2022 did not raise material issues; special audits will continue for each future test date.
- CBvS has published FY 2015-2019 financial statements on its external website.
- Audited FY 2020 and 2021 financial statements will be prepared in line with International Financial Reporting Standards; FY 2020 will be published by end-May (albeit with delay).
- Publication of FY 2021 statement was not met and is proposed as a structural benchmark for end-October 2023.
- Publication of FY 2022 audited IFRS financial statements is proposed as a new structural benchmark for end-December 2023.
- IMF technical assistance will be requested to strengthen governance and oversight of foreign reserves management by CBvS.

### Central Bank (CBvS) Act and regulatory alignment
- The CBvS Act has been enacted, prohibiting monetary financing of the government and improving governance by:
  - Clarifying and strengthening CBvS mandate;
  - Bringing institutional, financial, and personal autonomy into line with international best practice;
  - Providing for collegial management and improving internal oversight;
  - Increasing transparency, accountability, and oversight;
  - Defining clear requirements on accounting, profit distribution, reserves, and eventual recapitalization of the CBvS.
- Authorities will review the Foreign Exchange Regulation and align it with the new Central Bank Act via a two-pronged strategy:
  - Identify elements not aligned and submit legislative amendment to the National Assembly by [December 2023 (proposed new structural benchmark)]; in the interim the Foreign Exchange Commission will refrain from using the powers covered by amendments.
  - Undertake a full review of the Foreign Exchange Regulation in consultation with IMF staff and stakeholders, to be finalized by [May 2024].

### CBvS recapitalization plan and debt consolidation
- MoFP is seeking agreement with CBvS on consolidating debt, clearing arrears, and discussing repayment schedule.
- A recapitalization plan covering the debt restructuring agreement, latest audited CBvS financial statements, and Central Bank Act recapitalization needs will be finalized (end-September 2022 structural benchmark was not met and is proposed to be set for end-December 2023).
- The plan will include:
  - A clear target level of capital;
  - A trigger point for recapitalization;
  - Assumption of recapitalization through marketable instruments and a binding time frame to complete recapitalization.
- Footnote: These instruments will be based on market value (marked to market) or fair value to avoid further recapitalization requirements due to accounting losses.

### Anti-corruption, AML/CFT, and governance progress
- Anti-Corruption Commission installed on May 5, 2023 for a term of 5 years.
  - One primary task within the first year: evaluate the Anti-Corruption Act in practice and implement necessary changes to the Anti-Corruption legal framework (end-September 2023 SB).
  - Revised legislation aims to align with UNCAC and broaden framework for reporting income and assets, enable routine verification of income and asset declarations for high-ranking and high-risk public officials, provide information to the public, and sanction additional categories of public officials.
- Ratified CARICOM’s Protocol on Public Procurement in July 2022.
  - With IDB support, enact a new procurement law (end-June 2022 SB, proposed reset to end-September 2023) to mandate publication of beneficial ownership information of awarded procurement contracts and expand Integrated Financial Management Information System to cover procurement, audits, and control.
  - PFM reform strategy priorities: publish quarterly budget execution reports, consolidate treasury functions, establish a public investment management system, and assess/manage fiscal risks from state-owned enterprises.
- Enacted a new AML/CFT law (SB implemented with delay in November 2022) following a November 2022 CFATF assessment to address key technical compliance deficiencies.
  - To fully comply with CFATF requirements, commitments include:
    - Implement AML/CFT supervision for all financial institutions (credit union, insurance, and pension fund sectors);
    - Develop and implement risk-based supervisory framework for Designated Non-Financial Businesses and Professions (DNFBPs);
    - Make available adequate human, financial, and technological resources to the Financial Intelligence Unit.
- Initiated process for a second National Risk Assessment (2020-2024); Kroll AML Division contracted to advise and assist, launch planned for end May 2023.
- Ministry of Economic Affairs started a sectoral assessment on Legal Persons including Ultimate Beneficial Ownership (UBOs) and Non-Profit Organizations (NPOs).
- November 2022 AML Steering Council (ASC) approved the AML Strategic Plan 2022-2025; in March 2023 the ASC approved a list of High Prioritized Actions for 2023 – Q2 2024.

*Source: 1surea2023003 - 13.      We have intensified our efforts to protect the poorest households by significantly*

### 30.      We are committed to improving governance and transparency of the extractive sector.

### 30.      We are committed to improving governance and transparency of the extractive sector.

### Extractive sector governance and transparency
- Suriname joined the Extractive Industry Transparency Initiative (EITI) in 2017 and has published reports for fiscal years 2016 and 2017.  
- Reports for fiscal years 2018 - 2020 were published in January 2023.  
- Government intentions and ongoing work:
  - (i) reforming the mining law to reduce room for discretion in investor incentives and strengthen the framework for mining titles; and
  - (ii) legally compel companies in the extractive industry to disclose their beneficial owners.

### Statistics: data quality and dissemination commitments
- The government is committed to improving the quality and dissemination of economic data, supported by IMF technical assistance.
- Improvements already made: monetary, financial, and balance of payments statistics quality and timeliness.
- Remaining issues the government recognizes and will address:
  - Timeliness of data availability, e.g., long lag of publication of annual GDP and lack of quarterly GDP statistics.
  - Data quality needs for the Consumer Price Index, fiscal sector statistics, and public debt data, including consistency with other data sources (monetary accounts and fiscal flows in the balance of payments).
- Specific commitments:
  - Accurately report all domestic arrears on a monthly basis.
  - Work towards broadening the institutional coverage of fiscal statistics to the public sector to better assess fiscal risks.
  - Seek technical assistance from international partners to support efforts to improve the quality of economic data and statistics.

