## 1surea2023004 ## Source details **Canonical URL:** [1surea2023004](https://www.imf.org/-/media/files/publications/cr/2023/english/1surea2023004.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2023/english/1surea2023004.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2023/english/1surea2023004.pdf.json) --- ### Executive summary — macroeconomic and financial environment - Economic recovery slower-than-expected; monthly growth rate of economic activity has slowed over the past year. - Inflation: 57 percent y/y in July; core inflation at 62 percent. - Exchange rate: SRD/USD depreciation of 72 percent in the year through May 2023; pressure has eased since May 2023. - Usable international reserves: 4.7 months of imports at end-July. - Banking sector: AQRs show substantial recapitalization needs in several banks; NPLs have increased and banks face tighter funding conditions. ### Outlook and key projections - Real GDP growth: - Projected to recover to 2.1 percent in 2023 and reach 3 percent in 2024. - Staff table: Real GDP (percent change): 2019 1.1; 2020 -15.9; 2021 -2.7; 2022 1.0; 2023 2.3; 2024 2.1; 2025 3.0; 2026 3.0; 2027 3.0; 2028 3.0. - Inflation and exchange rate: - Inflation projected gradual decline to 40 percent y/y by end year (2023). - REER expected to depreciate by around 6 percent by end-year (2023). - Public debt and financing: - Public debt: stood at 120 percent of GDP in end-2022 and is expected to fall below 70 percent by 2028. - Gross financing needs (GFN): peak at 11.3 percent of GDP in 2023 and average 7.2 percent of GDP over the medium term (Executive Summary). - Staff baseline commentary: GFN peaks at 11.1 percent in 2023 (projections vary within source tables). - Program parameters: GFN under 12 percent of GDP in any year, and under 9 percent on average over the medium- to long-term. ### Program implementation, compliance, and institutional actions - Quantitative PCs: - End-June 2023 quantitative PCs on the cumulative central government primary balance, NDA, and NIR were met. - Two continuous PCs not observed: accumulation by government of arrears on external obligations to other IFIs (debt payments to OPEC Fund, IDB, EIB, and CDB made 30 days past due; waiver requested) and introduction/modification of multiple currency practices (MCPs) following CBvS Circular of July 14, 2023 (MCP existed between July 14, 2023 and September 8, 2023); corrective action via CBvS Circular 2023-2 on September 8, 2023 to remove MCP (waiver requested). - Indicative target on social assistance spending missed due to tightened eligibility criteria and delays in expanding coverage. - Structural benchmarks and prior actions: - End-June SB on establishing up-to-date list of public entities met. - End-July SB on publishing time-bound strategic plan to improve social benefits delayed to end-December. - End-July SB on enacting VAT amendment not met by end-July but completed on September 5 as a prior action. - CBvS finalized assessment framework for banks’ recapitalization/restructuring plans (prior action—August 29). - Staff supports authorities’ requests for completion of the third review, modification of program targets, and completion of financing assurances review. ### Fiscal policy, revenue and expenditure measures - Authorities on track to achieve 1.7 percent of GDP central government primary balance target for 2023. - End-June primary balance QPC met with margin largely due to under-execution of capital expenditures and social assistance spending. - Short-term fiscal contingency measures for 2023: scale down non-priority capital spending and introduce excise taxes on selected products. - Key 2023 fiscal projection differences (Percent of GDP and Millions of SRD; preserved exactly as listed): - Primary Balance: 1.7 / 1.7 / 0.0 - Revenue: 26.9 / 26.1 / -0.7 - Taxes: 16.6 / 17.1 / 0.4 / 1,157 (Millions of SRD) - Direct taxes: 9.4 / 9.7 / 0.3 / 714 - Mining taxes: 4.2 / 4.5 / 0.3 / 508 - Indirect taxes: 7.2 / 7.4 / 0.1 / 442 - VAT: 3.2 / 3.0 / -0.1 / -60 - Non-tax revenue: 9.7 / 8.6 / -1.1 / -1,171 - Mining revenues: 8.5 / 7.4 / -1.1 / -1,221 - Grants: 0.5 / 0.5 / 0.0 / 17 - Primary Expenditure: 25.1 / 24.5 / -0.7 - Wage Bill: 6.9 / 6.7 / -0.2 / -2 - Fuel subsidies: 0.3 / 0.3 / 0.0 / 16 - Electricity subsidies: 2.4 / 2.7 / 0.3 / 437 - Cash transfer programs: 3.0 / 2.9 / -0.1 / 0 - Capital expenditure: 3.3 / 2.6 / -0.7 / -808 - Other primary expenditure: 9.2 / 9.2 / 0.0 / 360 - Non-mining primary balance: -11.0 / -10.2 / 0.8 / 713 ### Tax reforms and VAT amendment - Amended VAT Act submitted in June, passed on September 1, enacted September 5 (prior action for third review). - Amendment specifics: - Converts all zero-rated products (except exports and ancillary supplies to exports) to exempt ones. - Reduces scope of exemptions to impose standard 10 percent VAT rate on at least 60 percent of household consumption. - Clarifies taxation of education, health, and financial services. - Implementation in two stages: - October 1: standard VAT on additional 16 percent of consumption basket. - November 1: standard VAT on additional 4 percent (to reach 60 percent coverage). - VAT registrations increased from 2,747 at end-January 2023 to 3,652 at end-June 2023. ### Wage bill, public employment, and social protection measures - Civil service actions: - Mandatory registration completed in February; National Assembly approved Personnel Act amendment in June enabling salary suspension for unregistered workers. - 18 percent of the public workforce remain unregistered; wage payments to unregistered workers to be discontinued at end-October 2023 (new proposed end-October SB). - Estimated savings: 0.1 percent of GDP in 2023 and 0.4 percent of GDP in 2024 from halting payments to unregistered workers. - Voluntary separation packages: low take-up (~1.5 percent of public workforce); near-term costs and longer-term savings not included in baseline. - Cash transfers: - July increases to partly compensate for inflation (examples preserved exactly): - General Old-Age Pension increased from SRD 1250 to SRD 1750 per month. - General Child Benefit increased from SRD 125 to SRD 200 per child. - Financial Assistance for Persons with Disabilities increased from SRD 1750 to SRD 2500 per month. - Financial Assistance for Weak Households increased from SRD 1250 to SRD 1750 per month. - Transfers to be increased again in October to fully compensate for inflation. - Social Beneficiary Program: 2023 budget assigned SRD 1.2 billion covering 60.000 eligible households and expanded with 50.000 old age pensioners; implementation delayed. ### Energy subsidy reforms and revenue impact - Fuel: - March: fuel subsidies discontinued; automatic pricing mechanism adopted. - May: specific taxes on fuel reinstated at SRD 3.50 per liter, expected to generate 0.7 percent of GDP in 2023. - Historical: Fuel taxes generated 1.3 percent of GDP in 2020. - Electricity: - June: tariff adjustment schedule including immediate 28 percent increase in average electricity tariffs; further Q3 and Q4 increases of 42 percent and 21 percent respectively as lump-sum billing discounts phased out by end-November 2023. - Tariffs to be adjusted quarterly to reach cost-recovery by end-2024. - Energie Autoriteit Suriname to publish quarterly tariff updates (new proposed end-October SB). - Gas: - August: price increases announced to phase out gas price subsidies (currently 90 percent of cost). - Beginning in September: gas prices to increase by around 425 percent to reduce subsidy to 55 percent of cost. - Further fixed quarterly increases beginning December 2023. - Expected savings: 0.1 percent of GDP in 2023 and 0.2 percent of GDP in 2024. ### Debt restructuring, arrears, and sustainability - Restructuring agreements reached for official and privately-held public debt, except official debt to China where negotiations continue. - Debt payments to four external creditors delayed more than 30 days due to missed invoices; payments have since been made and a waiver requested. - Domestic arrears: - Authorities cleared SRD 0.9 billion of domestic debt arrears and committed to clear remainder SRD 2.4 billion by end-December. - Accumulated domestic debt arrears peaked at SRD 3.3 billion as of November 2022 (excluding CBvS arrears); arrears stood at SRD 2.4 billion in June 2023. - Legacy debts to CBvS restructured into new loan with grace period of 2 years and maturity of 27 years. - External arrears and negotiations: - Suriname continues to accrue arrears with China (USD 127 million as of end-June); authorities undertaking good faith negotiations; China consented to proceed with the review. - As of end-June, total arrears with external private creditors stood at USD 311 million. - Agreement-in-principle with bondholders reached May 3/4, 2023; financial advisors preparing formal exchange. - DSA and restructuring scenario: - Under restructuring scenario and program implementation, public debt judged sustainable on forward-looking basis conditional on comparable treatment by China and others (Annex I referenced). - Staff baseline: public debt projected to decline below 100 percent of GDP by 2024 and below 70 percent in 2028; below 50 percent by 2034 (staff projections preserved from source). - Debt vulnerability: medium-term risks assessed as high; overall risk of sovereign stress: high. ### Banking sector, CBvS reforms, and recapitalization roadmap - AQR outcomes: - Banks adjusted loan loss provisioning at end-July; AQRs indicate substantial additional provisioning and recapitalization needs. - System-level reported risk-weighted capital: 18.6 percent (system), with reported combined capital adequacy ratio 17.7 percent as of July 2023 in different excerpts; some banks under-capitalized. - Asset quality: 16.1 percent of loans nonperforming by June 2023 (source table). - Banking system liquid: 52.3 percent (one excerpt) / 52.9 percent (another excerpt) of assets are liquid; liquidity unevenly distributed and concentrated in two large systemic banks. - CBvS roadmap and governance: - CBvS finalized assessment framework for time-bound recapitalization and restructuring plans (prior action, August 29). - Recapitalization needs conservatively assumed to add 10 percent of GDP to public debt stock in 2023 (5 percent for CBvS and 5 percent for commercial banks). - CBvS implementing Central Bank Act of 2022; established Audit Committee and Risk and Compliance Committee; approved Investment Policy. - FY2020 audit delayed impacting FY2021-22 audits; completion essential for recapitalization plan (end-December 2023 SB proposed reset to end-March 2024). - Recapitalization to be with marketable instruments; losses from government-CBvS debt restructuring to be reflected in CBvS recapitalization plan. ### Monetary policy, FX market functioning, and safeguards - Monetary stance and operations: - SRD reserve money growth remained below CBvS’ target path; program end-June NDA ceiling met. - Liquidity tightened after April increase in SRD reserve requirement and regular OMOs and direct issuances of CBCs. - Private sector credit growth guided by time-bound, bank-by-bank lending caps to contain nominal SRD private sector credit growth to 20 percent over a one-year period through April 2024. - CBC wholesale auctions and direct issuances now quarterly. - FX market measures: - Authorities refrained from direct FX interventions and limited indirect FX sales to essential goods importers. - FX surrender requirement tightened: immediate surrender upon repatriation and exporters required to offer at least 35 percent of repatriated FX for sale to banks with correspondent banking relationships. - CBvS Circular 2023-1 (July 14, 2023) mandated banks use weighted average exchange rates for 35 percent purchase, giving rise to MCP; removed by CBvS Circular 2023-2 (September 8, 2023) requiring banks to use current exchange rates of the day when settling export earnings under surrender requirement. - Electronic inter-bank/cambio FX trading platform nearing launch (end-September SB). - Program NIR and NDA adjusters and reporting: detailed adjuster mechanisms and high-frequency reporting requirements established in Technical Memorandum of Understanding (tables and flows preserved in source). ### Risks, upside scenarios, and policy trade-offs - Domestic risks: policy implementation challenges, social discontent undermining reform plans, rising NPLs or financial-sector shocks leading to deposit outflows and financial instability, weak implementation capacity. - External risks: potential worsening in terms of trade and weaker FX mineral revenue. - Longer-term upside: potential development of large new oil fields (no final investment decision (FID) yet); if realized, would boost growth, increase export and fiscal revenues, and strengthen balance of payments and debt dynamics. - Policy trade-offs: - Fiscal consolidation underway but risks from subsidies (electricity) and wage/cost overruns persist. - Maintain liquidity buffers (including government deposits) against rising long-run GFN and potential recapitalization needs. - Recapitalization modalities matter: direct equity injections increase immediate GFN; use of securities reduces immediate GFN and spreads financing. ### Key numeric tables, monitoring, and reporting anchors (selected exact figures preserved) - Consumer prices (period average) series includes: 2019 4.4; 2020 4.9; 2021 9.1; 2022 52.4; 2023 47.3; 2024 33.3; 2025 30.7; 2026 0.7; 2027 0.9; 2028 17.1; 2029 11.9; 2030 8.8; 2031 5.0. - Central government debt (percent of GDP): 2019 84.7; 2020 147.8; 2021 119.6; 2022 120.1; 2023 116.0; 2024 107.0; 2025 102.2; 2026 93.9; 2027 83.7; 2028 77.6; 2029 72.0; 2030 68.7. - Gross international reserves (USD millions): 2019 648; 2020 585; 2021 992; 2022 1,195; 2023 1,361; 2024 1,234; 2025 1,599; 2026 1,480; 2027 1,488; 2028 1,479; 2029 1,459; 2030 1,406. - Usable gross international reserves (USD millions): 2019 505; 2020 129; 2021 512; 2022 865; 2023 1,032; 2024 995; 2025 1,270; 2026 1,241; 2027 1,249; 2028 1,240; 2029 1,221; 2030 1,167. - External debt (percent of GDP): 2019 99.7; 2020 165.0; 2021 144.9; 2022 153.1; 2023 140.4; 2024 129.0; 2025 122.1; 2026 112.1; 2027 101.5; 2028 92.0; 2029 82.9; 2030 76.8. - Banking system indicators (selected): reported risk-weighted capital for the system 18.6 percent; asset quality: 16.1 percent of loans nonperforming by June 2023; liquid assets 52.3 percent (or 52.9 percent in alternative table) of assets. ### Key policy recommendations and monitoring priorities (from staff and program) - Continue fiscal consolidation to sustain public debt decline and meet program anchors (2024 primary balance target 3.5 percent of GDP). - Finalize and implement agreed debt restructuring across creditor types, including comparable treatment assurances, and launch formal bond exchange. - Maintain strict monitoring and reporting under TMU: high-frequency reporting on FX flows, NIR, NDA, social spending, debt stock, arrears, and banking sector templates. - Complete CBvS and bank audits and finalize recapitalization plans; preserve CBvS autonomy and recapitalize with marketable instruments following agreed plan. - Protect the poor: scale up social protection as savings from subsidy removal materialize; complete time-bound social protection strategic plan (reset to end-December). - Tighten and monitor FX market rules to prevent MCPs and ensure transparent functioning (electronic FX trading platform launch and surrender rule enforcement). - Maintain liquidity buffers and plan recapitalization modalities to minimize adverse GFN spikes; consider securities issuance to spread recapitalization costs. *Italic: Source: IMF staff report—EXECUTIVE SUMMARY and chapters (1surea2023004).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context - Authorities prioritize fiscal discipline and macroeconomic stability while negotiating debt restructuring for official and privately-held public debt; negotiations with official creditor China continue. - Financial advisors are preparing to launch the formal debt exchange with private external bondholders. - Key reforms already implemented: elimination of fuel subsidies (March), increases in electricity tariffs (June), amendment to curtail wage payments to unregistered public servants, and increasing the VAT base (early September). - Private sector established the Suriname Economic Oversight Board (SEOB) as a consultative monitoring body; SEOB issued its first report in July. ### Macroeconomic and Financial Environment - Economic recovery is slower-than-expected; monthly growth rate of economic activity has slowed over the past year. - Inflation: 57 percent y/y in July; core inflation at 62 percent. - Exchange rate: SRD/USD depreciation of 72 percent in the year through May 2023; pressure has eased since May 2023. - Usable international reserves: 4.7 months of imports at end-July. - Banking sector: Asset quality reviews (AQRs) show substantial recapitalization needs in several banks; NPLs have increased and banks face tighter funding conditions. ### Outlook and Projections - Growth: projected to recover to 2.1 percent in 2023 and reach 3 percent in 2024; real GDP expected to remain below its pre-pandemic level throughout the forecast horizon. - Inflation: projected gradual decline to 40 percent y/y by end year (2023), with the 2023 inflation projection modestly revised up due to higher global food and energy prices. - Real effective exchange rate (REER): expected to depreciate by around 6 percent by end-year (2023). - Public debt: stood at 120 percent of GDP in end-2022 and is expected to fall below 70 percent by 2028. - Gross financing needs (GFN): peak at 11.3 percent of GDP in 2023 and average 7.2 percent of GDP over the medium term; program parameters for GFN are under 12 percent of GDP in any year, and under 9 percent on average over the medium- to long-term. ### Program Implementation and Performance - End-June 2023 quantitative performance criteria (PCs) on the cumulative central government primary balance, net domestic assets (NDA), and net international reserves (NIR) were met. - Two continuous PCs were not observed: - Accumulation by the government of arrears on its external obligations to other IFIs (debt payments to OPEC Fund, IDB, EIB, and CDB were made 30 days past due; a waiver is requested). - Introduction/modification of multiple currency practices (MCPs) following CBvS Circular of July 14, 2023 (MCP existed between July 14, 2023 and September 8, 2023); corrective action taken via CBvS Circular 2023-2 on September 8, 2023 to remove MCP (waiver requested). - Continuous PCs otherwise met; an indicative target (IT) on social assistance spending was missed due to tightened eligibility criteria and delays in expanding coverage. - Specific operational notes: - Overperformance on the NDA target of SRD 958 million reflected large commercial bank transfers in April-June 2023 of ring-fenced FX reserves to overseas nostro accounts; adjusting for these outflows, overperformance would have been SRD 444 million. - Indicative end-July NDA ceiling was temporarily exceeded due to maturing term deposits at the CBvS (SRD 1.4 billion) not reinvested until the CBvS debt auction on August 2, 2023. - Indirect FX sales by mineral exporters were contained well-below the end-July indicative target (about USD 4 million), but