### Program monitoring, performance, and access adjustments
- The economic plan will be monitored through prior actions, reviews, quantitative and continuous performance criteria, indicative targets, and structural benchmarks.
- Many of the quantitative performance criteria under the program have been missed (details are in Tables 1 and 2 and definitions in the attached TMU).
- Due to delays to the reviews:
  - The latest quantitative performance criteria have been established for end-December 2022 (no QPCs had been set in the program for March 2023 and beyond).
  - To complete the program under its original 36-month timeframe, the number of reviews scheduled to be completed on a quarterly basis are reduced from eleven to eight.
- In recognition of delays in program implementation and the large reserve buffers built into the original program, the government requests:
  - A reduction in total access under the extended arrangement from 366.8 percent of quota to 297.8 percent of quota (SDR 383.9 million).
  - Rephasing of access across the remainder of the arrangement.

### Key program-related numeric items highlighted in the tables and memorandum items
- Reduction in total access under the extended arrangement: from 366.8 percent of quota to 297.8 percent of quota (SDR 383.9 million).
- Number of quarterly reviews reduced: from eleven to eight.
- Latest quantitative performance criteria set for: end-December 2022.
- Memorandum-item examples (as reported in tables):
  - Program exchange rate: 14.018 (repeated across table entries).
  - Gross international reserves (millions of U.S. dollar) reported in tables with values including: 585, 968, 992, 979, 986, 1,071, 848, 1,139, 899, 1,000, 886, 1,004, 951, 1,094, 983, 1,097, 991, 1,099, 1,018, 1,187, 1,029, 1,190, 1,045, 1,192, 1,031, 1,260, 1,194.
  - Usable international reserves (millions of U.S. dollar) reported with values including: 129, 501, 512, 513, 505, 604, 518, 673, 566, 674, 558, 678, 620, 768, 656, 771, 667, 773, 698, 862, 713, 864, 716, 866, 707, 934, 865.
- Quantitative performance criteria and indicative targets tables show numerous period-by-period entries for:
  - Primary fiscal balance (cash basis) of central government (floor) with many specific monthly/quarterly values and met/not met assessments.
  - Net international reserves of the central bank (floor) in millions of U.S. dollars with multiple period values and met/not met assessments.
  - Net domestic assets of the central bank (ceiling) with multiple period values and met/not met assessments.
  - Continuous ceilings for new natural resource revenue-collateralized debt, new central government guaranteed debt, and non-accumulation of central government external debt arrears reported as 0 (Met) in many periods.
- Indicative target highlighted: Social spending of central government (floor) appears in the tables with various period values (e.g., 604, 1,112, 1,483, 1,717 as reported in the table sections).

*Source: 1surea2023003 - 30.      We are committed to improving governance and transparency of the extractive sector.*

### 1. Social spending of central government (floor) 2/

### 1. Social spending of central government (floor) 2/

### Memorandum items: reserve money and reserves (selected series and levels)
- Reserve money:
  - 29,489
  - 28,890
  - 29,466
  - 31,356
  - 32,765
  - 33,964
  - 35,102
  - 36,147
  - 37,086
  - 37,888
  - 38,606
  - 39,316
  - 40,056
  - 40,756
  - 41,415
  - 42,074
  - 42,701
  - 43,306
- Reserve money (local currency portion only):
  - 13,546
  - 12,457
  - 12,513
  - 13,259
  - 13,839
  - 14,249
  - 14,642
  - 14,998
  - 15,320
  - 15,573
  - 15,831
  - 16,162
  - 16,570
  - 16,935
  - 17,255
  - 17,571
  - 17,853
  - 18,109
- Reserve money (constant exchange rates):
  - 20,860
  - 19,763
  - 19,611
  - 19,849
  - 21,010
  - 21,461
  - 21,896
  - 22,294
  - 22,658
  - 22,955
  - 23,256
  - 23,631
  - 24,091
  - 24,508
  - 24,880
  - 25,248
  - 25,582
  - 25,891
- NFA (constant exchange rates):
  - 11,743
  - 11,480
  - 11,253
  - 10,522
  - 10,292
  - 9,959
  - 9,990
  - 9,997
  - 9,893
  - 10,057
  - 10,174
  - 11,341
  - 11,249
  - 11,123
  - 10,890
  - 10,821
  - 11,403
  - 11,171
- Gross international reserves (millions of U.S. dollar):
  - 1,218
  - 1,188
  - 1,186
  - 1,138
  - 1,120
  - 1,153
  - 1,155
  - 1,156
  - 1,204
  - 1,216
  - 1,224
  - 1,361
  - 1,354
  - 1,345
  - 1,395
  - 1,390
  - 1,430
  - 1,480
- Usable international reserves (millions of U.S. dollar) 5/:
  - 888
  - 858
  - 868
  - 820
  - 803
  - 835
  - 837
  - 838
  - 886
  - 898
  - 906
  - 1,043
  - 1,036
  - 1,027
  - 1,077
  - 1,072
  - 1,113
  - 1,163
- Program exchange rate:
  - 14.018 (listed repeatedly for program periods)

### Key quantitative definitions and valuation rules (TMU)
- Program accounting exchange rates:
  - U.S. dollar to Surinamese dollar: 14.0180 (set by the CBvS as of December 31, 2020).
  - Cross-rates as of December 31, 2020:
    - Euro: 1.2281 U.S. dollars
    - Pound Sterling: 1.3600 U.S. dollars
    - Chinese Yuan: 0.1532 U.S. dollars
    - SDR: 1.4403 U.S. dollars
  - Official gold holdings valued at 1,892.0 U.S. dollars per fine ounce.
- Valuation rule: All foreign currency-related assets, liabilities, and flows will be evaluated at “program accounting exchange rates” unless otherwise specified; items affecting government fiscal balances will be measured at current exchange rates.
- Definition of central government (CG): CG consists of institutions and government units covered under the state budget; newly formed public sector entities will be examined and included if they meet the Government Finance Statistics Manual 2014 definition.
- Definition of State-Owned Enterprises (SOE): SOE consists of corporations where the CG is a shareholder or exercises control directly or indirectly through other government-controlled entities; control can be by legislation or equity participation.
- Definition of debt: Debt is a current liability under a contractual arrangement requiring future payments; primary forms include:
  - i. loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements);
  - ii. suppliers’ credits (deferred payment contracts);
  - iii. leases (present value at inception of lease payments expected during the agreement period excluding operation/repair/maintenance payments).

### Prior actions and structural benchmarks under the EFF (selected measures, objectives, target dates, and statuses)
- Prior Actions (examples):
  - Submit to the National Assembly an amended VAT Act that (i) converts all zero-rated products (except exports and ancillary supplies to exports) to exempt ones and (ii) additionally, impose the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption. — MEFP ¶ 10 — Prior Action — Objective: Ensure fiscal adjustment in line with program parameters.
  - Finalize the roadmap to triage banks, apply conditions on the use of public funds, and unwind the existing regulatory forbearance. — MEFP ¶ 22 — Prior Action — Objective: Improve strength of the financial sector.
  - Publicly announce increases to average electricity tariffs by 28 percent and phasing out lump-sum billing discounts. — MEFP ¶ 10 — Prior Action — Objective: Ensure fiscal adjustment in line with program parameters.
- Exchange rate / monetary / safeguards (selected structural benchmarks):
  - 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.
  - Establish an electronic trading platform for inter-bank/cambio FX trading. — Target date: 20June 2022 — Status: Not met — Objective: Create a consolidated FX market.
  - Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements. — Target date: 25June 2022 — Status: Not met — 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: 28September 2022 — Status: Not met — Objective: Protect the CBvS’s financial autonomy.
  - National Assembly to pass amendments to strengthen CBvS mandate, autonomy, governance, and limits on monetary financing. — Target date: January 2022 — Status: Not met; implemented with a delay in April 2023 — Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency.
  - Proposed new structural benchmarks with target date 25December 2023 include publishing FY 2020-2021 audited IFRS financial statements, publishing FY 2022 audited IFRS financial statements, and developing a time bound recapitalization plan for the CBvS.
- Financial sector / crisis preparedness (selected):
  - 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: 21September 2022 — Status: Met — Objective: Diagnose the largest banks and potential recapitalization needs.
  - Submit the Credit Institutions Resolution Act to the State Council to increase CBvS’ powers and tools for early intervention, recovery, and resolution of financial institutions. — Target date: 23January 2022 — Status: Not met; 'Implemented with delay in February 2023 — Objective: Strengthen the CBvS's role in crisis management.
  - Undertake full asset quality review for the remaining banks (drawing on the expertise of an internationally reputable specialist firm). — Target date: 22December 2022 — Status: Not met; 'Implemented with a delay in May 2023 — Objective: Diagnose the financial sector and potential recapitalization needs.
  - Proposed new SBs include CBvS and MoF agreeing on a governance framework for state-owned banks (22December 2023) and CBvS to instruct banks to incorporate AQR results and review recapitalization plans (22October 2023).
- Fiscal (selected):
  - 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.
  - Publish the financial assessment of EBS that includes its legacy liabilities. — Target date: May 2022 — Status: Met — Objective: Achieve full cost recovery in the electricity sector.
  - Review the social protection public expenditure and publish a time-bound strategic plan to improve the efficiency and effectiveness of social benefits. — Target date: 13September 2022 — Status: Not Met — 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: 11December 2022 — Status: Not Met — Objective: Contain fiscal risks.
  - Passage of laws needed to implement the VAT by the National Assembly. — Target date: March 2022 — Status: Not Met; implemented with a delay in August 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. — Target date: March 2022 — Status: Not Met; Implemented in [February] 2023 budget — Objective: Ensure fiscal adjustment in line with program parameters.
  - Proposed new SBs include a review of social protection public expenditure and publication of a time-bound strategic plan (13July 2023), publication of audited financial reports for SOEs (11December 2023), establishment of an Institutional Table (11[June 2023]), enact the amended VAT Act to convert zero-rated products and impose the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption (10July 2023), issue State Decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks (11December 2023), publish quarterly budget execution reports starting with end June 2023, and establish a public investment management system ([December 2023]).
- Governance / anti-corruption (selected):
  - Ratify the United Nations Convention Against Corruption (UNCAC). — Target date: January 2022 — Status: Met — 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 and strengthen income and asset declaration provisions. — Target date: 29June 2022 — Status: Not 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 for its implementation, in line with the UNCAC. — Target date: 29March 2022 — Status: Not Met; implemented with a delay in May 2023 — Objective: Reduce vulnerabilities to corruption and promote investment and growth.
  - Proposed new SB: Issue an Implementation Act to amend the Anti-Corruption legal framework (29September 2023).
- Governance / procurement (selected):
  - Enact the new procurement law to centralize the publication of all tenders and contract awards and to expand the Integrated Financial Management Information System to cover procurement, audits, and controls. — Target date: 29June 2022 — Status: Not Met — 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: 29August 2022 — Status: Not Met — Objective: Strengthen procurement efficiency.
  - Proposed new SBs include enacting the new procurement law and mandating publication of procurement contracts (29September 2023).
- 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 with respect to the treatment of politically-exposed persons and beneficial ownership requirements). — Target date: 29August 2022 — Status: Not Met; implemented with a delay in November 2022 — Objective: Mitigate the adverse effects of criminal economic activity and promote integrity in financial markets.