government received higher-than-expected SRD share of state-owned oil company dividend revenue, temporarily increasing SRD-denominated income. ### Institutional and Structural Reforms - End-June structural benchmark (SB) on establishing a system to compile and maintain an up-to-date list of public entities (starting with central government entities) was met. - End-July SB on publishing a time-bound strategic plan to improve efficiency and effectiveness of social benefits delayed to end-December to incorporate ILO recommendations. - End-July SB on enacting the VAT amendment by the National Assembly was not met by end-July but completed on September 5 as a prior action. - Authorities finalized a framework to assess banks’ recapitalization and restructuring plans. - Authorities enacted an amendment to increase value added tax (VAT) revenues. ### Fiscal Policy and Social Protection - Authorities are on track to achieve the 1.7 percent of GDP central government primary balance target for 2023. - End-June primary balance QPC met with a sizable margin largely due to under-execution of capital expenditures and social assistance spending. - Authorities intend to correct underspending on social programs for the remainder of the year and are stepping up efforts to finalize the social assistance reform plan (end-July SB not met; proposed reset to end-December) and to work with capacity development providers. - Short-term fiscal contingency measures for fiscal year 2023 include scaling down non-priority capital spending and introducing excise taxes on selected products. - Key 2023 fiscal projections (difference between 2nd Review and Latest Projection, Percent of GDP and Millions of SRD): - Primary Balance: 1.7 / 1.7 / 0.0 - Revenue: 26.9 / 26.1 / -0.7 - Taxes: 16.6 / 17.1 / 0.4 / 1,157 (Millions of SRD) - Direct taxes: 9.4 / 9.7 / 0.3 / 714 - Mining taxes: 4.2 / 4.5 / 0.3 / 508 - Indirect taxes: 7.2 / 7.4 / 0.1 / 442 - VAT: 3.2 / 3.0 / -0.1 / -60 - Non-tax revenue: 9.7 / 8.6 / -1.1 / -1,171 - Mining revenues: 8.5 / 7.4 / -1.1 / -1,221 - Grants: 0.5 / 0.5 / 0.0 / 17 - Primary Expenditure: 25.1 / 24.5 / -0.7 - Wage Bill: 6.9 / 6.7 / -0.2 / -2 - Fuel subsidies: 0.3 / 0.3 / 0.0 / 16 - Electricity subsidies: 2.4 / 2.7 / 0.3 / 437 - Cash transfer programs: 3.0 / 2.9 / -0.1 / 0 - Capital expenditure: 3.3 / 2.6 / -0.7 / -808 - Other primary expenditure: 9.2 / 9.2 / 0.0 / 360 - Non-mining primary balance: -11.0 / -10.2 / 0.8 / 713 ### Debt Restructuring and Management - Restructuring agreements reached for both official and privately-held public debt, except official debt to China where negotiations continue. - Debt payments to four external creditors were delayed more than 30 days due to missed invoices; payments have since been made and a waiver for non-observance is requested based on temporary nature and actions to strengthen SDMO middle office capacity. - Staff note: public debt stock revised up for 2017-22 after audit report recorded higher supplier arrears; public debt expected to fall faster due to a smaller-than-expected REER depreciation in 2023. ### Monetary Policy and Exchange Rate Management - Monetary and fiscal restraint have tightened SRD liquidity conditions and slowed the pace of exchange rate depreciation, helping to ease inflationary pressures. - Authorities refrained from direct FX interventions and limited indirect FX sales to essential goods importers. - CBvS issued Circular 2023-1 (July 14, 2023) which mandated banks to use weighted average exchange rates calculated and published by CBvS when purchasing 35 percent of repatriated export proceeds; this gave rise to an MCP and was subsequently removed by CBvS Circular 2023-2 (September 8, 2023), which requires FX banks to use current exchange rates of the day as published by the relevant foreign exchange bank when settling export earnings under the surrender requirement. ### Financial Sector Risks and Bank Restructuring - AQRs show substantial recapitalization needs in several banks; NPLs have risen and banks face tighter funding conditions. - Authorities finalized a framework to assess banks’ recapitalization and restructuring plans. ### Risks to the Outlook - Domestic risks: policy implementation challenges, social discontent undermining reform plans, rising NPLs or financial-sector shocks leading to deposit outflows and financial instability, and weak implementation capacity. - External risks: potential worsening in terms of trade. - Longer-term upside: potential development of large new oil fields (no final investment decision (FID) yet); if realized, would boost growth, increase export and fiscal revenues, and strengthen balance of payments and debt dynamics. *Source: IMF staff report—EXECUTIVE SUMMARY (1surea2023004).* ### 8. The authorities are implementing a range of revenue and expenditure measures ### 8. The authorities are implementing a range of revenue and expenditure measures ### VAT and tax policy - An amended VAT Act was submitted in June, passed on September 1, and enacted on September 5 — a prior action for completion of the third review. - Amendment specifics (as described): - Converts all zero-rated products (except exports and ancillary supplies to exports) to exempt ones. - Reduces the scope of exemptions to impose the standard 10 percent VAT rate on at least 60 percent of household consumption. - Clarifies taxation of education, health, and financial services under VAT. - Implementation in two stages: - October 1: standard VAT rate imposed on an additional 16 percent of the consumption basket. - November 1: standard VAT rate imposed on an additional 4 percent of the consumption basket (to reach 60 percent coverage). - Progress is being made in registering companies and ensuring timely and accurate VAT refunds for eligible exporters. ### Wage bill and public employment - In May, authorities reached an agreement with unions to increase wages through cost-of-living bonuses and committed to no further increases in either wages or hiring in 2023. - February: government completed mandatory registration for all civil servants. - June: National Assembly approved an amendment to the Personnel Act enabling salary payments to be halted for unregistered workers. - 18 percent of the public workforce remain unregistered. - Wage and benefit payments to unregistered workers will be discontinued at end-October 2023 after a state decree detailing procedures (new proposed end-October SB). - Estimated savings from halting payments to unregistered workers: 0.1 percent of GDP in 2023 and 0.4 percent of GDP in 2024. - Voluntary separation packages are being offered to reduce government headcount; take-up has been low (around 1.5 percent of the public workforce). Given uncertain take-up, near-term costs and longer-term savings from this measure are not included in the baseline. ### Fuel, electricity, and gas subsidy reforms - Fuel taxes: - March: fuel subsidies discontinued; fuel prices determined by an automatic pricing mechanism based on international prices. - May: government reinstated specific taxes on fuel of SRD 3.50 per liter, expected to generate 0.7 percent of GDP in revenue in 2023. - Note: Fuel taxes generated 1.3 percent of GDP in revenue in 2020; the negative contribution in 2024 reflects erosion by inflation as a specific tax. - Electricity subsidies: - June: government approved a tariff adjustment schedule including: - Immediate 28 percent increase in average electricity tariffs. - Further increases in Q3 and Q4 of 42 percent and 21 percent respectively, as lump-sum billing discounts are phased out by end-November 2023. - Tariffs will then be adjusted quarterly going forward to reach cost-recovery by end-2024. - Energie Autoriteit Suriname will publish quarterly updates on tariffs by consumer group, rationale, estimated cost, and remaining subsidy size (new proposed end-October SB). - Average electricity tariffs for the quarter are calculated as an average across consumer groups weighted by kWh usage and averaged for the entire quarter. - Gas subsidies: - August: schedule of price increases announced to phase out gas price subsidies (currently 90 percent of the cost of gas). - Beginning in September: gas prices will increase by around 425 percent to reduce the subsidy to 55 percent of cost. - Prices will further increase by a fixed amount each quarter beginning in December 2023. - Expected savings: 0.1 percent of GDP in 2023 and 0.2 percent of GDP in 2024. ### Cash transfers and social protection - To protect the poor, beginning in July the value of cash transfers for traditional social protection programs was increased to partly compensate for inflation. - Values increased (examples provided in source): - General Old-Age Pension increased from SRD 1250 to SRD 1750 per month. - General Child Benefit increased from SRD 125 to SRD 200 per child. - Financial Assistance for Persons with Disabilities increased from SRD 1750 to SRD 2500 per month. - Financial Assistance for Weak Households increased from SRD 1250 to SRD 1750 per month. - Transfers will be increased again in October to fully compensate for inflation. - With assistance from the ILO and IDB, the government is reviewing social protection expenditures and developing a time-bound strategic plan to improve efficiency and effectiveness of social benefits (end-July 2023 SB, not met, proposed to be reset to end-December). ### Fiscal institutional reforms and transparency - Measures to strengthen fiscal institutions: - Established a central institutional repository listing all public entities (end-June SB, met). - Will publish quarterly budget execution reports starting in Q2 (end-September SB). The quarterly execution report for the first quarter was published on June 2, 2023. - Will issue a State decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks (end-December SB). - Will enact a new procurement law (end-September SB). ### Contributions to fiscal adjustment (selected figures and categories) - Annual change of Primary Balance (reported): 1.6 0.7 0.6 1.8 1.8 4.8 4.1 (presented in table format in source—values preserved exactly as listed). - Adjustment from Policy Changes: 0.5 2.6 3.8 4.2 4.4 8.5 8.8. - Revenue measures and selected line items (values preserved as in source table): - Revenue measures: -0.6 0.7 1.1 1.9 1.8 3.7 2.3. - Replacing sales tax with VAT: 0.0 0.3 0.2 0.6 0.6 0.9 0.8. - Fuel tax: -0.4 ... 0.7 ... -0.2 ... 0.1. - Expenditure measures and selected line items: - Expenditure measures: 1.1 1.9 2.6 2.2 2.7 4.8 6.5. - Wage bill restraint: -0.5 1.5 1.7 0.1 0.4 1.1 1.7. - Phased electricity subsidy elimination: 0.5 1.0 0.7 1.7 2.1 3.2 3.2. - Phased gas subsidy elimination: 0.0 ... 0.1 ... 0.2 ... 0.3. - Social programs spending: -0.5 -1.0 -0.9 0.0 -0.1 -1.5 -1.5. - Contribution by Non-Policy Factors (selected): 1.1 -1.9 -3.1 -2.4 -2.6 -3.7 -4.7. - Memo: Primary Balance 1.1 1.7 3.5 (values preserved from source). ### Debt clearance and restructuring actions - Domestic arrears: - Authorities cleared SRD 0.9 billion of domestic debt arrears and committed to clear the remainder SRD 2.4 billion of arrears by end-December. - Estimated stock of domestic debt arrears was revised upwards for January-March 2023 based on new SDMO data; stock increased in H1 2023 due to FX valuation effects from sharp nominal exchange rate depreciation and new arrears on FX-denominated debt. - Legacy debts to the CBvS restructured into a new loan with a grace period of 2 years and a maturity of 27 years. - All short-term advances made to the CG will be repaid to the CBvS in 2023. - Treasury and cash management improvements: - Fund debt management TA supporting recording, reporting, and payment of debt. - Treasury Department strengthening cash forecasting; plan to create a cash management unit by end-2023 covering liquidity planning, accounts, working capital and cashflow management. - Government intends to expand Treasury Single Account coverage to include all government accounts held at commercial banks by end-2024. - External creditor negotiations: - Paris Club: agreement reached June 2022 for a two-step debt treatment; bilateral agreements with all PC creditors completed. - EXIM India: agreement to restructure official credit line in March 2023; agreement on loan backed by EXIM India reached in May 2023. - EXIM China: negotiations continue; no restructuring agreement yet. Authorities’ recent offer modeled on other official creditors was not accepted by China; authorities requested a counterproposal. - Telesur and other agencies: no further payments made to EXIM China; authorities committed to reflecting past payments to EXIM China in eventual restructuring to ensure comparability. - Bondholders: agreement-in-principle reached with bondholders on May 4; financial advisors preparing to launch formal exchange. Preliminary Paris Club Secretariat assessment indicates agreement satisfies comparability of treatment relative to official creditors. - Conditional on agreed treatments for official and private debt and assuming comparable treatment for China, Suriname’s debt is judged sustainable on a forward-looking basis (Annex I referenced in source). ### Monetary policy, FX, and inflation management - Monetary stance: - SRD reserve money growth remained below CBvS’ target path; program end-June NDA ceiling met. - Liquidity conditions tight following April increase of SRD reserve requirement and regular OMOs and direct issuances of central bank certificates (CBCs) to absorb liquidity. - Reserve money growth stabilized; private sector credit growth is weakening, guided by time-bound, bank-by-bank lending caps. - Caps aim to contain nominal SRD private sector credit growth to 20 percent over a one-year period through April 2024. - CBC wholesale auctions and direct issuances now take place on a quarterly cycle. - Maintaining same nominal reserve money path in context of higher inflation implies a modest further tightening in the monetary stance. - Interest rates and transmission: - Interest rates on central bank liabilities have increased although transmission to market rates remains weak. - Median deposit and lending rates, although negative in real terms, are gradually edging up as banks compete for liquidity. - Exchange rate and FX market: - Depreciation pressures have eased; fiscal and monetary restraint slowed demand for FX and reduced pace of nominal exchange rate depreciation. - Authorities have refrained from direct FX interventions; indirect sales by mineral exporters to importers of essential goods have been reduced. - Projected weaker path for mineral revenue resulted in a modest downward revision for targeted path of usable international reserves; NIR targets proposed to be adjusted to align with revised macro framework. - FX market functioning and regulations: - FX surrender requirement tightened: surrender must take place immediately upon repatriation (previously within five days); exporters required to offer at least 35 percent of repatriated FX for sale to banks with correspondent banking relationships. - Authorities reviewing the Foreign Exchange Regulation of 1947 to make it consistent with the new Central Bank Act (end-December SB). - CBvS finalizing preparations for launch of an electronic FX trading platform (end-September SB) to improve transparency, liquidity, and price discovery. ### Banking sector vulnerabilities - System-level indicators and risks: - Reported risk-weighted capital for the system is 18.6 percent, but some banks do not meet regulatory minima for capital. - Asset quality: 16.1 percent of loans nonperforming by June 2023. - Results from the AQR indicate substantial additional provisioning is required, adding to recapitalization needs. - Banking sector is, on aggregate, very liquid (52.3 percent of assets are liquid, in large part due to high reserve requirements), but liquidity is unevenly distributed and skewed towards two large systemic banks. - Monetary tightening and higher reserve requirements increase the risk of exposing liquidity shortfalls in some smaller banks. - Transmission weaknesses reflect concerns over borrower repayment capacity, banking system weaknesses, and high concentration of liquidity in a few banks. - CBvS actions and surveillance: - Time-bound, bank-by-bank lending caps and expanded monetary and financial surveys (with Fund CD support) — extend to insurance and pension funds by March 2024 — to improve understanding of overall credit conditions. *Source: IMF staff summary of the content unit titled "8. The authorities are implementing a range of revenue and expenditure measures" from the provided IMF PDF.