_Source: Authorities and IMF staff calculations and projections._

### 6.      Under the definition of debt set out in previous paragraph, arrears, penalties, and judicially

### 1surea2023003 - 6. Definitions and Performance Criteria

### Debt definition and contracting
- Arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.
- A debt is considered contracted for program purposes when all conditions for its entrance into effect have been met, including approval by the National Assembly.
- Contracting of credit lines with no predetermined disbursement schedules or with multiple disbursements will also be considered as contracting of debt.

### Fiscal year and primary fiscal balance (cash basis) of the Central Government (CG)
- Fiscal year: calendar year, starting on January 1 and ending on December 31.
- Primary Fiscal Balance (Cash Basis) of CG (floor): calculated as the cumulative CG interest payments minus total net borrowing requirements (NBR) from the beginning of the year.
- Net borrowing requirements (NBR) are measured at official (current) exchange rates and are defined as the sum of:
  - i. The change in net CBvS credit to the CG, including changes in the government deposit position at the CBvS and excludes any accrued interest;
  - ii. The change in net credit from depository corporations, which includes changes in CG deposits and the net issuance of treasury bills, lending, and other CG securities held by commercial banks and excludes any accrued interest;
  - iii. The change in net non-bank credit to the CG, which includes net issuance of Treasury bills and other CG securities to non-banks, and other CG claims and debts vis-à-vis nonbank institutions and excludes any accrued interest;
  - 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: defined on a cash basis as interest paid on CG domestic and external debt obligations.
- Reporting: Fiscal data will be provided to the Fund with a lag of no more than six weeks after the end of the month.

### Mineral revenue (definition and treatment)
- Mineral revenue: government’s tax and non-tax proceeds from state-oil company Staatsolie Suriname and from gold companies. Includes corporate tax, wage tax (including old age fund contributions), dividend tax, indirect taxes, dividends, royalties and others. Royalties from small scale gold mining are also included.
- QPC for the fiscal balance is calculated based on the projected official exchange rate. Reporting (and adjustments) will be made using the current official exchange rate.
- Adjusters to the cumulative primary cash balance floor:
  - Downward (upward) to the full extent that cumulative project loans are more (less) than project loans given in Table 2.
  - Upward to the extent of any rise in mineral revenue above the cumulative baseline projections given in Table 1.

### New natural resource revenue-collateralized debt (continuous ceiling)
- Definition: 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 involves creating a security interest, charge or lien over any natural resource, natural resource receivables, or the proceeds from the sale or lease of natural resources.
- Exclusions: use of a collection account where no charge or lien is created; external debt contracted due to external debt restructuring (to be agreed between the authorities and its creditors); prefinancing arrangements are included (debt contracted against future sales).
- Official exchange rate applies to all non-SRD denominated debt.
- Reporting: Data provided to the IMF on a continuous basis to verify absence of security interests, charges, or liens.

### New Central Government guaranteed debt (continuous ceiling)
- Definition: Ceiling applies to amount of guarantees issued by the CG for debt contracted by any agency or entity outside the CG. 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).
- Official exchange rate applies to all non-SRD denominated debt.
- Reporting: Data provided to the IMF on a continuous basis.

### Non-accumulation of Central Government external debt arrears (continuous ceiling)
- Definition: Continuous performance criterion that CG must not accumulate arrears on contractual debt obligations owed to non-resident creditors.
- External payments arrears: external debt obligations of the CG not paid within 30 days after the contractual due date (taking into account any contractual grace periods).
- Exclusion: Arrears arising from nonpayment for which a rescheduling or restructuring agreement is being sought, based on good faith negotiations.
- Stock of external arrears: calculated based on payment schedule reported by the Ministry of Finance and Planning (MoFP); reconciled with creditors and adjusted as necessary.
- Reporting: Data provided to the IMF on a continuous basis.

### Gross credit to CG by the CBvS (continuous ceiling)
- Definition: Ceiling on change in gross credit provided to the CG by CBvS (including any provision of overdrafts). Measured from end-June 2021 for 2021 and from beginning of the year for 2022.
- Exclusions: Coins and notes issued by the MoFP and claims on IMF related to valuation of IMF account no 1 and 2.
- Valuation: Stock of gross credit valued at fair value and at program exchange rates.
- Special notes: Changes in the stock of the COVID-19 Fund approved by Parliament in 2020 would constitute gross credit from the CBvS to the CG. Rolling over CG principal and interest payments due to the CBvS does not constitute gross credit.
- Reporting: Data provided to the IMF on a continuous basis.

### Net International Reserves (NIR) of the CBvS (floor)
- Definition: Floor applies to cumulative flows from the beginning of the year (end-December level of NIR of the previous year). NIR defined as U.S. dollar value of the difference between reserve assets and reserve liabilities.
- 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.
- Exclusions from reserve assets: assets pledged, collateralized, or otherwise encumbered; ring-fenced reserves from domestic banks’ foreign reserve requirements; CBvS claims on resident banks and nonbanks; claims in foreign exchange arising from derivatives in foreign currencies vis-à-vis domestic currency; precious metals other than monetary gold; assets in nonconvertible currencies; illiquid swaps; and any reserve assets not readily available for intervention.
- Reserve liabilities defined as: (i) all short-term foreign liabilities of the CBvS vis-à-vis nonresidents denominated in convertible foreign currencies with an original maturity of one year or less; (ii) all outstanding credit from the IMF resulting from purchases; (iii) the nominal value of all derivative positions of the CBvS implying sale of foreign currency or other reserve assets; and (iv) all foreign exchange liabilities of the CBvS to resident entities excluding foreign exchange liabilities to the CG.
- Specific figures and items:
  - Reserve requirements ring-fenced in Suriname’s sovereign bond in the amount of USD 10.283 million.
  - As of December 31, 2020, the stock of NIR amounted to USD -154.3 million (at the program exchange rates; Table 3).
- Reporting:
  - CBvS provides data on foreign reserves and FX cash flow once a week.
  - Data in Table 3 provided monthly in both official and program exchange rates with a lag of no more than two weeks after the end of the month.
  - At each program test date, quarterly NIR data submitted by the CBvS to the IMF will be audited by the CBvS external auditors in accordance with International Standards on Auditing; reports submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date.
  - Data on total foreign exchange mineral revenue provided weekly by the government; inflows of government FX mineral revenue to the CBvS monitored as part of weekly CBvS FX purchases and sales reporting.
- Adjusters to NIR targets (valued at program exchange rates for adjuster calculations):
  1. Upward (downward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to baseline projections in Table 2.
  2. Upward (downward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to baseline projections in Table 2.
  3. Upward (downward) by the full amount of the cumulative surplus (shortfall) in the sum of (i) government’s total mineral revenues received in foreign exchange and (ii) government’s other revenue received in foreign exchange transferred to the CG account at the CBvS relative to baseline projections in Table 4.
  4. Downward (upward) by the full amount of the cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to baseline projections in Table 5.
  5. Downward by the amount of FX sales by the CBvS insofar as these sales occur via competitive auctions in response to the intraday depreciation in the exchange rate versus the U.S. dollar that is more than 2 percent and are less than USD 2 million per day. This adjustor is capped at USD 20 million per quarter.

### Net Domestic Assets (NDA) of the CBvS (ceiling)
- Definition: Ceiling applies to cumulative flows from the beginning of the year. NDA = reserve money (as defined) minus net foreign assets (NFA).
- Items in foreign currencies valued at fair value and at program exchange rates.
- Stock values as of December 31, 2020:
  - NDA amounted to SRD 8,777.1 million (Table 6).
  - Reserve money amounted to SRD 12,816.6 million.
  - NFA amounted to SRD 4,039.5 million.
- Reserve money (program exchange rates) defined as: currency in circulation; commercial banks’ deposits in correspondent accounts at the CBvS; statutory cash reserve requirements against prescribed liabilities in SRDs and foreign currency held by commercial banks at the CBvS; other commercial banks’ deposits at the CBvS in national and foreign currency; other demand deposits in national and foreign currency; and gold certificates. Reserve money excludes balances in deposit auctions and commercial banks’ term deposits at the CBvS.
- Foreign assets and liabilities definitions mirror those used for NIR (claims on nonresidents denominated in foreign currencies; liabilities of CBvS vis-à-vis nonresidents denominated in foreign currencies, IMF credit, SDR allocations, and nominal value of derivative positions).
- Reporting: Data provided to the IMF with a lag of no more than two weeks after the end of the month. Quarterly NDA data reviewed by CBvS external auditors and reports submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date.
- NDA adjusters (consistent with NIR adjuster mechanism):
  1. Downward (upward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to baseline projections in Table 2.
  2. Downward (upward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to baseline projections in Table 2.
  3. Downward (upward) by the full amount of the cumulative surplus (shortfall) in the sum of (i) government’s total mineral revenues received in foreign exchange and (ii) government’s other revenue received in foreign exchange transferred to the CG account at the CBvS relative to baseline projections in Table 4.
  4. Upward (downward) by the full amount of the cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to baseline projections in Table 5.
  5. Downward by the full amount of the CBvS’ cumulative purchases of foreign exchange from the market relative to baseline projections reported in Table 7.

### Direct purchases/sales of FX by the CBvS and/or Central Government from/to SOEs and private sector (continuous ceiling)
- Definition: 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 an equivalent thereof in another convertible currency.
  - Purchases of EUR banknotes from banks and cambios in exchange for USD banknotes.
  - Sales of FX by mineral companies associated with these companies’ tax or non-tax obligations to the central government.
- 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.

### Central Government mineral revenue in local currency (ceiling)
- Definition: Ceiling assessed on cumulative basis and specified in U.S. dollars (converted at the weighted average SRD/U.S. dollar exchange rate published by the CBvS at the end of the previous working day).
- Central government mineral revenue (for this criterion): government’s tax and non-tax cash revenue from Staatsolie Suriname and from large- and small-scale gold companies. Includes corporate tax, indirect taxes, dividends, royalties and other mineral revenue.
- Exclusions from this definition: (i) wage taxes (including old age fund contributions); (ii) consent right fees; (iii) dividend tax; and (iv) Staatsolie Suriname’s tax and non-tax obligations to the government netted out against accounts receivable from other state-owned enterprises.