* ### 16. The CBvS has finalized a roadmap to bring banks back into compliance with regulatory ### 1surea2023004 - 16. The CBvS has finalized a roadmap to bring banks back into compliance with regulatory ### Banks recapitalization and restructuring roadmap - The CBvS finalized its assessment framework for a time-bound recapitalization and restructuring plans on August 29 as a prior action. - The roadmap comprises the recapitalization and restructuring of banks that do not meet regulatory standards and elaborates on the information banks need to include in their plans to resolve their NPLs. - Banks have fully implemented the AQR results and adjusted their loan loss provisioning at the end of July accordingly. - Banks with capital shortages submitted their recapitalization and restructuring plans to the CBvS; the CBvS is in the process of a critical review of these plans (end-October SB). - For banks with NPL ratios above the internal benchmark of 5 percent of gross loans, CBvS will evaluate the need to provide guidance on NPL resolution and credit risk management based on international best practices. - Recapitalization needs of the CBvS and commercial banks are conservatively assumed to add to the public debt stock in 2023, increasing it by 10 percent of GDP (5 percent for CBvS and 5 percent for commercial banks).28 - The implications of the recent restructuring of government debt to the CBvS will be incorporated into the CBvS’ recapitalization plan. ### Strengthening the Central Bank (CBvS) - The CBvS is working to implement the Central Bank Act of 2022, which strengthened its mandate, autonomy, and decision-making. - The CBvS has established the Audit Committee and Risk and Compliance Committee in accordance with their approved charters and approved the Investment Policy. - The CBvS is developing a regulation for the Supervisory Board and updating the Governance Handbook. - The FY2020 financial statements’ audit has been delayed due to capacity constraints, impacting completion of the FY2021-22 audits (end-December 2023 SB, proposed to be reset to end-March 2024). - Completion of these audits is essential for the MoFP and CBvS to finalize a recapitalization plan for the CBvS (end-December 2023 SB, proposed to be reset to end-March 2024). - The CBvS will be recapitalized with marketable instruments. - A special audit of program monetary data was completed in August 2023. ### Governance, AML/CFT, and public procurement - 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; it is tasked with evaluating the Anti-Corruption Act and proposing amendments to the Anti-Corruption legal framework (end-September SB, proposed to be reset to end-December) to facilitate routine verification and publication of income and asset declarations of high-ranking and high-risk public officials. The State Decree requiring registration of income and assets by high-ranking and high-risk public officials has been issued in August. - The authorities ratified the Caribbean Community (CARICOM)’s Protocol on Public Procurement in July 2022. With IDB support, a new procurement law will be enacted by end-September (SB)30 to mandate the publication of beneficial ownership information of all awarded public contracts. - The law will centralize the publication of all tenders and contracts awards, mandate publication on a government website of all public procurement contracts, the names of the awarded entities and their beneficial owners, the names of the public officials awarding the contracts, and an ex-post validation of delivery of the contracted services.30 - A 2022 CFATF assessment identified several technical compliance deficiencies and placed Suriname on enhanced follow up.31 - In November 2022, the authorities enacted a new AML/CFT law to bring it into line with international standards and to address key technical compliance deficiencies (drafted with IMF support). - To comply with FATF requirements, Suriname will need to: - (i) enhance AML/CFT supervision for all financial institutions; - (ii) develop and implement risk based supervisory framework for Designated Non-Financial Businesses and Professions (DNFBPs); - (iii) make available adequate human, financial, and technological resources to the Financial Intelligence Unit; - (iv) increase ML/TF related investigations, prosecutions and confiscations; and - (v) amend the International Sanctions Framework to update the legal framework in relation to the implementation of the UN Security Council Resolution Resolutions for Terrorism and Proliferation Financing. - Authorities are working to enact amendments to various laws and to strengthen risk-based supervision, including with support from IMF CD. ### Program issues, conditionality, and prior actions - Waivers for the nonobservance of continuous PCs are requested based on the temporary nature of the breached PCs.32 - Prior actions completed: - Enactment of the amended VAT law on September 5. - Finalization by the CBvS of its assessment framework for banks’ time-bound recapitalization and restructuring plans on August 29. - Proposed modifications to program conditionality: - Quantitative targets: The end-September and subsequent QPCs on NIR and NDA are proposed to be adjusted in line with the revised macro-framework. Quarterly QPCs are proposed through end-September 2024. - Indicative targets: The end-September IT on social spending is proposed to be adjusted downward to reflect a more gradual and realistic path to achieving the full-year target, given underspending on social protection at end-June, while subsequent ITs remain unchanged. - New end-October SBs are proposed in areas of expenditure control and fiscal policy transparency (¶8).33 - Two end-September SBs on public procurement have been reformulated (¶18). - Due to capacity constraints, two SBs in areas of strengthening central bank accountability and transparency (¶17), governance (and social spending (¶8) are proposed to be reset. ### Debt, arrears, lending-into-arrears, and program financing - Access and capacity to repay: - Suriname’s capacity to repay is assessed as adequate under the program baseline but subject to significant risks. - Fund credit outstanding will peak in 2024 at 42 percent of usable reserves (12.9 percent of GDP in 2024, Table 11) and will remain elevated through 2030. - Annual debt service to the Fund peaks in 2029 at 3.9 percent of exports of goods and services and 9.7 percent of usable reserves in 2029. - Out of the SDR 39.4 million scheduled for the third review, SDR 25.6 (65 percent) would be made available for budget support as a direct disbursement to the Treasury. - Lending into arrears (LIA) and lending into official arrears (LIOA) policies: - The authorities accumulated technical arrears of USD 5.1 million to multilateral creditors in April and May but these were cleared in May-July. - Suriname continues to accrue arrears with China (USD 127 million as of end-June); authorities are undertaking good faith negotiations to resolve these arrears. China has provided consent to proceed with the review despite official arrears. - Authorities will not make further payments to China until a debt treatment has been finalized. - Staff assess that the remaining arrears to China EXIM do not undermine the medium-term external viability of Suriname’s balance of payments or its capacity to repay the Fund. - As of end-June, total arrears with external private creditors stood at USD 311 million. Financial advisors are preparing to launch the formal debt exchange. The authorities have offered the same restructuring menu to other private creditors as to bondholders and official creditors; these creditors represent about 5 percent of arrears to external private creditors at end-2022. The LIA good faith criterion has been met. - Program financing: - Staff find progress with creditors — including the consent to arrears by China which constitutes a form of financing contribution to the program — is adequate to fill financing gaps during the program period and that the member is in a position to repay the Fund during the post-program period. These assurances will need to be reevaluated before the next review can be completed. - Suriname’s program contains firm commitments of financing for the next 12 months and good prospects for adequate financing for the remaining program period.35 ### Staff appraisal: macroeconomic and structural assessment - Quantitative program performance has improved; most end-June quantitative targets have been met. - Authorities are on track to reach the 1.7 percent of GDP primary balance target this year. - The IT on social spending was missed; authorities are taking steps to expand coverage of the social safety net and increase the value of payments. - Authorities have implemented politically costly reforms: eliminating fuel subsidies, phasing out electricity subsidies, and broadening the VAT tax base. - Government measures to contain the public wage bill include a hiring freeze, early retirement incentives, and steps to eliminate payments to unregistered workers (almost 20 percent of the public workforce). - A recently approved “no work - no pay” amendment to the Personnel Act will increase public sector productivity and create fiscal space to put in place performance-based pay. - A new procurement law mandating publication of beneficial ownership information has been submitted to the National Assembly; once enacted it will improve spending efficiency, promote fiscal transparency, and reduce corruption. - The economy continues to recover albeit at a slower-than-expected rate; exchange rate pressures have eased and inflation is on a downward trend. - Reserve money growth has stabilized and remained below the central bank’s targeted path. - Fiscal balances are improving, and public debt has started to decline. Clearing of domestic arrears will help support investor confidence. - Substantial progress has been made with debt restructuring: bilateral agreements with all PC creditors and India have been completed. Financial advisors are preparing to launch the formal debt exchange. Negotiations continue with EXIM China, with all parties aspiring to reach an agreement by the time of the fourth review. - Authorities remain committed to a flexible exchange rate and an independent central bank. The finalization of a recapitalization plan will be an important further step to strengthen the CBvS’ financial autonomy and safeguard its independence. - The development of the electronic inter-bank/cambio FX trading platform is nearing completion to improve the functioning of the FX market. - Financial sector vulnerabilities persist: rising NPLs bear close monitoring. The CBvS has finalized the framework for assessment of banks’ recapitalization plans; all banks have been instructed to incorporate the AQR results into their accounts and the CBvS is assessing banks’ time-bound recapitalization and restructuring plans. - Ongoing efforts to strengthen the AML/CFT framework will support financial sector resiliency and prevent potential loss of corresponding banking relationships. - Staff supports the authorities’ request for waivers for the nonobservance of the continuous QPC on non-accumulation of external debt arrears and the continuous PC on non- *Source: Excerpt from the IMF document 1surea2023004.* ### introduction and non-modification of MCP. In view of the actions already taken and the ### 1surea2023004 - introduction and non-modification of MCP. In view of the actions already taken and the ### Staff recommendation - Staff supports the authorities’ request for: - the completion of the third review under the EFF arrangement, - the modification of program targets, - the completion of financing assurances review. ### Recent economic developments (key findings) - Monthly Economic Activity Indicator and Contributions (MEAI): charted as 12m/12m moving average (percent change) with sectoral contributions for Government, Tertiary (excl. Government), Secondary, Primary : mining, Primary (other than mining), and Total (visual series spanning Sep-20 to Mar-23). - Exchange rate developments: - Parallel market rate and Official rate plotted (Aug-21 to Aug-23). - After significant depreciation, REER has started to appreciate since mid-2021 (Real Effective Exchange Rate, 2014=100; series shown). - Inflation: - 3M/3M annualized inflation and Y/Y inflation series (Jul-16 to Jul-23). - International reserves: - Usable reserves and International reserves shown (in millions of USD) with usable reserves also expressed in months of imports (RHS). - Sectoral fiscal series (visual): Non-mineral revenues, Mineral revenues, Expenditures, Primary balance, Non-mineral primary balance, Overall balance, Public Debt (external/domestic). ### Fiscal developments, 2012–22 (summary) - Total revenues improved in 2021-22, due to a marked increase in mining revenue. - Exchange rate depreciation boosted both tax and non-tax mining revenues. - Despite cost overruns on subsidies and wages in 2022, the government exercised restraint to reduce government expenditure. - Subsidies to the electricity sector remained high in 2022 as tariff increases were offset by rising energy generation costs due to the surge in international oil prices. - Overall fiscal position improved moderately in 2022, while public debt increased marginally. ### Fiscal and macro projections — selected figures (preserve original numeric values) - Real GDP (percent change): 2019 1.1; 2020 -15.9; 2021 -2.7; 2022 1.0; 2023 2.3; 2024 2.1; 2025 3.0; 2026 3.0; 2027 3.0; 2028 3.0. - Nominal GDP: 2019 5.6; 2020 21.8; 2021 53.3; 2022 47.1; 2023 52.1; 2024 56.7; 2025 32.1; 2026 32.3; 2027 18.3; 2028 14.0; 2029 12.0; 2030 8.2 (table columns reflect Est./Proj. and 2nd Review labels). - Consumer prices (period average): 2019 4.4; 2020 4.9; 2021 9.1; 2022 52.4; 2023 47.3; 2024 33.3; 2025 30.7; 2026 0.7; 2027 0.9; 2028 17.1; 2029 11.9; 2030 8.8; 2031 5.0 (table shows long series). - Unemployment rate: 2019 8.8; 2020 11.1; 2021 11.2; 2022 10.9; 2023 10.6; 2024 10.6; 2025 10.3; 2026 10.3; 2027 10.0; 2028 9.9; 2029 9.1; 2030 8.6. - Broad money (percent change): 2019 4.7; 2020 65.0; 2021 45.3; 2022 45.1; 2023 48.2; 2024 32.8; 2025 19.6; 2026 16.7; 2027 18.8; 2028 13.3; 2029 10.5; 2030 8.2. - Central government overall balance (net lending/borrowing, percent of GDP): 2019 -20.4; 2020 -12.1; 2021 -6.6; 2022 -3.1; 2023 -0.9; 2024 -0.9; 2025 -0.7; 2026 -0.4; 2027 -0.2; 2028 -0.1; 2029 -0.1; 2030 0.0. - Non-resource primary balance (percent of GDP): 2019 -23.7; 2020 -14.9; 2021 -13.1; 2022 -13.7; 2023 -11.0; 2024 -10.2; 2025 -7.9; 2026 -6.8; 2027 -6.2; 2028 -6.0; 2029 -5.7; 2030 -5.3. - Central government debt (percent of GDP): 2019 84.7; 2020 147.8; 2021 119.6; 2022 120.1; 2023 116.0; 2024 107.0; 2025 102.2; 2026 93.9; 2027 83.7; 2028 77.6; 2029 72.0; 2030 68.7. - Gross international reserves (USD millions): 2019 648; 2020 585; 2021 992; 2022 1,195; 2023 1,361; 2024 1,234; 2025 1,599; 2026 1,480; 2027 1,488; 2028 1,479; 2029 1,459; 2030 1,406. - Usable gross international reserves (USD millions): 2019 505; 2020 129; 2021 512; 2022 865; 2023 1,032; 2024 995; 2025 1,270; 2026 1,241; 2027 1,249; 2028 1,240; 2029 1,221; 2030 1,167. - Gold price (USD per troy ounce): 2019 1,392; 2020 1,770; 2021 1,747; 2022 1,722; 2023 1,685; 2024 1,685; 2025 1,651; 2026 1,651; 2027 1,618; 2028 1,602; 2029 1,602; 2030 1,602. - Oil price (USD per barrel): 2019 61.4; 2020 41.8; 2021 69.2; 2022 96.4; 2023 73.1; 2024 80.5; 2025 68.9; 2026 79.9; 2027 76.0; 2028 72.7; 2029 69.9; 2030 67.5. ### Real sector by expenditures (selected projections) - Real GDP (growth rates, constant prices): 2022 1.0; 2023 2.3; 2024 2.1; 2025 3.0; 2026 3.0; 2027 3.0; 2028 3.0. - Private Absorption (growth rates): 2022 2.5; 2023 0.0; 2024 1.0; 2025 2.3; 2026 1.5; 2027 2.6; 2028 3.6; 2029 2.9; 2030 3.2. - Exports (growth rates, constant prices): 2022 8.2; 2023 3.0; 2024 3.9; 2025 3.8; 2026 4.2; 2027 3.4; 2028 2.7; 2029 3.8; 2030 3.0. - Imports (growth rates, constant prices): 2022 8.0; 2023 -2.3; 2024 -1.2; 2025 1.3; 2026 0.1; 2027 1.9; 2028 3.8; 2029 3.7; 2030 3.5. - GDP deflator (growth rates): 2022 45.6; 2023 48.7; 2024 53.4; 2025 28.3; 2026 28.5; 2027 14.9; 2028 10.7; 2029 8.7; 2030 5.0. ### Central government operations (major aggregates, selected figures) - Revenues (Millions of SRD): 2019 6,434; 2020 7,066; 2021 16,010; 2022 24,021; 2023 35,429; 2024 35,432; 2025 46,024; 2026 45,291; 2027 52,526; 2028 59,899; 2029 67,075; 2030 72,558. - Taxes (Millions of SRD): 2019 4,717; 2020 5,133; 2021 11,831; 2022 16,649; 2023 21,949; 2024 23,106; 2025 33,732; 2026 33,370; 2027 39,629; 2028 45,844; 2029 51,041; 2030 55,771. - Non-tax revenues (Millions of SRD): 2019 1,718; 2020 1,934; 2021 4,039; 2022 7,285; 2023 12,852; 2024 11,681; 2025 12,292; 2026 11,921; 2027 12,897; 2028 14,055; 2029 16,034; 2030 16,787. - Of which: Mineral resource revenues (Millions of SRD): 2019 1,054; 2020 1,058; 2021 2,864; 2022 5,706; 2023 11,247; 2024 10,026; 2025 9,124; 2026 8,685; 2027 9,066; 2028 9,687; 2029 11,143; 2030 11,495. - Expenditures (Millions of SRD): 2019 12,852; 2020 11,695; 2021 19,876; 2022 26,729; 2023 36,571; 2024 36,663; 2025 47,220; 2026 45,958; 2027 52,859; 2028 60,224; 2029 67,466; 2030 72,521. - Interest (Millions of SRD): 2019 913; 2020 1,411; 2021 3,537; 2022 3,630; 2023 3,437; 2024 3,525; 2025 7,291; 2026 6,939; 2027 7,757; 2028 8,791; 2029 9,871; 2030 10,218. - Overall balance (Millions of SRD): 2019 -6,418; 2020 -4,629; 2021 -3,866; 2022 -2,707; 2023 -1,143; 2024 -1,231; 2025 -1,190; 2026 -666; 2027 -333; 2028 -325; 2029 -391; 2030 37. - Net incurrence of liabilities (Millions of SRD): 2019 4,446; 2020 7,640; 2021 3,058; 2022 -919; 2023 1,143; 2024 1,231; 2025 1,190; 2026 666; 2027 333; 2028 327; 2029 399; 2030 -8. - Public (central government) debt (Millions of SRD): 2019 26,664; 2020 56,699; 2021 70,344; 2022 103,850; 2023 153,110; 2024 144,979; 2025 178,098; 2026 168,278; 2027 177,534; 2028 187,639; 2029 195,119; 2030 201,357. - Memorandum: Gross financing needs (incl. IMF debt service, percent of GDP): 2019 27.1; 2020 17.0; 2021 18.5; 2022 14.6; 2023 12.0; 2024 11.2; 2025 9.3; 2026 7.3; 2027 4.3; 2028 3.9; 2029 6.3; 2030 6.7. ### Balance of payments — key aggregates (selected figures) - Current account (Millions of USD): 2019 -448; 2020 260; 2021 176; 2022 76; 2023 25; 2024 41; 2025 13; 2026 82; 2027 88; 2028 -3; 2029 -2; 2030 -25. - Exports of goods and services (Millions of USD): 2019 2,287; 2020 2,447; 2021 2,300; 2022 2,600; 2023 2,548; 2024 2,586; 2025 2,581; 2026 2,645; 2027 2,673; 2028 2,712; 2029 2,805; 2030 2,883. - Imports of goods and services (Millions of USD): 2019 2,413; 2020 1,845; 2021 1,876; 2022 2,342; 2023 2,165; 2024 2,194; 2025 2,197; 2026 2,219; 2027 2,267; 2028 2,356; 2029 2,449; 2030 2,555. - Trade balance, goods (Millions of USD): 2019 532; 2020 1,061; 2021 865; 2022 755; 2023 816; 2024 807; 2025 781; 2026 784; 2027 728; 2028 667; 2029 649; 2030 605. - Primary income, net (Millions of USD): 2019 -412; 2020 -466; 2021 -393; 2022 -308; 2023 -447; 2024 -454; 2025 -482; 2026 -493; 2027 -479; 2028 -444; 2029 -451; 2030 -445. - Capital and financial account (Millions of USD): 2019 -508; 2020 189; 2021 311; 2022 392; 2023 143; 2024 272; 2025 125; 2026 142; 2027 204; 2028 -6; 2029 -2; 2030 -27. - Financial account — Foreign direct investment (Millions of USD): 2019 80; 2020 124; 2021 -312; 2022 29; 2023 -15; 2024 -3; 2025 -18; 2026 -34; 2027 -65; 2028 -61. - Gross international reserves (USD millions): 2019 648; 2020 585; 2021 992; 2022 1,195; 2023 1,361; 2024 1,234; 2025 1,599; 2026 1,480; 2027 1,488; 2028 1,479; 2029 1,459; 2030 1,406. - Usable gross international reserves (USD millions): 2019 505; 2020 129; 2021 512; 2022 865; 2023 1,032; 2024 995; 2025 1,270; 2026 1,241; 2027 1,249; 2028 1,240; 2029 1,221; 2030 1,167. - External debt (USD millions): 2019 3,779; 2020 3,650; 2021 4,088; 2022 4,178; 2023 4,028; 2024 4,170; 2025 4,238; 2026 4,382; 2027 4,347; 2028 4,261; 2029 4,147; 2030 4,026. - External debt (percent of GDP): 2019 99.7; 2020 165.0; 2021 144.9; 2022 153.1; 2023 140.4; 2024 129.0; 2025 122.1; 2026 112.1; 2027 101.5; 2028 92.0; 2029 82.9; 2030 76.8. ### Monetary developments (high-level points) - Central Bank (CBC) auctions and retail issuances tracked (millions of SRD and percent) across tenors 180d, 90d, and weighted average interest rates. - OMO Auctions (7-day, 30-day, 90-day) series show allocated amounts, over-allocation, oversubscription metrics, and weighted average allotted rates. - OMO/CBC stock weighted average interest and tenor (percent, number of days) displayed. - SRD required/excess reserves, currency in circulation, and outstanding stock of OMOs (net of interest paid) shown in billions of SRD. ### Key policy-relevant takeaways and trade-offs (derived from presented tables and charts) - Mining revenues have been the primary driver of recent revenue improvements; exchange rate movements materially affect tax and non-tax mining receipts. - Fiscal consolidation is underway but fiscal risks remain from subsidies (notably electricity) and wage/cost overruns observed in 2022. - External buffers have recovered since earlier troughs, but accumulation pace slowed with weaker FX mineral revenue; reserve adequacy and usable reserves series highlight remaining vulnerability. - Public debt declined from peak ratios in projection path but remains elevated: central government debt (percent of GDP) projects from 116.0 in 2023 to 68.7 by 2030. - Current account and financial account display episodes of balance and correction; reserve trajectories and capital flows indicate reliance on orderly financing and IFI support. _Italic: Source — Surinamese authorities and IMF staff calculations and projections (from 1surea2023004 PDF content)._ ### 1. Gross external financing requirements 557-1198223915126118216163109199211 ### 1. Gross external financing requirements ### Major components of gross external financing requirements (levels) - 1. Gross external financing requirements: 557-1198223915126118216163109199211 - A. Current account deficit: 448-260-176-76-52-54-11-38-28-8325 - B. Public sector debt amortization: 12214625930820320319319491117197187 - (i) Central government: 974615920210310393946667172186 - (ii) CBvS: 000000 000001 - (iii) SOEs: 251001001071001001001002550250 - C. Other outflows: -13-5-170111 050000 ### Major components of sources of financing (levels) - 2. Sources of financing: 611-4821-77-88-71-46-582937-408323 - A. Asset sales (net) (Other investment account): 244-168433600 000000 - B. Foreign direct investment (net): -80-1243-12-2915318346561 - C. Portfolio flows (net): 1173547-1900 000000 - (i) Central government: 12500000 000001 - (ii) SOEs: 0510000 000000 - (iii) Other: -9-1647-1900 00000-1 - D. Public sector debt financing: 201985579717153535478137151 - (i) Central government: 201985579717153535478137151 - (ii) SOEs: 000000 000000 - E. Other inflows (net): 57-140-176-148-114-114-114-43-75-610111 ### Balance excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (levels) - Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+): 5471-61-316-239-332-228-219-34-72-607112 ### Expected change in gross reserves of the CBvS; accumulation (-) (levels) - 3. Expected change in gross reserves of the CBvS; accumulation (-): 25483-416-225-167-39-238-246-8101953 ### Errors and omissions (levels) - 4. Errors and omissions: -289-11424011800000000 ### Financing needs and allocation (levels) - 5. Financing needs -(2-1+3+4)-20-402374234063714654654362588-165 - Allocation by: - (i) Official financing: -20-40342542592583513510-13-22-55 - a. IMF: -20-4034541591582512510-13-22-55 - Purchases: 0055541591582512510000 - O/w: for budget support: 00565310210350500000 - Repurchases: 204021 00 00 0 0132255 - b. IFIs: 0002001001001001000000 - (ii) External arrears (net): 203168 -1-1 000000 - (iii) Financing from external debt restructuring 1/: 1481141141144375610-110 ### Major components of gross external financing requirements (percent of GDP) - 1. Gross external financing requirements: 14.0-4.12.86.84.77.45.14.01.42.33.94.0 - A. Current account deficit: 11.3-9.0-5.9-2.2-1.6-1.5-0.3-1.0-0.6-0.20.10.5 - B. Public sector debt amortization: 3.15.18.78.86.35.75.44.92.12.53.93.5 - (i) Central government: 2.41.65.35.73.22.92.62.31.51.43.43.5 - (ii) CBvS: 0.00.00.00.00.00.00.00.00.00.00.00.0 - (iii) SOEs: 0.63.53.33.03.12.82.82.50.61.10.50.0 - C. Other outflows: -0.3-0.20.00.20.03.10.00.10.00.00.00.0 ### Major components of sources of financing (percent of GDP) - 2. Sources of financing: 15.3-1.70.7-2.2-2.7-2.0-1.3-1.40.60.8-8.06.1 - A. Asset sales (net) (Other investment account): 6.1-5.81.51.00.00.00.00.00.00.00.00.0 - B. Foreign direct investment (net): -0.20.0-4.20.1-0.4-0.80.40.10.40.71.31.1 - C. Portfolio flows (net): 2.91.21.6-0.60.00.00.00.00.00.00.00.0 - (i) Central government: 3.10.00.00.00.00.00.00.00.00.00.00.0 - (ii) SOEs: 0.01.80.00.00.00.00.00.00.00.00.00.0 - (iii) Other: -0.2-0.51.6-0.60.00.00.00.00.00.00.00.0 - D. Public sector debt financing: 5.03.41.92.32.22.01.51.31.21.62.72.8 - (i) Central government: 5.03.41.92.32.22.01.51.31.21.62.72.8 - (ii) SOEs: 0.00.00.00.00.00.00.00.00.00.00.00.0 - E. Other inflows (net): 1.4-0.50.0-5.0-4.6-3.2-3.2-2.9-1.0-1.6-12.02.1 ### Balance excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (percent of GDP) - Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+): 1.42.4-2.0-9.0-7.4-9.4-6.4-5.5-0.8-1.5-11.92.1 ### Expected change in gross reserves of the CBvS; accumulation (percent of GDP) - 3. Expected change in gross reserves of the CBvS; accumulation: 6.42.9 -13.9-6.4-5.2-1.1-6.7-6.2-0.20.20.41.0 ### Errors and omissions (percent of GDP) - 4. Errors and omissions: -7.2-3.98.03.40.00.00.00.00.00.00.00.0 ### Financing needs and allocation (percent of GDP) - 5. Financing needs -(2-1+3+4): -0.5-1.47.912.012.610.513.111.61.01.311.6-3.1 - Allocation by: - (i) Official financing: -0.5-1.41.17.38.07.39.98.80.0-0.3-0.4-1.0 - a. IMF: -0.5-1.41.11.64.94.57.16.30.0-0.3-0.4-1.0 - Purchases: 0.00.01.81.64.94.57.16.30.00.00.00.0 - O/w: for budget support: 0.00.01.91.53.22.91.41.30.00.00.00.0 - Repurchases: 0.51.40.70.00.00.00.00.00.00.30.41.0 - b. IFIs: 0.00.00.05.73.12.82.82.50.00.00.00.0 - (ii) External arrears (net): 6.84.80.00.00.00.00.00.00.00.0 - (iii) Financing from external debt restructuring 1/: 4.63.23.22.91.01.612.0-2.1 *Sources: Fund staff estimates and projections.* *Italicized source attribution: 1surea2023004 - 1. Gross external financing requirements (PDF).* ### 2. New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (co ### 2. New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (co ### Quantitative performance criteria and indicative targets — overview - New natural resource revenue-collateralized debt (continuous ceiling) (U.S. dollars): 0; status across reported rows: Met; repeated entries: 0 / 0 / Met. - New central government guaranteed debt (continuous ceiling): 0; status across reported rows: Met. - Non-accumulation of central government external debt arrears (continuous ceiling) (millions of U.S. dollars): multiple entries showing "0" and one entry showing "4" with status: Not Met. - Gross credit to the central government by the central bank (continuous ceiling): 0; status entries: Met. - Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (millions USD) (continuous ceiling): 0 entries with status: Met. ### Monetary targets and key monetary statistics (selected reported figures) - Net international reserves of the central bank (floor) (millions of U.S. dollar) 2/: - 194 / 169 / 204 — Met - 196 / 150 / 179 — Met - 226 / 313 / 332 — Met - Other reported periodic values include negative and small values (e.g., -57 / -38 / -31 — Met; -55 / -32 / -26 — Met; -54 / TBD / TBD). - Net domestic assets of the central bank (ceiling) 2/: - -1,193 / -845 / -111 — Not Met - -1,063 / -425 / 435 — Not Met - -1,332 / -2,548 / -1,080 — Not Met - Other reported periodic values (2022/2023 sequences) include both Met and Not Met outcomes, and values such as 3,602 / 3,334 / 2,376 — Met; 4,006 / 3,683 / 3,843 — Not Met. - Reserve money (total and components) (levels in local currency): - Reserve money: 24,277 / 25,205 / 24,660 / 26,514 / 25,047 / 27,470 (various period entries). - Reserve money (local currency portion only): 10,718 / 11,507 / 10,871 / 11,632 / 11,024 / 12,263. - Reserve money (constant exchange rates): 17,224 / 18,583 / 17,377 / 18,710 / 17,529 / 19,414. - Gross international reserves (millions of U.S. dollar): 1,190 / 1,045 / 1,192 / 1,031 / 1,260 / 1,194 (selected periodic entries). - Usable international reserves (millions of U.S. dollar) 5/: 864 / 716 / 866 / 707 / 934 / 865 (selected periodic entries). - Program exchange rate: 14.018 (repeated across reported periods). ### Fiscal targets — primary fiscal balance and social spending (selected reported figures) - Primary fiscal balance (cash basis) of central government (floor) 2/: - 1,147 / 1,647 / 1,939 — Met (for one set of periods) - 1,338 / TBD / TBD - 1,721 / 1,721 / 1,912 / 2,103 / 2,294 / 2,294 / 523 / 1,046 / 1,525 / 1,525 / 2,091 / 2,614 / 3,050 / 3,050 / 3,659 / 4,182 / 4,705 (series of projected/monthly PC/IT levels). - Social spending of central government (floor) 2/ (indicative target): - 1,483 / 1,717 — Met (one set) - 1,981 / 1,058 — Not Met (another set) - Additional series values: 2,971 / 2,027 / 3,962 / 3,962 / 1,308 / 1,308 / 2,617 / 2,617 / 4,033 (various months). ### Central government mineral revenue and FX operations (selected reported figures) - Central government mineral revenue in local currency (ceiling) (millions of U.S. dollar) 2/: - Entries include 57 — Not Met; and a sequence: 15 / 15 / 20 / 25 / 30 / 30 / 5 / 10 / 15 / 15 / 20 / 25 / 30 / 30 / 35 / 40 / 45 (periodic ceilings). - Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (millions USD) (continuous ceiling) 6/: - Many periods reported as 0; later month sequence includes 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 1 / 2 / 3. ### Performance outcomes and compliance notes - Multiple PC/IT rows indicate targets were "Met" when reported as 0 for new natural resource revenue-collateralized debt and new guaranteed debt. - Non-accumulation of external debt arrears was marked "Not Met" in at least one observation where the reported figure was 4 (millions of U.S. dollars). - Net domestic assets target showed several "Not Met" outcomes for negative and positive levels reported in different periods. - Several monetary and fiscal indicators are presented as time series of periodic program targets (PC/Adj. PC/Act./Met-Not met and IT/Adj. IT/Act./Met-Not met) with detailed numeric trajectories for 2022–2024 and monthly breakdowns in 2023. ### Debt sustainability and sovereign stress assessment — key analytical findings - The debt restructuring scenario by the authorities suggests public debt and GFNs would be sustainable under that scenario; however: - Public debt would remain high (above 100 percent of GDP) until 2024. - Debt remains highly vulnerable to macro-fiscal shocks, including recapitalization needs of the banking system and the Central Bank of Suriname (CBvS). - Risk assessments: - Medium-term risks: assessed as high. - Long-term risks: assessed as moderate. - Overall risk of sovereign stress: high. - The GFN tool suggests low risk due to declining GFN path and contained bank exposure to the government. - The fanchart tool gives a high risk signal mainly driven by the width of the chart suggesting high historical volatility of macro-fiscal shocks. - FX vulnerability is highlighted due to past fluctuations in real exchange rate and inflation; mitigation noted via the significant share of government revenues received in foreign currency and potential future oil revenues not incorporated in the DSA. *Source: Authorities and IMF staff calculations and projections (excerpts from Table 12 and Annex I).* ### 5. Debt consolidation across sectors: ### 5. Debt consolidation across sectors: ### Key statistics and public debt structure - Public debt: 120.1 percent of GDP as of 2022. - FX debt: 107 percent of GDP as of 2022. - External public debt: 91 percent of GDP as of 2022. - In external debt (2022): - Multilateral debt: 26 percent of GDP (about 3/4 owed to Inter-American Development Bank (IADB)). - Bilateral debt: 19 percent of GDP. - ECA-backed debt: 8 percent of GDP. - China: 16 percent of GDP (largest official creditor). - Paris Club: 2 percent of GDP. - India: 1 percent of GDP. - Private external debt: - Two eurobonds: 24 percent of GDP. - Non-ECA backed securities: 1 percent of GDP. - External arrears: 11 percent of GDP as of end-2022. - Domestic debt (end-2022): 29 percent of GDP, composed of: - Debts to CBvS: 13 percent of GDP. - Debts to commercial banks: 7 percent of GDP. - Debts to non-banking institutions: 8 percent of GDP. - Domestic arrears, including supplier arrears: 8 percent of GDP as of end-2022. - Residual maturity (median): 6. years (as reported). - Fanchart width: 162.52.4 (indicator as presented). - Probability of debt not stabilizing (pct): 10.00.1 (indicator as presented). - Average GFN in baseline: 6.62.3 (indicator as presented). - Bank claims on government (pct bank assets): 7.22.3 (indicator as presented). - Change in claims on govt. in stress (pct bank assets): 6.62.2 (indicator as presented). - GFN financeability index: ...6.8 (indicator as presented). - Medium-term index (MTI): 0.30.4...0.5, High (indicator as presented). ### Baseline scenario projections (percent of GDP unless indicated otherwise) - Public debt path (Actual and projections): - 2022: 120.1107.093.983.777.672.068.765.161.357.754.1 (table row as presented across years 2022–2032). - Change in public debt: 0.4-13.1-13.1-10.2-6.2-5.5-3.3-3.6-3.7-3.7-3.6 (by year). - Contribution of identified flows: 0.9-5.8-2.5-7.0-4.2-3.7-3.4-3.5-3.6-3.6-3.6 (by year). - Primary deficit: -1.1-1.7-3.5-3.5-3.5-3.5-3.5-3.5-3.5-3.5-3.5 (by year). - Noninterest revenues: 27.826.225.424.724.724.724.724.724.724.724.7 (by year). - Noninterest expenditures: 26.724.521.921.221.221.221.221.221.221.221.2 (by year). - Automatic debt dynamics: -1.0-9.4-5.2-2.4-1.3-0.8-0.3-0.4-0.4-0.4-0.5 (by year). - Real interest rate and relative inflation: -10.0-6.8-2.10.31.11.51.81.61.51.31.2 (by year). - Real interest rate: -32.9-38.3-19.2-8.2-4.2-2.40.10.10.10.10.1 (by year). - Relative inflation: 22.931.517.18.55.43.91.71.51.41.21.1 (by year). - Real growth rate: -1.2-2.5-3.1-2.7-2.4-2.3-2.1-2.0-1.9-1.8-1.7 (by year). - Other identified flows: 3.05.36.2-1.10.60.50.40.40.40.40.4 (by year). - Contingent liabilities: 0.00.00.00.00.00.00.00.00.00.00.0 (by year). - Deposit increase: 4.20.00.0-1.90.00.00.00.00.00.00.0 (by year). - CBvS restructuring (tentative agreement): -1.20.00.00.00.00.00.00.00.00.00.0 (by year). - Nominal haircut by restructuring: 0.0-6.30.00.00.00.00.00.00.00.00.0 (by year). - Recap assumption: 0.010.01.20.80.60.50.40.40.40.40.4 (by year). - IMF finance: BOP: 0.01.65.00.00.00.00.00.00.00.00.0 (by year). - Contribution of residual: -0.5-7.3-10.6-3.2-2.0-1.80.1-0.1-0.2-0.10.0 (by year). - Gross financing needs (incl. arrear clearance, base): 13.111.27.34.33.96.36.77.57.78.08.0 (by year). - of which: debt service: 11.69.39.67.67.49.810.211.011.211.511.5 (by year). - Local currency: 1.01.61.41.31.72.12.42.32.32.73.2 (by year). - Foreign currency: 10.77.78.26.35.77.77.88.68.98.88.3 (by year). - Gross financing needs (excl. arrear clearance): 7.66.14.13.96.36.77.57.78.08.0 (by year). - Memo indicators (by year): - Real GDP growth (percent): 1.02.13.03.03.03.03.03.03.03.03.0 - Inflation (GDP deflator; percent): 45.653.428.514.910.78.75.05.05.05.05.0 - Nominal GDP growth (percent): 47.156.732.318.314.012.08.28.28.18.28.2 - Effective interest rate (percent): 5.23.44.84.64.95.25.25.25.15.25.3 ### Staff baseline commentary and projections - Staff commentary: Public debt stands at 1201.1 percent of GDP as of end-2022 (note: staff commentary line reproduces source string). It is projected to decline below 100 percent of GDP by 2024 due to fiscal adjustment efforts and restructuring agreements, and placed on a steady downward trend: - Below 70 percent in 2028. - Below 50 percent by 2034. - GFN to GDP: - Peaks at 11.1 percent in 2023. - Expected to decline to 4.3 percent in 2026. - Projected to gradually increase in the medium to long run to 9 percent of GDP because repayments to restructured external debts and Fund loans commence after grace periods. - Fiscal assumptions anchoring GFN path: sustained primary surpluses of 3.5 percent of GDP from 2024 onwards. - Liquidity recommendations: keep a liquidity buffer, including government's deposits, against increasing long-run GFN. - Recapitalization & restructuring impacts: - Recapitalization assumption (not realized) adds 10 percent of GDP on public debt stock in 2023 (5% for CBvS and 5% for commercial banks). - Nominal haircut by bondholders reduces public debt stock by 6.3% in 2023. - IMF's BOP finance component is added to the debt stock. - GFN tool and restructuring targets: underlying GFN reflects arrear clearances. ### Medium-term risk analysis and indicators - Debt Fanchart Module: points to high risk of debt distress mainly from wide fanchart width driven by large fluctuations in real exchange rate and inflation historically. - Debt non-stabilization risk: relatively contained due to steady debt decline and fiscal adjustment, but terminal debt level in 2028 remains relatively high (76 percent of GDP). - GFN financeability module: suggests low risk of debt distress supported by declining medium-term GFN. - Banking sector risks: current fragile state of domestic banks could add liquidity risks; recapitalization needs for CBvS and commercial banks could increase GFN. - Recapitalization modalities: - Direct equity injections: significant immediate increase in GFN. - Use of securities: reduce immediate GFN and spread financing over longer period. - Upside mitigants: significant share of government revenues received in foreign currency and potential future oil revenues. - Program note on oil revenues: DSA excludes potential oil production impact as available information does not assure economic viability of reserves. - Overall medium-term and overall risk: considered high even under restructuring scenario given macro-fiscal vulnerabilities and potential higher GFN from recapitalization. ### Long-term risks and scenario insights - Long-term projections: GFN-to-GDP and public debt-to-GDP diverge quickly if government follows past 10-year path; historical 10-year average includes crisis shocks (2020–22) and is less informative. - Staff projection: aligns with "Baseline with t+5", suggesting GFN to GDP returns below 10 percent from 2029 to 2033 due to repayments to restructured external debts and IFIs including the Fund. - Importance of policy: sufficient primary balances and fiscal reforms required to achieve declining GFN and public debt paths; maintain sufficient liquidity buffers. - Demographics (Health) and climate scenarios: - Health cost based on demographic changes could add long-term fiscal risk but not material if declining GFN and public debt maintained. - Climate adaptation and mitigation costs could add fiscal costs in early 2030s; Suriname faces occasional flooding and storm events. - New oil discoveries could be considerable upside; long-term analysis refrains from incorporating natural resource module until FID of a new oil development is confirmed. ### Restructuring scenario: objectives and specific assumptions - Program long-term anchors: - Reduce public debt to 60 percent of GDP by 2035. - Intermediate debt target: 120 percent of GDP by 2024 (end of program). - Reduce GFNs to an average of 9 percent and an upper limit of 12 percent over 2023-2035. - Debt 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: - Paris Club agreement reached on June 24, 2022; follow-up bilateral agreements with PC creditors; final bilateral agreement with Italy in June. - 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 PC arrears under bilateral agreement already paid; remaining 40 percent expected to be paid in 2024. - EXIM India: - Agreement on official credit lines by EXIM India in March 2023; 60 percent of arrears already paid; remaining 40 percent expected to be paid in 2024. - Agreement on loans backed by EXIM India was made in May 2023. - In line with Paris Club terms, amortization paused for 7 years (until 2028) without face value reduction. - Treatment of other non-PC official creditors: scenario envisages restructuring on comparable terms to PC creditors; agreements with China assumed concluded in 2023 (negotiations active). - External private creditors (bondholders): - Agreement in principle (AIP) with bondholders on May 3, 2023. - AIP envisages 25 percent nominal haircut of outstanding debt (including arrears) and pause of amortization until 2026. - Interest payments expected to start from 2024 with coupon of 4.95 percent in cash and coupon of 3 percent capitalized until January 2026; after January 2026 coupon rate is 7.95 percent. - AIP includes Value Recovery Instrument (VRI) that capitalizes 120 percent of the nominal haircut. - VRI payment conditional on new revenue stream from a specific oil development project (currently under appraisal). - Allocation to VRI limited to fraction of new oil revenue (30 percent of the royalty revenues) with first USD 100 million secured for the government. - Program baseline conservatively does not incorporate additional oil revenue nor debt services on VRI (no FID). - Under baseline (without VRI), typical creditor methodology yields NPV reductions of: - 19 percent for official creditors and 21 percent for external commercial creditors at a 5 percent discount rate. - Market-based NPV reductions: around 25 percent for official bilateral and 17 percent for external commercial creditors at a 5 percent discount rate, and 52 percent for official bilateral and 40 percent for external commercial creditors at a 10 percent discount rate. - Financial advisors preparing to launch the formal bond exchange. - 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 (as noted). - CBvS restructuring: - MoFP and CBvS reached agreement on legacy debt owed to CBvS. - Legacy debts restructured into a new loan with a grace period of 2 years and a maturity of 27 years. - All short-term advances made to the CG will be repaid to the CBvS in (text truncated in source). ### Policy implications and recommendations (as presented) - Continue fiscal adjustment efforts in the medium to long term to sustain steady public debt decline and meet anchoring targets. - Maintain liquidity buffers, including government deposits, against rising long-term GFN and potential recapitalization needs. - Plan recapitalization carefully to avoid excessive solvency and liquidity risks while ensuring financial health of CBvS and commercial banks. - Consider recapitalization modalities: - Direct equity injections increase immediate GFN sharply. - Use of securities reduces immediate GFN and spreads financing over longer periods. - Pursue restructuring agreements across creditor types to secure amortization pauses and debt-service relief as projected. - Do not incorporate potential oil revenues into baseline DSA until FID confirms economic viability; treat potential oil revenue as upside risk. *Source: 1surea2023004 - 5. Debt consolidation across sectors: (PDF chapter content as provided).* ### 2023. Losses arising from this agreement are expected to be reflected in the CBvS ### 1surea2023004 - 2023. Losses arising from this agreement are expected to be reflected in the CBvS recapitalization plan, which will follow the restructuring agreement. ### Domestic arrears and restructuring - Accumulated domestic debt arrears peaked at SRD 3.3 billion as of November 2022, excluding arrears with the CBvS. - Part of the arrears was cleared at the end of 2022: SRD 1.2 billion. - Arrears stood at SRD 2.4 billion in June 2023. - Authorities have prepared a concrete action plan and commit to: - Completing the ongoing domestic restructuring by the end of 2023. - Clearing all domestic debt arrears except technical ones by end-2023. ### Supplier arrears, gold loan, and timelines - Final audit of legacy supplier arrears as of end-2021 confirmed higher numbers for 2017-2021 than preliminary results, but faster clearance in 2022. - Little change to the end-2022 debt stock compared to the second review despite revisions for 2017-2021. - Authorities commit to clearing at least SRD 1 billion of supplier arrears in 2023 and to clearing all supplier arrears by 2025, while improving capacity through PFM reforms and TA. - A gold loan agreement in arrears is evaluated at SRD 0.4 billion at end-2022 and is planned to be cleared in 2024 under a renewed agreement. ### Domestic arrear repayment schedule (summary of Text Table) - 2023 total arrear repayments: SRD 5,032 (3.7% of GDP) - CBvS: SRD 1,549 (1.1% of GDP) - Debt: SRD 2,483 (1.8% of GDP) - Gold: SRD 0 (0.0% of GDP) - Supplier: SRD 1,000 (0.7% of GDP) - 2024 total arrear repayments: SRD 2,259 (1.3% of GDP) - CBvS: SRD 1,122 (0.6% of GDP) - Debt: SRD 0 (0.0% of GDP) - Gold: SRD 593 (0.3% of GDP) - Supplier: SRD 544 (0.3% of GDP) - Source: IMF staff estimates. ### Financing assumptions and recapitalization - Financing requirements projected to decline over the medium term due to external debt restructuring (face-value reduction and coupon reduction). - Budget finance from multilateral creditors is 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 creditor financing is assumed to resume gradually over the medium and long term. - Baseline assumption: external market access resumes from 2026; potential financing gap in 2025 filled by deposit withdrawal. - Government deposits by end-2022: SRD 9.7 billion (11 percent of GDP). - Domestic financing expected to be limited until 2024 due to ongoing restructuring and gradual recovery in market confidence; domestic financing in 2023 limited to roll-over finance (no net issuance) apart from domestic project finance. - Recapitalization needs of CBvS and commercial banks are conservatively assumed to add 10 percent of GDP to the public debt stock in 2023 (5 percent for CBvS and 5 percent for commercial banks). - Associated financing needs are not incorporated in the DSA because of uncertainty regarding scale and modalities. - Use of securities could reduce immediate GFN needs and spread recapitalization financing over a long horizon. ### Public debt sustainability under restructuring scenario - Public debt is assessed to become sustainable under the restructuring scenario and program implementation: - Public debt falls below 100 percent in 2024. - Below 70 percent in 2028. - Below 50 percent in 2034. - Gross financing needs (GFN) projections: - GFN decline from 11.1 percent in 2023 to 4.3 percent in 2026 under the baseline. - GFN would rise to about 9 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 with GFN-to-GDP declining from 2033 onwards. ### External Debt Sustainability Assessment (DSA) — key projections and risks - External debt projected around 129.3 percent of GDP at end-2023, down from 153.1 percent at end-2022. - Total external debt forecast to decline to 77.5 percent of GDP at end-2028. - Public sector external debt accounts for more than 50 percent of total external debt; decline driven by large fiscal adjustment and public external debt restructuring. - Macro shocks pose significant risks; various shocks generally keep external debt below 150 percent of GDP but the historical scenario indicates external debt could be considerably higher absent fiscal adjustment, restructuring, and macro stability, especially on exchange rate. - Continued internal and external adjustment is critical to ensure external sustainability. ### External DSA table highlights (2018–2028, selected lines) - Baseline: External debt (percent of GDP) - 2018: 88.0 - 2019: 99.7 - 2020: 165.0 - 2021: 144.9 - 2022: 153.1 - 2023: 129.3 - 2024: 112.6 - 2025: 102.0 - 2026: 92.6 - 2027: 83.5 - 2028: 77.5 - Change in external debt (percent of GDP) - 2022: 8.2 - 2023: -23.8 - 2024: -16.7 - 2025: -10.6 - 2026: -9.4 - 2027: -9.1 - 2028: -6.0 - Identified external debt-creating flows (4+8+9) - 2022: -12.7 - 2023: -5.6 - 2024: -4.4 - 2025: -3.3 - 2026: -2.2 - 2027: -0.9 - 2028: -0.4 - Current account deficit, excluding interest payments (percent of GDP) - 2022: -10.7 - 2023: -3.2 - 2024: -4.1 - 2025: -3.8 - 2026: -3.3 - 2027: -3.1 - 2028: -2.4 - Exports (percent of GDP) - 2022: 77.0 - 2023: 85.7 - 2024: 77.6 - 2025: 70.7 - 2026: 67.1 - 2027: 64.8 - 2028: 63.7 - Gross external financing need (in billions of US dollars and percent of GDP) - 2022: 0.4 (14.8 percent of GDP) - 2023: 0.6 (10-Year ???) [table shows "0.6" and "10-Year" labels; numbers preserved from source] - 2024: 0.4 - 2025: 0.3 - 2026: 0.2 - 2027: 0.3 - 2028: 0.3 - Scenario with key variables at their historical averages: external debt levels shown as - 2023: 129.3 - 2024: 143.8 - 2025: 137.8 - 2026: 124.5 - 2027: 107.0 - 2028: 89.6 ### Shocks and bound tests (summary) - Interest rate shock, growth shock, current account shock, combined shock, real depreciation shock, and historical scenarios were analyzed with individual permanent shocks of one-half standard deviation (and 1/4 standard deviation in other tests). - Example box-average projections in figure captions (preserved exactly where shown): - i-rate shock: 96 baseline, 78 baseline (figure labels preserved from source) - Historical: 90 baseline 78 (figure labels preserved from source) - CA shock: 112 baseline 78 - Combined shock: 112 baseline 78 - 30% depreciation: 93 baseline 78 - Growth shock: 109 baseline 78 - Note: Shaded areas represent actual data. Ten-year historical averages used for certain historical scenario projections. *Source: IMF staff estimates and data as presented in the provided IMF chapter/section.* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Background and recent developments - Date and context: Paramaribo, Suriname, September 9, 2023. Second review under the Extended Fund Facility (EFF) completed on June 14, 2023. - Program approval: IMF Executive Board approved a 36-month EFF-supported program on December 22, 2021 with access of 366.8 percent of quota (SDR 472.8 million or USD 673 million). - Shock and response: Underperformance in late 2022 following the war in Ukraine prompted untargeted fuel subsidies and wage increases; corrective measures were subsequently implemented to restore fiscal discipline. - Macro indicators and outlook: - Inflation: 57 percent year-on-year in July 2023 (high but on a downward trend). - Usable international reserves: 4.7 months of imports at end-July 2023. - Reserve money growth: stabilized and remained below the central bank’s targeted path. - Real GDP: expected to remain below its pre-pandemic level until 2029 (post-pandemic recovery lags peers). - Excessive credit growth: has started to taper off. ### Fiscal position and targets - End-June 2023 performance: - Met QPC on the floor on the primary fiscal balance (cash basis) with a margin of SRD 292 million. - Met QPCs on the ceiling on the net domestic asset (NDA) of the central bank and net international reserves (NIR). - Breaches: Indicative target on social assistance spending not met; continuous PC on the non-accumulation of central government external debt arrears breached but necessary payments have since been made. - Fiscal anchors and medium-term targets: - 2023 end-year central government primary surplus target: 1.7 percent of GDP (on track). - 2024 primary balance target: 3.5 percent of GDP (medium-term fiscal anchor consistent with debt sustainability). - Gross financing needs: to remain under 9 percent of GDP over the medium- to long-term. - Key fiscal measures and outcomes: - VAT reform: - Amended VAT Act enacted in September 2023 (prior action). - Converts zero-rated products (except exports and ancillary supplies to exports) to exempt; imposes standard 10 percent VAT rate covering at least 60 percent of household consumption. - VAT registrations increased from 2,747 at end-January 2023 to 3,652 at end-June 2023. - Penalties for failure to register/file began in July 2023. - Wage bill and public employment: - Agreement with unions for cost-of-living bonuses in May 2023; committed to no further wage increases or hiring in 2023. - Mandatory registration of all civil servants completed in February 2023. - National Assembly approved amendment to Personnel Act in June 2023 enabling salary suspension for unregistered workers (approximately 18 percent of the public workforce); payments expected to be discontinued in October 2023. - Voluntary separation packages yield modest take-up (~1.5 percent of public workforce). - Digital personnel data information system to roll out in January 2024 (monitoring civil service size, absenteeism, alignment of qualifications). - Fuel policy: - Fuel subsidies fully eliminated in March 2023. - Specific taxes on fuel reinstated in May 2023 at SRD 3.50 per liter, expected to generate 0.7 percent of GDP in revenue in 2023 (fuel taxes generated 1.3 percent of GDP in revenue in 2020). - Exploring indexing fuel and excise taxes to CPI inflation. - Electricity tariffs and subsidies: - June 2023 tariff adjustment: phased out monthly household discount of SRD 260 over 6 months; increase of 31 percent for industrial and commercial users. - Phasing out discount results in an average monthly electricity bill increase of 28 percent for households. - Quarterly tariff adjustments beginning December 2023 to reach break-even by end-2024 (proposed new structural benchmark for end-October 2023 to publish quarterly tariff updates and subsidy estimates). - Coordination with social assistance increases to mitigate distributional impacts. ### Social protection and mitigation measures - Reallocation of savings: Savings from eliminating energy subsidies being channeled to expand and strengthen social safety nets. - Cash transfers: July 2023 increase in the value of cash transfers to offset inflationary burden on poor households. - Commitment to make up for social assistance shortfalls during the year. - Technical support: IMF, ILO, and IDB assisting with review of social protection expenditures and development of a time-bound strategic plan to improve efficiency and effectiveness. ### Monetary policy, exchange rate, and FX market functioning - Central bank stance: - Commitment to a flexible, market-determined exchange rate. - Refrained from direct FX interventions; limited indirect FX sales to essential goods importers consistent with program commitments. - Tightening monetary instruments: CBvS issuing term deposits and central bank certificates (CBCs); OMO/CBC interest rates increased though transmission to market rates remains weak. - Median deposit and lending rates gradually rising from previously negative real levels. - Reserve money growth stabilized below the targeted path. - Stand ready to tighten monetary conditions further in consultation with Fund staff if necessary. - FX market measures: - Monitoring arrangement established to ensure indirect mineral company FX sales occur at market exchange rates and do not create a multiple currency practice (MCP). - Export surrender requirement tightened to immediate surrender upon repatriation of FX. - Central bank governance and transparency: - Will publish FY 2020-2022 audited IFRS financial statements on the CBvS external website. - Developing a time-bound recapitalization plan for the CBvS. - Reviewing the Foreign Exchange Regulation of 1947 to align with the new Central Bank Act; will submit legislative amendment to the National Assembly in consultation with the IMF. ### Financial sector reforms and bank resolution - Asset quality and recapitalization: - Asset quality reviews (AQR) completed for all commercial banks; banks instructed to adjust provisions accordingly. - CBvS finalized the assessment framework for time-bound recapitalization and restructuring plans (prior action) and will review bank-submitted recapitalization plans for credibility. - Finalized restructuring of legacy debts to the central bank in July 2023. - Legal and institutional reforms: - Bank Resolution Bill and amendments to the Banking and Credit System Supervision Act submitted to the State Council and discussed with DNA on August 14, 2023. - CBvS finalized a roadmap to triage banks and apply conditions on the use of public funds; implementation will finalize bank-by-bank recapitalization and restructuring plans and set governance for state-owned banks. - Strengthening governance reforms in anti-corruption, public procurement, and AML/CFT. ### Debt restructuring and arrears - Bilateral and bondholder negotiations: - Bilateral agreements with all Paris Club creditors completed. - EXIM India: agreement to restructure official credit line reached in March 2023; agreement on the loan backed by EXIM India reached in May 2023. - Bondholders: agreement in-principle reached in May 2023; financial advisors preparing to launch formal debt exchange. - Negotiations ongoing with EXIM China; aim to reach agreement consistent with program parameters by next review. - China has provided consent to proceed with Fund financing consistent with the Fund’s Lending into Official Arrears policy. - Arrears and safeguards: - No further payments have been made to Exim China; safeguards effective to prevent erroneous payments on debts under restructuring. - On track to clear all domestic debt arrears by end-2023. ### Program financing requests and conditionality - Request to IMF: - Completion of the third review of the extended arrangement under the EFF, which would make available an amount equivalent to SDR 39.4 million (30.6 percent of quota or about USD 53 million) upon approval (out of which SDR 25.6 million or about USD 34.2 million would be for budget support). - Completion of the financing assurances review. - Waivers requested for: - Nonobservance of the continuous PC on non-accumulation of central government external debt arrears (based on temporary nature). - Nonobservance of the continuous PC against introduction or modification of MCPs related to the CBvS July 14, 2023 Circular (corrective action taken to remove the MCP). - Request to set quantitative program targets until September 2024 and new structural benchmarks. ### Governance, transparency, and accountability measures - Institutional accountability: - Established the Suriname Economic Oversight Board (SEOB) with private and public sector, unions, academia, and civil society representation to provide independent assessment of program progress. - SEOB began publishing a monthly bulletin in July 2023 on program implementation progress. - Information sharing and IMF cooperation: - Government authorizes IMF to publish this letter, its attachments, and the related staff report. - Government will provide IMF staff with relevant information to complete scheduled program reviews and monitor performance. - Government will observe standard continuous performance criteria against imposing or intensifying exchange restrictions, introducing/modifying MCPs, concluding bilateral payment agreements inconsistent with Article VIII, and imposing/intensifying import restrictions for balance of payments reasons. _Appendix I. Letter of Intent and attachments (Memorandum of Economic and Financial Policies; Technical Memorandum of Understanding), Paramaribo, Suriname, September 9, 2023._ ### 9. We are committed to strengthening fiscal institutions. Reforms are ongoing to improve ### 9. We are committed to strengthening fiscal institutions. Reforms are ongoing to improve ### Fiscal institutions reform strategy - Four priority areas identified with IDB support: - publishing quarterly budget execution reports - consolidating treasury functions - establishing a public investment management system - assessing and managing fiscal risks from state-owned enterprises - Other PFM reform areas: improving public procurement practices and strengthening fiscal planning. ### Strengthening tax administration - Establish a fully functioning large taxpayers’ unit (LTU) despite capacity constraints. - Expand LTU functions to include account maintenance, client relationship management, filing and payment compliance. - Begin converting the Tax Directorate, including Customs, into a modern semi-autonomous revenue authority. - With IDB support, prepare a complete reorganization plan and submit enabling legislation to parliament. ### Improving debt management and recording - Acknowledge accumulation of technical external debt arrears and breach of continuous QPC; commit to addressing the issue. - Identified weaknesses: SDMO capacity, antiquated procedures, coordination failures leading to missed payment invoices. - Actions: - Improve