*Source: 1surea2023003 - 6.*

### 35.      Reporting: Data on central government foreign and local currency tax and non-tax mineral

### 35. Reporting: Data on central government foreign and local currency tax and non-tax mineral

### Weekly reporting requirement for mineral revenue
- Central government foreign and local currency tax and non-tax mineral revenue will be submitted on a weekly basis by:
  - revenue item,
  - type of commodity,
  - source counterparty (aggregated for small-scale gold companies).
- Where local currency mineral revenue arises from a prior sale of mineral companies’ FX-denominated tax or non-tax obligations to the central government, the weekly data will additionally include the sale transactions by date and counterparty, including:
  - the exchange rate, and
  - any margins or fees applied.
- Data will be provided to the IMF within 3 working days of the end of each week.

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

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

### Definition and scope of total gross debt and BCG debt instruments
- Total gross debt (per IMF GFSM 2014 and Public Sector Debt Guide) covers all liabilities that are debt instruments.
- Debt instrument defined as a financial claim that requires payment(s) of interest and/or principal by the debtor to the creditor at a date, or dates, in the future.
- Instruments considered debt instruments:
  - Special drawing rights (SDRs);
  - Currency and deposits;
  - Debt securities;
  - Loans;
  - Insurance, pension, and standardized guarantee schemes; and
  - Other accounts payable.
- Exclusions from debt for GFSM balance sheet:
  - Equity and investment fund shares;
  - Financial derivatives;
  - Employee stock options.
- For the purpose of the program, Suriname Budgetary Central government (BCG) debt includes:
  - Debt Securities including short term liquidity instruments;
  - Loans (including overdraft in bank accounts);
  - Other Accounts Payables.
- Any liabilities issued by the BCG and held as an asset by another entity of the BCG should be netted out. Central bank lending to the government is included in the stock of BCG debt (consolidation at BCG level).

### Information requirements and reporting frequencies
- Daily/Semi-weekly (reporting lags specified where applicable):
  - Official nominal exchange rates.
  - Volumes and nominal exchange rates (inclusive of any fees, commission, or other types of charge) of foreign exchange transactions (purchases and sales) by banks and cambios.
  - Volumes and nominal exchange rates of direct purchases/sales of foreign exchange by the CBvS and/or central government from/to SOEs and private sector.
  - Monitoring Template IMF (no. 25) - Deposits including largest 5 depositors in accordance with the Enhanced Supervision framework, within one week after the reporting period.
  - Monitoring Template IMF (no. 26) – Liquid assets held by banks in accordance with the Enhanced Supervision framework, within one week after the reporting period.
  - Liquidity Coverage SRD template (no. 30) in accordance with the Enhanced Supervision framework, within one week after the reporting period.
  - Liquidity Coverage FX template (no. 31) in accordance with the Enhanced Supervision framework, within one week after the reporting period.
  - Net Foreign Currency Position (Net Open Position) template (no. 27) for banks in accordance with the Enhanced Supervision framework; for cambios this ratio will also be reported, in both cases within one week after the reporting period.
- Weekly/bi-weekly:
  - CBvS liquidity assistance to financial institutions, by institution.
  - Reports on large exposures by bank that are equal or exceed 10 percent of Tier 1 Capital (template no. 28) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
  - Large deposits that are equal or exceed 10 percent of Tier 1 Capital (template no. 29) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
  - Liquidity forecast and realization (templates no. 15, 17 and 19) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
  - Liquidity stress testing (templates no. 10-13) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
  - Lending availability in SRD and USD (templates no. 21 and 22) in accordance with the Enhanced Supervision framework, within two weeks after the reporting period.
  - Table on monitoring of banking sector benchmarks in accordance with the Enhanced Supervision framework on a bi-weekly basis, within two weeks after the reporting period.
  - CBvS purchases and sales of foreign currency (FX cash flow table). FX auction amounts, auction bids, highest and lowest prices, cut-off and weighted average prices, FX rate before the auction.
  - Information on auction results for open market operations no later than two days after the auctions, including:
    - 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:
    - 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.
  - Weekly submission of daily 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 3 working days of the end of each week.
- Monthly (reporting lags specified):
  - 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.
  - 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. 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. 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. 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. 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. 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. 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. 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. 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) within 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.
  - 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. Lag 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. Lag no more than eight weeks after the end of the month.
  - EBS committed and executed payments to Staatsolie for purchases of fuel and electricity. Lag no more than eight weeks after the end of the month.
- 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.
- 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.

### Multiple currency practice (MCP) finding, corrective action, and waiver request
- Assessment and finding:
  - Staff determined that indirect government foreign exchange (FX) sales to essential goods importers gave rise to a multiple currency practice (MCP), resulting in non-observance of the standard continuous performance criterion against the introduction or modification of MCP.
  - The authorities’ instructions to an intermediary state-owned bank on the exchange rates used for these transactions resulted in deviations of more than 2 percent from the prevailing market exchange rates at the time of such transactions on several occasions from September 20, 2022.
  - The indirect sales arrangement: mineral companies sell FX to the intermediary state-owned bank at an FX rate instructed by the MoFP, which in turn sells FX to essential goods importers at an FX rate instructed by the MoFP.
- Corrective action:
  - On June 9, 2023, the authorities issued a revised instruction for the state-owned bank to conduct all such future FX purchase and sale transactions at exchange rates that are consistent with the Fund`s MCP policy.
- Waiver and staff assessment:
  - The authorities requested a waiver for the non-observance of the continuous PC against introduction or modification of MCP on grounds of the corrective action taken.
  - Staff supports the authorities’ request for a waiver and assesses the corrective action to eliminate the MCP.
  - This finding and the waiver request do not alter the thrust of the staff report; staff continues to recommend completion of the Second Review.
- Relevant dates and figures cited in the finding:
  - Transactions commenced on September 20, 2022.
  - Corrective instruction issued on June 9, 2023.
  - Non-observance involved deviations of more than 2 percent from prevailing market exchange rates.