back-office capacity and coordination between SDMO, the MoFP, and the CBvS. - Set up an information system to receive and dispatch information on upcoming payments to external creditors. - Sign a memorandum of understanding (MOU) among SDMO, MoFP, and CBvS defining responsibilities for timely information provision and payment processing, specifying escalation processes and inter-agency monitoring. ### Improving procurement practices - Enact a new procurement law to centralize and mandate publication of all public procurement tenders and contract awards, including: - names of awarded entities and their beneficial owner(s) - names of public officials awarding the contracts - an ex-post validation of delivery of contracted services - (proposed reformulated structural benchmark for end-September 2023) - Publish procurement information on an external government website by end-October 2023. - With CARICOM Secretariat, incorporate a procurement module in the Integrated Financial Management Information System and integrate it with the regional system to increase spending efficiency. ### Improving treasury management - Issue a state decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks (end-December 2023 SB). - Decree will clarify rules on management of commercial bank accounts and frequency/content of financial statements to the Minister of Finance. - Close separate bank accounts and gradually bring them into the Treasury Single Account (TSA). - Aim to expand TSA coverage to include all government accounts held at commercial banks by end-2024. - Expand Treasury functions, beginning with monitoring supplier arrears. ### Cash management and commitment controls - Strengthen cash forecasting via the recently established Treasury Unit. - With IMF capacity development (CD) support, create a cash management unit by end-2023 covering: - liquidity planning - accounts management - working capital management - cashflow management - Improvements aimed to monitor and prevent further accumulation of supplier arrears. ### Managing public investment better - Establish a dedicated public investment management unit. - Allocate resources for planning, pre-investment, and feasibility studies. - Upgrade PIM procedures into a PIM manual with general guidelines for economic appraisal of investment projects and sectoral guidelines. ### Strengthening fiscal planning - Implemented a medium-term macro-fiscal framework with CARTAC assistance to generate medium-term revenue and expenditure projections. - From the 2024 budget cycle, use this framework as the basis for budget planning. ### Strengthening SOE oversight - Three-step approach for the 10 largest SOEs: - collect and publish the latest financial information for the 10 largest SOEs - prepare a report identifying and quantifying fiscal risk generated by these SOEs (end-December 2023 SB) - initiate quarterly financial monitoring of these SOEs ### Improving fiscal transparency and fiscal data quality - Publish end-June budget execution report by end-September (SB). - Already published a quarterly budget execution report based on end-March fiscal outturns and will continue during the program. - With IMF CD support, established a central system to compile and maintain an up-to-date list of public entities. - Sign an MOU between the Directorate of Taxes, MoFP, Finabank, CBvS and SDMO specifying data provision requirements to improve collection and processing of source data. ### Strengthening the social safety net - Principle: ensure fiscal consolidation burden is not borne by the poor and vulnerable; channel fiscal space from eliminating generalized energy subsidies to help the poor and vulnerable. - Actions and measures: - Cash transfers of SRD 1,800 in June to over 40,000 households to compensate for higher fuel and energy costs. - Increased nominal levels of traditional social protection benefits in July. - Address underspending on social protection observed in first half of 2023: end-June IT was missed by SRD 923 million. - Commit to expanding coverage of social assistance and calibrating cash transfers; expanded social beneficiary program in July to include recipients of the old age fund. - Remain committed to expanding social protection spending to 3 percent of GDP in 2023. - Indexation and eligibility adjustments: - At end-October, transparently adjust nominal benefits for each social protection program to compensate for changes in the aggregate price level. - Adjust eligibility thresholds on a quarterly basis to prevent households falling out of the safety net due to high inflation. - Adjust nominal value of the social beneficiary program when electricity tariffs are adjusted quarterly. - Digitalization and administrative improvements: - Shift beneficiaries to digital payments using a government-provided debit card system; purchased 40,000 cards with IDB help. - Initial registrations reached over 70,000 new households in the database. - IDB support to establish a monitoring and evaluation unit within the Ministry of Social Affairs and Housing in 2024. - Strategic review: - Missed end-July SB on reviewing social protection expenditure and publishing a time-bound strategic plan. - ILO completed a social benefit review with recommendations; working with ILO and IDB to develop a strategic plan aligned with the Multi-Annual Development Plan 2022-26. ### Restructuring public debt and restoring sustainability - Debt targets and financing: - Committed to bringing down public debt 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 is fully financed from 2023 to 2024. - Restructuring approach: - Followed best practices including inter-creditor equity and comparability of treatment of official bilateral creditors. - Agreement in principle with Paris Club creditors in June 2022; bilateral agreements signed with all Paris Club creditors. - May 2023: agreement-in-principle with the Bondholder’s Committee; advisors preparing to launch actual debt exchange. - Agreement includes a 25 percent nominal haircut on fixed income instrument and a value recovery mechanism. - Fixed income instrument reduces coupon rate from 7.95 percent to 4.95 percent until January 2026 (with the gap being capitalized). - Value recovery mechanism contingent on new oil revenue from Block 58 and capitalizes 120 percent of the nominal haircut (USD 275.6 million). - Official bilateral creditor negotiations: - Presented restructuring offers to China and India in July 2022. - EXIM India signed an agreement on official bilateral loan in March 2023, in line with July 2022 offer. - Agreement on ECA backed loans with India reached in May 2023 consistent with program parameters. - Engaged China EXIM Bank in good faith; offer presented but not accepted; asked China EXIM for a counterproposal acceptable and consistent with comparability of treatment and IMF program parameters. - China provided consent to proceed with Fund financing notwithstanding arrears to China (consistent with Fund’s Lending into Official Arrears policy). - Miscellaneous debt matters: - Corrective measures after erroneous payment to EXIM China by Telesur in January 2023 have prevented further payments; past payments will be reflected in eventual restructuring to ensure comparability. - Domestic debt restructuring: - Prepared a concrete time-bound action plan for restructuring domestic debts and commit to completing ongoing domestic restructuring by the end of 2023. - Cleared about SRD 0.9 billion of domestic debt arrears; plan to clear all domestic arrears except technical arrears by the end of 2023. - Supplier arrears: - Cleared SRD 0.7 billion of supplier arrears from January to June 2023. - Commit to bringing down stock of supplier arrears to SRD 1 billion by end 2023. - Determined to clear entire stock of supplier arrears by the end of 2025. - Implementing measures to monitor and prevent accumulation of supplier arrears (¶9). - Negotiation on legacy debts with CBvS concluded in July; part of arrears will be settled this year and the rest restructured. - Government will not provide guarantees to debt contracted by other parties during the program, nor contract new debt collateralized by natural resource revenues. - CBvS has discontinued issuance of new FX-linked or FX-denominated securities to avoid influencing the domestic FX market or complicating reserve money targeting. ### Reducing inflation, monetary operations, and FX policy - Monetary tightening and liquidity management: - April increase in local currency reserve requirement by 5 percent (from 39 to 44 percent). - Private sector credit growth cap: contain increase in stock of nominal credit to 20 percent over a 12-month period through end-March 2024 (CBvS guidance to commercial banks). - Central bank open market operations (OMOs), more regular wholesale auctions, direct issuances of Central Bank Certificates (CBCs) supporting liquidity management. - CBvS met its SRD reserve money target at end-June 2023 and aims to maintain SRD reserve money growth below the target path; net domestic assets (NDA) remain below the ceiling under the EFF program. - Transmission of increased OMO interest rates to market rates remains weak but several banks have recently increased term deposit and lending rates. - CBvS stands ready to implement further tightening measures if needed to meet monetary targets. - Standing lending and intraday facilities: - Facilities available to help banks cover short-term liquidity gaps; recurrent or sizeable use subject to supervisory investigation and remedial action. - Facility priced at weighted average price of OMOs plus a modest spread; CBvS will sterilize liquidity from facility use through OMOs. - Revised circular on ELA framework issued to provide emergency liquidity to banks. - FX policy and indirect FX sales: - Commit to a flexible, market-determined exchange rate and have refrained from direct FX interventions. - To mitigate FX shortages and avoid supply disruptions, government conducts limited indirect FX sales to essential goods importers by allowing mineral companies to pay some government revenue obligations in SRD from corresponding FX sales, in line with program commitments. - Total SRD mineral revenue for July 2023 exceeded the program indicative target of US$5 million due to a higher than anticipated SRD share, while indirect sale volumes remained much below target. - Future indirect sales will be further limited to remain below the end-September cumulative ceiling of US$15 million. - MoFP will strengthen monitoring of indirect sales to prevent multiple currency practices and will phase out indirect FX sales once FX market conditions ease. - MoFP will continue to transfer all other government net FX receipts (including from IFI budget support) at the prevailing market exchange rate to the CBvS only, except for transfers required to meet the government’s domestic FX debt service obligations. *Source: IMF country document (extracted content).* ### 18. We continue our work to improve functioning of the foreign exchange market. After ### 1surea2023004 - 18. We continue our work to improve functioning of the foreign exchange market. After ### Foreign exchange market functioning - Development of the electronic inter-bank/cambio FX trading platform (end-September 2023 SB) is nearing completion after a series of procurement and technical challenge delays. - The technical testing phase for the platform has been completed and the CBvS has been conducting market participant staff training in September. - The platform will launch by end-September, with a view to expand participation progressively as experience and confidence in the platform grows (the platform has built-in optionality to also incorporate gold-producers and other non-bank/cambio participants). - A surrender requirement for exporters to offer 35 percent of export proceeds for sale to the market remains in force to support timely FX availability. - CBvS Circular 2023-1 of July 14, 2023, inadvertently gave rise to an MCP by imposing a requirement on banks to purchase repatriated export proceeds subject to the surrender requirement using the weighted average exchange rates calculated and published by the CBvS. - Upon confirmation of the MCP finding, new guidance was issued on September 8 eliminating the MCP. - Commitment to consult with the Fund before issuing any future regulatory guidance on the functioning of the FX market and to refrain from any indirect or administrative interventions that could impede efficient functioning of the FX market or be inconsistent with the program or Suriname’s obligations under Article VIII, Sections 2 and 3 of the IMF’s Article of Agreement. ### Reducing banking sector risks - Reported combined capital adequacy ratio for the system: 17.7 percent as of July 2023; some banks remain under-capitalized. - Nonperforming loans show an increasing trend. - AQR results indicate a requirement for a substantial level of additional provisioning, mainly for government-related debt and subsequent recapitalization needs. - Banking system liquidity is largely due to high reserve requirements; liquid assets comprise 52.9 percent of total assets. - Liquidity is unevenly distributed across banks and skewed towards larger systemic banks. - Ongoing monetary tightening may increase the vulnerability of some banks to funding shocks. - CBvS committed to prudently monitoring, supervising the banking system and taking appropriate measures, including prompt corrective actions, to address problem banks. - AQR roadmap (finalized) for financial sector recapitalization, restructuring and governance reform: - Roadmap triages banks and applies conditions on the use of public funds. - Assessment framework for time-bound recapitalization and restructuring plans of banks finalized (prior action, completed). - Banks instructed to incorporate AQR results considering loan portfolio developments as of July 2023 to calculate capital shortfall. - Banks required to submit recapitalization and restructuring plans to the CBvS by end-August; CBvS to critically review these plans to verify credibility by the end of October 2023 (structural benchmark). - Plans to include time-bound actions and implementation milestones to address breaches of prudential requirements and, where appropriate, restructuring to address root causes. - MoFP to agree with CBvS on a new governance framework for government-owned banks to ensure fully commercial operation (structural benchmark, end-December 2023). - Strengthening supervisory regime and resolution framework: - Amendments to the Banking and Credit System Supervision Act and the draft Bank Resolution Bill submitted to the State Council in February 2023; drafts discussed with State Council in April 2023. - Both drafts sent to the National Assembly and a date in August 2023 set to discuss with the committee of rapporteurs; adoption by the National Assembly no later than end of 2023. - Draft Bank Resolution Bill to strengthen CBvS’ powers and tools for early intervention, recovery, and resolution. - Amendments to the Banking and Credit System Supervision Act to enhance risk-based supervision (business strategies, governance, risk management including provisioning policies and AML/CFT compliance, capital planning, budget forecasting, valuation of collateral, profit and loss projections). - Focus on determining and preventing concentration risk within the financial sector. - Other financial sector reforms: - Commitment to improve supervision of insurance and pension sector, capital market and electronic payment systems; establish credit reporting, deposit insurance, and improve electronic transactions. - CBvS drafting acts and regulations in these areas. - Revised AML/CFT regulation to be issued in the third quarter of 2023. - Plan to coordinate and integrate reform initiatives supported by technical assistance by the IMF and other parties due to limited resources. ### Improving monetary governance - CBvS finalizing the FY 2020 audit of its financial statements and continues to conduct special audits of program monetary data. - Progress made clearing backlog of financial statements’ audits; FY 2015-2019 financial statements published on external website. - Financial statements starting with FY 2020 will be prepared in line with International Financial Reporting Standards (IFRS). - FY 2020 statements to be published, albeit with a delay, by end-August. - FY 2021 statement to be published (end-December 2023 SB). - To normalize auditing cycle, publish FY 2022 audited IFRS financial statements (end-December 2023 SB, proposed to be reset to end-March 2024). - Audits of program monetary data conducted for each test date since program start have not raised material issues; these audits will continue for future test dates. - Continue to co-source specific audits while building internal audit capacity. - Requested IMF technical assistance to strengthen governance and oversight of foreign reserves management by CBvS. - CBvS Act enacted, strengthening mandate, autonomy and decision-making structure; prohibits monetary financing of the government and improves governance by: - Clarifying and strengthening the mandate of the CBvS; - Bringing the CBvS’ institutional, financial, and personal autonomy into line with international best practice; - Strengthening governance by providing for collegial management of the CBvS and improving internal oversight; - Increasing transparency, accountability, and oversight; - Defining clear requirements on accounting, profit distribution, reserves, and eventual recapitalization of the CBvS. - Implementation steps taken: establishment of the Audit Committee and Risk and Compliance Committee in accordance with approved charters; approved the Investment Policy; developing a regulation for the Supervisory Board and reviewing the Governance Handbook. - Foreign Exchange Regulation of 1947 review and alignment with new Central Bank Act: - Two-pronged strategy: (1) identify elements not aligned with Central Bank Act (e.g., determination of exchange rate policy, setting exchange rates for FX transactions and use of different rates) and submit a legislative amendment to the National Assembly by December 2023 (structural benchmark); (2) undertake a full review of the Foreign Exchange Regulation of 1947 in consultation with IMF staff and all stakeholders, to be finalized by end of May 2024. - In anticipation of the amendments, work with the Foreign Exchange Commission to ensure it refrains from using powers covered by the amendments. - Recapitalization plan for CBvS: - MoFP agreed with CBvS on consolidating debt, clearance of arrears and repayment schedule. - Finalize recapitalization plan (delayed due to need to finalize audits), covering debt restructuring agreement, latest audited CBvS financial statements and Central Bank Act recapitalization needs (structural benchmark, end-December 2023, proposed to be reset to end-March 2024). - Losses from the agreement to restructure government debt to CBvS will be incorporated into the CBvS’ recapitalization plan. - Plan to include clear target level of capital, a trigger point for recapitalization, assume recapitalization through marketable instruments and contain a binding time frame to complete recapitalization in line with the new CBvS Act. ### Tackling corruption, improving governance, and enhancing the AML/CFT framework - Capacity constraints have delayed implementation of key governance reforms but progress made: - Ratified the United Nations Convention Against Corruption (UNCAC); Anti-Corruption Commission installed on May 5, 2023, for a term of 5 years. - Anti-Corruption Commission’s primary tasks include evaluating the Anti-Corruption Act in practice and implementing necessary changes within the first year (end-September 2023 SB, proposed to be reset to end-December 2023). - Revised Anti-Corruption legislation aims to align legal framework with UNCAC and broaden framework for reporting income and assets; broaden scope for routine verification and sanctioning of high-ranking and high-risk public officials; wages and salaries of high-ranking and high-risk public officials already made public through state decrees. - Ratified CARICOM’s Protocol on Public Procurement in July 2022. - With IDB support, enact a new procurement law (end-September 2023 SB) mandating publication of beneficial ownership information of awarded procurement contracts. - Enacted a new AML/CFT law in November 2022 following November 2022 CFATF assessment to address key technical compliance deficiencies placing Suriname on enhanced follow up. - Commitments to work with donors and providers (IMF, UNODC, World Bank) to strengthen anti-corruption and AML/CFT framework. - To fully comply with CFATF requirements, will: - (i) implement AML/CFT supervision for all financial institutions (credit union, insurance, and pension fund sectors); - (ii) develop and implement risk-based supervisory framework for Designated Non-Financial Businesses and Professions (DNFBPs); - (iii) make available adequate human, financial, and technological resources to the Financial Intelligence Unit (FIU); - (iv) amend the International Sanctions Framework to update legal framework for implementation of UN Security Council Resolutions Against Terrorism and Proliferation Financing. - Initiate process for second National Risk Assessment (2020-2024); Kroll AML Division contracted to advise and assist. - Ministry of Economic Affairs started sectoral assessment regarding Legal Persons including Ultimate Beneficial Ownership (UBOs) and Non-Profit Organizations (NPOs). - AML Steering Council (ASC) approved AML Strategic Plan 2022-2025 (November 2022). - ASC approved list of High Prioritized Actions for 2023 – Q2 2024 (March 2023) being rigorously implemented. - Priority to complete second NRA by mid-2024. - New draft legislation being presented to Parliament by the Ministry of Finance and CBvS to strengthen supervision regime for financial sector; Ministry of Justice and Police presented draft legislation to strengthen supervision for gaming sector. - Law of November 2022 “Prevention and Combating money laundering and Terrorist Financing” already led to a positive effect on MER ratings. - Sectoral Risk Analysis (SRA) of the banking sector begun in April 2023 with OAS technical assistance; SRA report expected December 2023; findings to be reported to CFATF in 2024. - Additional projects: new AML/CFT regulation under discussion and to be issued shortly; second NRA underway (KROLL); legislation (in line with FATF requirements) pending with DNA with technical assistance from IMF and UNODC/WB. ### Extractive sector governance and transparency - Suriname joined the Extractive Industry Transparency Initiative (EITI) in 2017 and published reports for fiscal years 2016 and 2017; reports for fiscal years 2018 - 2020 were published in January 2023. - Government intends to address EITI recommendations including: - (i) reforming the mining law to reduce room for discretion in investor incentives and strengthen the framework for mining titles; - (ii) legally compel companies in the extractive industry to disclose their beneficial owners. - Work is underway on these measures. ### Statistics and data quality - Commitment to improving quality and dissemination of economic data, supported by IMF technical assistance. - Improvements made to quality and timeliness of monetary, financial, and balance of payments statistics. - Timeliness issues remain (long lag of publication of annual GDP and lack of quarterly GDP statistics). - Need to improve data quality for Consumer Price Index, fiscal sector statistics and public debt data ensuring consistency with other sources (monetary accounts and fiscal flows in the balance of payments). - Government committed to accurately reporting all domestic arrears on a monthly basis. - Work towards broadening institutional coverage of fiscal statistics to the public sector to better assess fiscal risks. - Will seek technical assistance from international partners to support improvements. ### Program monitoring - Economic plan to be monitored through prior actions, reviews, quantitative and continuous performance criteria, indicative targets, and structural benchmarks. - Quantitative performance criteria and standard non-quantitative continuous targets presented in Table 1; structural benchmarks in Table 2. - Program quantitative targets defined in the attached Technical Memorandum of Understanding. - Government requests waivers for non-observance of continuous PCs on non-accumulation of central government external debt arrears and against introduction or modification of multiple currency practices based on temporary nature of non-observance and corrective actions already taken. - Example quantitative figures from Table 1 excerpt (In millions of Suriname dollars, unless otherwise indicated): - Primary fiscal balance (cash basis) of central government (floor) entries shown: - -2,321 - -719 - 334 - 3,007 Met - 110 - 159 - 135 Not Met - 221 - -110 - 14 Met - 331 - -3 - 161 Met *Source: Excerpt from IMF document 1surea2023004* ### 2. New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (co ### 2. New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (continuous ceiling) (U.S. dollars) ### Overview - Target definition: New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (continuous ceiling) measured in U.S. dollars. - Repeated reported values across reporting dates: "0" with status "Met" in multiple periods. ### Quantitative performance (selected reporting rows) - Instances reported: - "0" — Met - "0" — Met - "0" — Met - "0" — Met ### Related fiscal/debt and continuity constraints (from the same table) - New central government guaranteed debt (continuous ceiling): - "0" — Met (repeated across periods) - Non-accumulation of central government external debt arrears (continuous ceiling): - "0" — Met (repeated across periods) ### Monetary targets and related indicators (selected items reported alongside the ceiling) - Gross credit to the central government by the central bank (continuous ceiling) 3/: - "10,229" - "0" — Met (repeated entries) - Net international reserves of the central bank (floor) (millions of U.S. dollar) 2/4/: - Reported sequence examples with Act and Met/Not Met statuses: - "-154", "348", "310", "319" — Met - "11", "-2", "5" — Met - "103", "2", "16" — Met - "114", "30", "1", "9" — Not Met - Net domestic assets of the central bank (ceiling) 2/4/: - "8,777" - "-343", "161", "203" — Not Met - "-6", "180", "-6" — Met - "-1,134", "272", "113" — Met - "-1,137", "39", "-118" — Met - Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (millions USD) (continuous ceiling): - "0" — Met (repeated entries) ### Indicative targets and memorandum items (selected exact figures) - Social spending of central government (floor) 2/: - "604", "1,070", "922" — Not Met (example row) - "371", "269" — Not Met (example row) - Additional entries across table: "742", "832" — Met; "1,112", "1,315" — Met; "1,483", "1,717" — Met; "1,981", "1,058" — Not Met - Reserve money (various presentations): - Reserve money: "12,817", "18,294", "18,967", "18,629", "18,950", "19,061", "19,180", "19,597", "18,881" - Reserve money (local currency portion only): "7,342", "9,188", "9,271", "9,341", "9,338", "9,494", "9,570", "9,647", "9,289" - Reserve money (constant exchange rates): "12,817", "14,838", "15,933", "14,991", "15,893", "15,144", "16,209", "15,297", "15,847" - NFA (constant exchange rates): - "4,039", "6,403", "6,953", "6,563", "6,920", "7,844", "7,117", "8,000", "7,020" - Gross international reserves (millions of U.S. dollar): - "585", "968", "992", "979", "986", "1,071", "848", "1,139", "899" - Usable international reserves (millions of U.S. dollar) 5/: - "129", "501", "512", "513", "505", "604", "518", "673", "566" - Program exchange rate: - "14.018" (repeated across reporting rows) ### Additional reported sequences (selected later-period excerpts) - Later-period quantitative rows continue to show the natural resource revenue-collateralized debt ceiling as "0" with "Met" status across multiple months and quarters. - Sample later monetary and memorandum item figures (selected): - Net international reserves examples: "118", "49", "13" — Not Met; "122", "104", "92" — Not Met; "156", "150", "156" — Met - Net domestic assets examples: "-1,040", "-67", "134" — Not Met; "-941", "-691", "-246" — Not Met; "-1,263", "-1,188", "-591" — Not Met - Gross international reserves: "1,000", "886", "1,004", "951", "1,094", "983" - Usable international reserves: "674", "558", "678", "620", "768", "656" - Program exchange rate: "14.018" *Source: Table 1. Suriname: Quantitative Performance Criteria and Indicative Targets Under the EFF (extracted entries as provided).* ### 1. Social spending of central government (floor) 2/ ### 1. Social spending of central government (floor) 2/ ### Memorandum items: reserve money, NFA, and reserves (selected reported figures) - Reserve money: - 37,086 - 29,440 - 30,049 - 30,670 - 39,316 - 31,374 - 31,964 - 32,513 - 41,415 - 33,018 - 33,520 - 33,989 - 43,306 - 34,434 - 34,973 - 35,481 - 35,969 - Reserve money (local currency portion only): - 15,320 - 15,320 - 15,573 - 15,831 - 16,162 - 16,162 - 16,570 - 16,935 - 17,255 - 17,255 - 17,571 - 17,853 - 18,109 - 18,10 - 9 - 18,457 - 18,774 - 19,070 - Reserve money (constant exchange rates): - 22,658 - 20,589 - 20,857 - 21,130 - 23,631 - 21,477 - 21,908 - 22,296 - 24,880 - 22,637 - 22,975 - 23,279 - 25,891 - 23,557 - 23,9 - 28 - 24,267 - 24,584 - NFA (constant exchange rates): - 9,893 - 8,797 - 8,742 - 8,507 - 11,341 - 9,455 - 9,397 - 9,167 - 10,890 - 9,050 - 8,989 - 9,462 - 11,171 - 9,347 - 9,285 - 9,029 - 8,914 - Gross international reserves (millions of U.S. dollar): - 1,204 - 1,132 - 1,128 - 1,112 - 1,361 - 1,234 - 1,230 - 1,213 - 1,395 - 1,271 - 1,267 - 1,301 - 1,480 - 1,359 - 1,3 - 54 - 1,337 - 1,395 - Usable international reserves (millions of U.S. dollar) 5/: - 886 - 893 - 889 - 873 - 1,043 - 995 - 991 - 975 - 1,077 - 1,033 - 1,028 - 1,062 - 1,163 - 1,120 - 1,115 - 1,098 - 1,1 - 56 - Program exchange rate: - 14.018 (repeated for each reported period) - Additional figures appearing at top of the source: - 2,971 - 2,027 - 3,962 - 3,962 - 1,308 - 1,308 - 2,617 - 2,617 - 4,033 - Footnotes and clarifications in the memorandum items: - 5/ Official reserve assets excluding the PBOC swap and ring-fenced reserves. - 3/ The 2020 figure is a stock as of end-June 2021. - 4/ The 2020 figure is a stock as of end-December 2020. - 2/ Cumulative flows from begining of the year. ### Prior actions and structural benchmarks under the EFF: objectives, target dates, and status highlights - Prior Actions (examples and objectives): - Enact the amended VAT Act to convert all zero-rated products (except exports and ancillary supplies to exports) to exempt ones and impose the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption — Prior Action — Objective: Ensure fiscal adjustment in line with program parameters. - CBvS to finalize the assessment framework for banks’ time-bound recapitalization and restructuring plans and share the framework with the IMF team — Prior Action — Objective: Improve strength of the financial sector. - Exchange rate / monetary / safeguards structural benchmarks (selected): - Establish competitive FX auctions for the CBvS to undertake buying/selling of FX during periods of disorderly market conditions (defined as when the intraday change in the exchange rate versus the U.S. dollar is more than 2 percent) under the agreed rule. — December 2021 — 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. — June 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. — June 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. — September 2022 — Status: Not met — Objective: Protect the CBvS’s financial autonomy. - Publish on the CBvS's external website the FY 2016 - 2018 audited financial statements. — December 2021 — Status: Not met; implemented with a delay in February 2022 — Objective: Strengthen accountability and transparency, and reduce risk of misreporting. - National Assembly to pass amendments to strengthen CBvS mandate, autonomy and limits on monetary financing. — January 2022 — Status: Not met; implemented with a delay in April 2023 — Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency. - Subsequent related SBs and proposed resets (e.g., publication of FY 2020-2021 audited IFRS financial statements, publication of FY 2022 audited IFRS financial statements, and time-bound recapitalization plan) — Target dates December 2023 or proposed reset to March, 2024 — Objectives: Strengthen accountability and transparency; Protect the CBvS’s financial autonomy. - Financial sector / crisis preparedness structural benchmarks (selected): - Undertake full asset quality review for the two largest (by assets size) banks (drawing on the expertise of an internationally reputable specialist firm). — September 2022 — Status: Met — Objective: Diagnose the largest banks and potential recapitalization needs. - Submit to the State Council the Credit Institutions Resolution Act to increase CBvS’ powers and tools for early intervention, recovery, and resolution. — January 2022 — Status: Not met; 'Implemented with delay in February 2023 — Objective: Strengthen the CBvS's role in crisis management. - Submit the revised Banking and Credit Supervision Act to the State Council. — January 2022 — Status: Not met; 'Implemented with delay in February 2023 — Objective: Solidify oversight over the financial sector. - Operationalize the Financial Stability Committee and a Bank Resolution Unit within the CBvS — January–February 2022 — Statuses: Not met; implemented with delays in April 2022 — Objective: Improve coordination and strengthen crisis management. - Undertake full asset quality review for the remaining banks — December 2022 — Status: Not met; 'Implemented with a delay in May 2023 — Objective: Diagnose financial sector and potential recapitalization needs. - CBvS and MoF agree on a governance framework for state-owned banks — Target date: 20December 2023 — Objective: Improve governance of state-owned banks. - CBvS to instruct banks to incorporate the AQR results and review recapitalization plans — Target date: 20October 2023 — Objective: Improve strength of the financial sector. - Fiscal structural benchmarks (selected): - Publish a time-bound plan to implement recommendations to streamline treasury functions through the Treasury Single Account (TSA). — January 2022 — Status: Met — Objective: Improve governance and increase transparency. - Develop terms of reference for hiring specialists to audit outstanding supplier arrears. — January 2022 — Status: Met — Objective: Improve governance and increase transparency; improve fiscal data reporting. - Publish the financial assessment of EBS including legacy liabilities. — May 2022 — Status: Met — Objective: Achieve full cost recovery in the electricity sector. - Commence an audit on outstanding supplier arrears. — April 2022 — Status: Met: audit completed in May 2023 — Objective: Improve governance and increase transparency; improve fiscal data reporting. - Review social protection public expenditure and publish a time-bound strategic plan to improve efficiency and effectiveness of social benefits. — September 2022 — Status: Not Met — Objective: Strengthen social spending. - Publish audited financial reports for FY2017-FY2021 of the 10 largest state-owned enterprises and quantify principal fiscal risks. — December 2022 — Status: Not Met — Objective: Contain fiscal risks. - Passage of laws needed to implement the VAT by the National Assembly. — 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 to raise additional revenue of 0.4 percent of GDP. — March 2022 — Status: Not Met; Implemented in February 2023 budget — Objective: Ensure fiscal adjustment in line with program parameters. - Pass laws and issue relevant decrees to expand the legal mandate of the debt management office (SDMO). — June 2022 — Status: Not Met; implemented with delay in March 2023 — Objective: Improve debt data reporting. - Create a large taxpayer unit to increase taxpayer compliance. — June 2022 — Status: Not Met; implemented with a delay in July 2022 — Objective: Improve tax administration. - Additional fiscal SBs with proposed resets: e.g., review social protection public expenditure proposed reset to December, 2023; publication of audited SOE reports targeted for December 2023. - Governance, procurement, and AML/CFT benchmarks (selected): - Ratify the United Nations Convention Against Corruption (UNCAC). — January 2022 — Status: Met — Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Issue an Implementation Act to amend Anti-Corruption legal framework to ensure criminalization of all corruption acts and strengthen income/asset declaration provisions. — June 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. — 27March 2022 — Status: Not Met; implemented with a delay in May 2023 — Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Enact the new procurement law and mandate publication of procurement contracts, beneficial owners, awarding officials, and ex-post validation of delivery — Target dates through 27September 2023 — Statuses: Not Met; reformulated into new SBs — Objective: Strengthen procurement efficiency. - Amend AML/CFT legislation and other laws to align with FATF international AML/CFT standards. — 27August 2022 — Status: Not Met; implemented with a delay in November 2022 — Objective: Mitigate adverse effects of criminal economic activity and promote integrity in financial markets. ### Attachment II: Technical Memorandum of Understanding — program accounting and definitions (selected points) - Program accounting exchange rates and valuation rules: - U.S. dollar denominated components of the CBvS balance sheet valued at the official exchange rate of 14.0180 (Surinamese dollar to the U.S. dollar) 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 - Special Drawing Right (SDR) = 1.4403 U.S. dollars - Official gold holdings valued at 1,892.0 U.S. dollars per fine ounce. - Central government (CG) definition for program purposes: - CG consists of the set of institutions and government units currently 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. - State-Owned Enterprises (SOE) definition: - SOE consists of corporations that i) the CG is a shareholder or ii) are controlled by the CG directly or indirectly through other government-controlled entities; control can be established through legislation or equity participation. - Definition of debt (program purposes): - Debt is understood as a current liability created under a contractual arrangement requiring future payments in the form of assets or services. Principal forms include: - i. loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements); - ii. suppliers’ credits (deferral of payments after delivery of goods or services); - iii. leases (debt = PV at lease inception of all lease payments expected during agreement period excluding payments for operation, repair, or maintenance). *Source: Authorities and IMF staff calculations and projections as presented in the provided document.