*Source: 1surea2023003 - 35. Reporting: Data on central government foreign and local currency tax and non-tax mineral (PDF).*

### introduction or modification of a multiple currency practice (MCP). We make this request on

### 1surea2023003 - introduction or modification of a multiple currency practice (MCP). We make this request on

### Corrective action on Multiple Currency Practice (MCP)
- MCP arose from instructions by the Ministry of Finance and Planning (MoFP) to a state-owned bank on exchange rates for FX purchase and sale transactions associated with indirect government FX sales to essential goods importers conducted since September 2022.
- Arrangement details:
  - Mineral companies sold FX to the intermediary state-owned bank at an exchange rate instructed by the MoFP.
  - The intermediary state-owned bank sold FX to essential goods importers at an exchange rate instructed by the MoFP.
- Deviations:
  - These instructions have at various times resulted in deviations by more than 2 percent from the prevailing market exchange rates at the time of transactions.
- Corrective action taken:
  - On June 9, 2023, a revised instruction was issued to the state-owned bank to conduct all future FX purchase and sale transactions associated with the indirect government FX sales to essential goods importers at the rates that are consistent with the Fund’s MCP policy.
- Reporting commitment:
  - The authorities will report the exchange rates used for the FX purchase and sales transactions associated with the indirect government FX sales on a weekly basis.

### Official confirmations and commitments
- The MoFP stated that the instructions were never intended to be at odds with the IMF’s policies on MCPs nor commitments under the Extended Fund Facility.
- Corrective action was taken immediately upon confirmation of the MCP finding.

### Statements by authorities and staff representative
- Statement by the Staff Representative on Suriname (June 14, 2023):
  - New information does not alter the thrust of the staff appraisal.
  - Prior actions met:
    - Submission of an amended VAT Act to the National Assembly (converts remaining untaxed domestic products from zero-rated to exempt; ensures at least 60 percent of household consumption is taxed at the standard VAT rate). The amendment will be deliberated by the National Assembly in July.
    - Finalization of a roadmap for financial sector recapitalization, restructuring, and governance reform of banks (triages banks based on AQR, sets capital targets and timelines, outlines CBvS instructions, monitoring and intervention measures, and governance reforms of state-owned banks).
  - National Assembly action:
    - On June 8, 2023, passed an amendment to the Personnel Act enabling the government to halt salary payments to unregistered workers. Compulsory registration completed on January 31, 2023, with 10 percent of employed civil servants remaining unregistered. The amendment enables implementation of a no-work-no-pay policy.

### Recent economic developments and outlook
- Growth:
  - Growth resumed in 2022 after contractions in 2020 and 2021 and is expected to improve further in 2023.
  - 2023 growth drivers: mining, trade, and services sectors.
  - Forthcoming investment decision by international oil companies to explore offshore oil and gas reserves expected to significantly enhance growth prospects.
- Inflation and social response:
  - Inflation remains unacceptably high, driven by higher international food and energy prices, reduction of subsidies on utilities and fuels, and depreciation of the local currency.
  - In February (2023), public discontent culminated in violent protests, looting, and damages to businesses.
  - Authorities will proceed with fiscal restraint and monetary tightening to put inflation on a declining path in 2023 and thereafter.
- Policy stance:
  - Authorities stepping up communication and consultation with stakeholders to broaden support and ownership for necessary measures within the program’s framework.

### Fiscal policies and social mitigation measures
- Actions to restore debt sustainability, support disinflation, and create conditions for sustainable and inclusive growth.
- Notable fiscal measures and outcomes:
  - Electricity subsidies:
    - Electricity tariff increased by 10 percent as of September 2022.
    - Nominal subsidy of SRD260 per household or small business will be phased out in six months, starting in July.
  - Royalties:
    - Increase for the small-scale gold subsector by 1 percentage point (from 4.5 percent to 5.5 percent).
  - Fuel subsidies:
    - Phased out; pump prices became market-based since April 2023.
    - A tax of SRD3.50/4.00 per liter on gasoline and diesel has been implemented.
  - Wages:
    - Civil servant nominal wages have increased significantly below inflation.
  - Social protection and transfers:
    - Old age pension, child support, and aid to vulnerable households have been boosted, including cash transfers to people with disabilities and vulnerable households.
    - January 2023 VAT negotiations raised the tax-free income threshold from SRD4,000 to SRD7,500.
    - Social Beneficiary Program (SBP) implemented in 2023 provides monthly financial assistance for an expanded group of eligible persons.
    - 2023 budget assigned SRD1.2 billion for the SBP, reflecting the transition from indirect, untargeted subsidies to direct, targeted cash transfers.
- Fiscal results and targets:
  - Public sector achieved a primary surplus of 1.1 percent of GDP in 2022, short of the 1.7 percent target.
  - To meet the 1.7 percent of GDP fiscal primary surplus target, additional measures include closing tax loopholes, simplifying payments instructions, improving tax administration, limiting the wage bill and overtime payments, freezing civil servants’ hires, shifting employees from the public to the private sector, and rationalizing goods and services spending.
- Arrears and cash management:
  - Treasury has taken over monitoring domestic payments arrears.
  - Efforts have cleared arrears by SRD0.7 billion through April 2023.
  - Target to clear an additional SRD1 billion in the remaining months of 2023.
  - Treasury unit upgraded to monitor cash management and budget execution; number of government accounts being streamlined into a Treasury Single Account (TSA).
  - CARTAC technical assistance started a detailed definition of core functions for banking, cash, and liquidity management.
- VAT and tax administration reforms:
  - VAT implementation more challenging than envisaged, but positive results emerging.
  - FAD technical assistance and a tax policy review highlighted the need to broaden the tax base.
  - An amended VAT bill sent to the National Assembly to close loopholes and broaden the tax base.
  - Technical assistance from the Netherlands helped set up a Large Taxpayer Unit.
  - Tax Administration started process for a new organizational structure to transition to a semi-autonomous revenue authority (SARA).
  - Update of the Tax and Customs legal framework is under way.

### Debt management and restructuring
- Progress in negotiations:
  - Agreement in principle with commercial bondholders reached on May 5, 2023; shared with IMF staff and consistent with DSA parameters.
  - Negotiations with India concluded successfully with signing of restructuring agreements covering all bilateral loans.
  - Restructuring discussions with China are proceeding at different levels on a good-faith basis.
- Institutional reform:
  - National Debt Act revised to improve debt management and transparency.
  - Suriname Debt Management Office (SDMO) responsibilities expanded to compile debt data on the entire public sector.

### Recent foreign exchange market developments and policies
- Market pressures:
  - Stronger U.S. dollar and recovery of domestic demand placed enormous pressures on the local currency, causing a prolonged period of depreciation and high pass-through to inflation.
  - FX interventions by the Central Bank of Suriname (CBvS) have been constrained due to the “disorderly market development” trigger in the program.
- Policy responses:
  - Temporary reintroduction of surrender requirements to ensure availability of foreign currency for essential imports.
  - Additional guidelines issued to promote responsible market behavior and support supply of foreign currency.
  - Mining companies now allowed to exchange part of government foreign currency obligations in local currency through a commercial bank.
  - During implementation, certain program conditions were inadvertently breached, for which waivers are now requested after adoption of corrective actions.

### Monetary and financial policies
- CBvS stance and interventions:
  - Pursued monetary tightening under the reserve money targeting regime (RMT), complemented with additional measures to address persistently high inflation.
  - Challenges with RMT implementation emerged after April 2022: excessively high bid rates, low bid volumes, impaired transmission to market rates, outdated monetary targets, external price shocks, excessive credit growth, and structural excess liquidity.
  - Central Bank Certificates (CBC) introduced in June 2022 to mop up structural excess liquidity; proved insufficient.
  - To further tighten stance:
    - Reserve requirements on local currency raised to 44 percent.
    - In April (2023), introduced a cap on credit growth in close collaboration with local banks.
- Program performance criteria:
  - CBvS committed to meet all performance criteria and targets.
  - Net Domestic Assets (NDA) target missed since June 2022 due to unexpected food and energy price shock.
  - Delays in reviews prevented timely updates to quantitative performance criteria (QPC) to account for Ukraine war effects and mitigating policies.
  - QPC of net international reserves (NIR) for 2022 were met, except for end-March 2022.
  - Continuous QPC of zero net gross credit to the Government was fully met throughout 2022.
- Institutional strengthening:
  - New Central Bank Act enacted in April 2023 (benefitted from Fund TA) provides safeguards for CBvS to conduct monetary policy independently.
  - Ongoing strengthening of governance, control procedures, monitoring mechanisms, communication, and reporting.
  - Authorities to finalize the recapitalization plan to enhance CBvS financial independence.
- Banking sector resilience:
  - Asset Quality Review (AQR) and roadmap for recapitalization, restructuring, and governance reform of banks finalized.
  - Banks must incorporate necessary provisioning per AQR results by end-July 2023.
  - CBvS will require banks that do not fully comply to submit time-bound recapitalization and restructuring plans by end-August 2023 and will assess credibility and feasibility and oversee implementation.
  - Banking supervision strengthened with new regulation effective as of June 1, 2023; intensified off-site monitoring and more frequent reporting by banks of a broader set of indicators.

### Structural reforms and private sector development
- Public Sector Reform (PSR) and Private Sector Development (PSD) programs aim to increase public sector efficiency and improve competition and job creation.
- Civil Service Registration (CSR):
  - CSR registered 90 percent of the total number of civil servants.
  - Option for early retirement provided for eligible civil servants.
  - Payroll cleaned up; personal data and detection of improper payments easier to verify.
  - A modern personnel information system to be launched on January 1, 2024.
- Support for start-ups and private investment:
  - Private Sector Technical Assistance Fund (managed by National Development Bank, NOB) to provide credit for feasibility and pilot studies, sub-sector studies, marketing plans, training courses and certifications.
  - National Development Fund for Agribusiness (NOFA) became operational last August to promote and improve agricultural production.
  - Production Credit Fund (PKF) established in 2023 under the MFP to serve small and medium-sized enterprises and producers of high value-added goods and services that replace imports or are intended for export.

### Improving program implementation and monitoring
- Suriname Economic Oversight Board:
  - Government will install the Board to consist of public and private sector representatives as an independent monitoring and advisory body to track implementation of institutional and socio-economic measures in the IMF-supported program.
  - Public communication will be integral to the Board’s tasks.
  - Memorandum of Understanding for the Board signed on June 1; aim to fully operationalize in July 2023.
- Policy coordination:
  - Closer coordination of macroeconomic policies through regular consultations.
  - Authorities will continue ambitious fiscal consolidation to restore a path of strong, sustainable, and inclusive growth, while mitigating immediate costs, especially on the most vulnerable.
- Engagement with IMF:
  - Authorities look forward to continued engagement with the IMF for successful implementation of Suriname’s adjustment and reform agenda.

*International Monetary Fund — Statement material provided in the source content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1surea2023003.pdf_