* ### 6. Under the definition of debt set out in previous paragraph, arrears, penalties, and judicially ### 6. Under the definition of debt set out in previous paragraph, arrears, penalties, and judicially ### Debt definition and contracting - Arrears, penalties, and judicially awarded damages arising from 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 contracting of debt. - The fiscal year is the calendar year, starting on January 1 and ending on December 31. ### A. Primary Fiscal Balance (Cash Basis) of Central Government (Floor) - Definition: The primary fiscal balance (cash basis) of the CG is calculated as the cumulative CG interest payments minus total net borrowing requirements from the beginning of the year. - Net borrowing requirements (NBR) are measured at official (current) exchange rates and 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 are defined on a cash basis as interest paid on CG domestic and external debt obligations. - Mineral revenue is defined as the government’s tax and non-tax proceeds from state-oil company Staatsolie Suriname and from gold companies. This 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 in mineral revenue. - The 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. - Reporting: Fiscal data will be provided to the Fund with a lag of no more than six weeks after the end of the month. ### Adjusters to the primary fiscal balance floor - The floor on the cumulative primary cash balance of the CG will be adjusted: 1. downward (upward) to the full extent that cumulative project loans are more (less) than project loans given in Table 2. 2. upward to the extent of any rise in mineral revenue above the cumulative baseline projections given in Table 1. - Table 1. Suriname: Total Mineral Revenues of CG — Cumulative flows from the beginning of the fiscal year (In SRD millions) - End-June 2023 8,396 - End-July 2023 9,796 - End-August 2023 11,195 - End-September 2023 12,059 - End-October 2023 13,399 - End-November 2023 14,739 - End-December 2023 16,079 - End-January 2024 1,537 - End-February 2024 3,073 - End-March 2024 4,610 - End-April 2024 6,147 - End-May 2024 7,683 - End-June 2024 9,220 - End-July 2024 10,756 - End-August 2024 12,293 - End-September 2024 13,830 - Table 2. Suriname: Budget and Project Financing in FX (Baseline Projection) — Cumulative flows from the beginning of the fiscal year (In USD millions) - External loans from IFIs for budget financing 1/: - End-June 2023 0 - End-July 2023 0 - End-August 2023 0 - End-September 2023 0 - End-October 2023 0 - End-November 2023 0 - End-December 2023 100 - End-January 2024 0 - End-February 2024 0 - End-March 2024 0 - End-April 2024 0 - End-May 2024 50 - End-June 2024 50 - End-July 2024 50 - End-August 2024 50 - End-September 2024 50 - 1/ Excluding IMF disbursements. - External debt from bilateral and private creditors for budget financing 2/: - All listed dates End-June 2023 through End-September 2024: 0 - 2/ Including international capital markets. - External loans for project financing: - End-June 2023 36 - End-July 2023 42 - End-August 2023 48 - End-September 2023 54 - End-October 2023 59 - End-November 2023 65 - End-December 2023 71 - End-January 2024 4 - End-February 2024 9 - End-March 2024 13 - End-April 2024 18 - End-May 2024 22 - End-June 2024 27 - End-July 2024 31 - End-August 2024 35 - End-September 2024 40 ### B. 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. - Use of a collection account where no charge or lien is created is excluded. - External debt contracted due to external debt restructuring, to be agreed between the authorities and its creditors, is excluded. - Ceiling also applies to prefinancing arrangements (where debt is contracted against future sales of natural resources). - The official exchange rate will apply to all non-SRD denominated debt. - Reporting: Data will be provided to the IMF on a continuous basis, including any new debt contracts entered into by the CG and/or SOEs to verify they do not include a security interest, charge, or lien over any natural resource. ### C. New Central Government Guaranteed Debt (Continuous Ceiling) - Definition: Ceiling applies to the amount of guarantees issued by the CG for debt contracted by any agency or entity outside the CG. - For program purposes, guarantee of a debt arises from any explicit legal or contractual obligation of CG to service a debt owed by a debtor outside the CG (involving payments in cash or in kind). - The official exchange rate will apply to all non-SRD denominated debt. - Reporting: Data will be provided to the IMF on a continuous basis. ### D. Non-Accumulation of Central Government External Debt Arrears (Continuous Ceiling) - Definition: Non-accumulation of arrears by the CG on contractual debt obligations owed to non-resident creditors is a continuous performance criterion. - External payments arrears are defined as external debt obligations of the CG which either have not been paid within 30 days after the contractual due date, or within the contractual grace period, whichever is longer. - Arrears resulting from nonpayment where a rescheduling or restructuring agreement is being sought, based on good faith negotiations, are excluded. - The stock of external arrears of the CG will be calculated based on the schedule reported by the Ministry of Finance and Planning (MoFP) and reconciled with creditors. - Reporting: Data will be provided to the IMF on a continuous basis. ### E. Gross Credit to Central Government by the CBvS (Continuous Ceiling) - Definition: Ceiling on change in gross credit provided to the CG by CBvS (including any provision of overdrafts) is a continuous performance criterion; measured from end-June 2021 for 2021 and from beginning of the year for 2022. - Coins and notes issued by the MoFP and claims on IMF related to the valuation of IMF account no 1 and 2 are excluded. - Stock of gross credit valued at fair value and program exchange rates. - Changes in stock of the COVID-19 Fund approved by Parliament in 2020 would constitute gross credit from the CBvS to the CG. - Rolling over CG principal and interest payments due to the CBvS does not constitute gross credit. - Reporting: Data will be provided to the IMF on a continuous basis. ### F. Net International Reserves of the CBvS (Floor) - Definitions: Floor applies to cumulative flows from the beginning of the year (end-December level of NIR of the previous year). - NIR are defined as the 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. - Excluded from foreign assets are assets that are pledged, collateralized, or otherwise encumbered; CBvS claims on resident banks and nonbanks; claims in foreign exchange arising from derivatives vis-à-vis domestic currency; precious metals other than monetary gold; assets in nonconvertible currencies; illiquid swaps; and any reserve assets not readily available for intervention. - Reserve liabilities are 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 (including swaps, options, forwards, and futures) of the CBvS, implying the sale of foreign currency or other reserve assets; - (iv) all foreign exchange liabilities of the CBvS to resident entities (e.g., claims in foreign exchange of domestic banks, non-ring-fenced reserve requirements of domestic banks on their foreign currency deposits, reserve requirements of domestic banks on their foreign currency deposits that are ring-fenced in Suriname’s sovereign bond in the amount of USD 10.283 million, and CBvS credits in foreign exchange from the domestic market) excluding foreign exchange liabilities to the CG. - The stock of foreign assets and liabilities shall be valued at fair value and converted at program exchange rates. - As of December 31, 2020, the stock of NIR amounted to USD -154.3 million (at the program exchange rates; Table 3). - Reporting: CBvS will provide data on foreign reserves and FX cash flow once a week; Table 3 statistics monthly in both official and program exchange rates with a lag of no more than two weeks after the end of the month. - External auditors will audit quarterly NIR data at each program test date; reports to CBvS with copy to IMF no later than 60 days after each test date. - Data on total foreign exchange mineral revenue will be provided weekly; inflows to the CBvS will be monitored as part of weekly reporting of CBvS purchases and sales. ### Adjusters to NIR targets - NIR targets will be adjusted: 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. Program loan disbursements are defined as external loan disbursements from official creditors usable for CG financing. 2. Upward (downward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors (including international capital markets) relative to baseline projections in Table 2. 3. Upward (downward) by the full amount of the cumulative surplus (shortfall) in the sum of the government’s total mineral and other revenues received in foreign exchange that are transferred to the CG account at the CBvS, with the exemption of pending transfers of these funds to the foreign bank account of the CBvS, relative to baseline projections reported in Table 4. - Mineral revenue in FX is defined as the government’s FX tax and non-tax proceeds from state-oil company Staatsolie Suriname and from gold companies. This includes corporate tax, wage tax (including old age fund contributions), dividends tax, indirect taxes, dividends royalties and others. Royalties from small scale gold mining are also included in mineral revenue. Other FX revenues of the CG are defined as any foreign exchange other mineral revenue as defined above. 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 reported 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. - Table 4. Suriname: Total FX Mineral Revenue received by the Government and Other FX Revenues of CG Transferred to CBvS (Baseline Projection) — Cumulative flows from the beginning of the fiscal year (In USD millions) - End-June 2023 46 - End-July 2023 67 - End-August 2023 89 - End-September 2023 117 - End-October 2023 135 - End-November 2023 153 - End-December 2023 170 - End-January 2024 18 - End-February 2024 35 - End-March 2024 53 - End-April 2024 70 - End-May 2024 88 - End-June 2024 105 - End-July 2024 123 - End-August 2024 141 - End-September 2024 158 - Table 5. Suriname: FX Debt Service Payments by the Central Government and CBvS (Baseline Projection) — Cumulative flows from the beginning of the fiscal year (In USD millions) - End-June 2023 76 - End-July 2023 92 - End-August 2023 112 - End-September 2023 121 - End-October 2023 136 - End-November 2023 163 - End-December 2023 204 - End-January 2024 17 - End-February 2024 46 - End-March 2024 63 - End-April 2024 80 - End-May 2024 109 - End-June 2024 127 - End-July 2024 144 - End-August 2024 174 - End-September 2024 192 - Table 3. Suriname: International Reserves (USD million, unless otherwise specified) — As of 31-Dec-20 - Reserve assets 128.9 - IMF reserve position 2.8 - IMF SDR 1.1 - Foreign currency cash and deposits with foreign banks 125.0 - Reserve liabilities 283.1 - IMF program disbursements outstanding 20.9 - Other liabilities with non-residents 0.1 - Liabilities with residents 262.2 - Reserve Requirements (non-ringfenced) 5.6 - Reserve Requirements (the ring-fenced sovereign bond) 10.3 - Working balance accounts of commercial banks 69.0 - Long-term loan to commercial banks 177.3 - Other 0.0 - Net international reserves -154.3 - Source: Central Bank of Suriname. ### G. Net Domestic Assets of the CBvS (Ceiling) - Definitions: Ceiling applies to cumulative flows from the beginning of the year. Net domestic assets (NDA) are defined as the difference between reserve money and net foreign assets (NFA) valued at fair value and program exchange rates. - As of December 31, 2020, the stock of NDA amounted to SRD 8,777.1 million (Table 6). - Reserve money at program exchange rates is defined as currency in circulation, commercial banks’ deposits in correspondent accounts at the CBvS, statutory cash reserve requirements against prescribed liabilities in SRDs and foreign currency held by commercial banks at the CBvS, other commercial banks’ deposits at the CBvS in national and foreign currency, other demand deposits in national and foreign currency, and gold certificates. Central bank certificates to retail investors are excluded from reserve money. Reserve money excludes balances in deposit auctions and commercial banks’ term deposits at the CBvS. - As of December 31, 2020, reserve money amounted to SRD 12,816.6 million. - NFA at program exchange rates is calculated as the difference between foreign assets and foreign liabilities. - As of December 31, 2020, NFA amounted to SRD 4,039.5 million (Table 6). - Table 6. Suriname: NFA, NDA, and Reserve Money (In SRD millions) — As of 31-Dec-20 - Net foreign assets 4,039.5 - Foreign assets 8,243.5 - Foreign liabilities -4,204.0 - Net domestic assets 8,777.1 - Net claims on the government 8,234.0 - Claims on the government in local currency 9,833.7 - Liabilities to the government in local currency -446.8 - Claims on the government in foreign currency 144.1 - Liabilities to government in foreign currency -1,297.0 - Net claims on commercial banks -2,495.6 - Claims on commercial banks in local currency 2.2 - Liabilities to commercial banks in local currency -200.0 - Claims on commercial banks in foreign currency 187.0 - Liabilities to commercial banks in foreign currency -2,484.7 - Other items net 3,038.7 - Reserve money 12,816.6 - Reserve money in local currency 7,342.2 - Reserve money in foreign currency 5,474.4 - Memorandum item: Program exchange rate 14.018 - Source: Central Bank of Suriname. - Reporting: Data will be provided to the IMF with a lag of no more than two weeks after the end of the month. - At each program test date, quarterly NDA data submitted by the CBvS to the IMF will be reviewed by the CBvS external auditors; reports to CBvS with a copy to IMF no later than 60 days after each test date. *SURINAME INTERNATIONAL MONETARY FUND* ### 28. Adjusters: Consistent with the NIR target adjustment mechanism defined above, NDA ### 1surea2023004 - 28. Adjusters: Consistent with the NIR target adjustment mechanism defined above, NDA ### Adjusters to NDA targets - NDA targets will be adjusted: - Downward (upward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to the baseline projections reported in Table 2. - Downward (upward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors (including international capital markets) relative to the baseline projections reported in Table 2. - Downward (upward) by the full amount of the cumulative surplus (shortfall) in the sum of the government’s total mineral and other revenues received in foreign exchange that are transferred to the CG account at the CBvS, with the exemption of pending transfers of these funds to the foreign bank account of the CBvS, relative to baseline projections reported in Table 4 (see definition in section F). - Mineral revenue in FX is defined as the government’s FX tax and non-tax proceeds from state-oil company Staatsolie Suriname and from gold companies. This 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 in mineral revenue. - Other FX revenues of the CG are defined as any revenues in foreign exchange other than mineral revenue as defined above. - 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 reported in Table 5. - Downward by the full amount of the CBvS’ cumulative purchases of foreign exchange from the market relative to the baseline projections reported in Table 7. - For the purposes of calculating adjusters, these flows will be valued at program exchange rates. ### Table reference (FX purchases baseline) - Table title referenced: "Table 7. Suriname: FX Purchases by CBvS (Baseline Projection)" - Cumulative flows from the beginning of the fiscal year (In USD millions) reported for: - End-June 20230 - End-July 20230 - End-August 20230 - End-September 20230 - End-October 20230 - End-November 20230 - End-December 20230 - End-January 20240 - End-February 20240 - End-March 20240 - End-April 20240 - End-May 20240 - End-June 20240 - End-July 20240 - End-August 20240 - End-September 20240 ### Direct purchases/sales of FX by CBvS and/or Central Government (Continuous Ceiling) - Definition: - The ceiling on direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and private sector will be a continuous performance criterion throughout the program period. - Excluded purchases/sales of FX by the CBvS from/to the FX market: - 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: - The ceiling on central government mineral revenue in local currency will be 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). - For purposes of this performance criterion, central government mineral revenue is defined as the government’s tax and non-tax cash revenue from the state-oil company Staatsolie Suriname and from large- and small-scale gold companies. This revenue includes corporate tax, indirect taxes, dividends, royalties and other mineral revenue. - The following mineral revenue is excluded from this definition: - (i) wage taxes (including old age fund contributions); - (ii) consent right fees; - (iii) dividend tax; - (iv) VAT not designated to be paid in FX; and - (v) Staatsolie Suriname’s tax and non-tax obligations to the government netted out against accounts receivable from other state-owned enterprises. - Reporting: - Data on central government foreign and local currency tax and non-tax mineral revenue as defined above will be submitted on a weekly basis by revenue item, type of commodity and source counterparty (aggregated for small-scale gold companies). - Where the local currency mineral revenue is from a prior sale of mineral companies’ FX-denominated tax or non-tax obligations to the central government, the 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. ### Other continuous performance criteria - During the period of the Arrangement under the EFF, Suriname will not: - (i) impose or intensify restrictions on the making of payments and transfers for current international transactions; - (ii) introduce or modify multiple currency practices; - (iii) conclude bilateral payments agreements that are inconsistent with Article VIII; and - (iv) impose or intensify import restrictions for balance of payments reasons. ### Indicative targets — 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. ### Information requirements — definitions and data coverage - Debt definitions (in accordance with IMF GFSM 2014 and Public Sector Debt Guide): - Total gross debt covers all liabilities that are debt instruments. - Debt instruments include: - Special drawing rights (SDRs); - Currency and deposits; - Debt securities; - Loans; - Insurance, pension, and standardized guarantee schemes; and - Other accounts payable. - Excluded from debt: liabilities in the form of equity and investment fund shares and financial derivatives and employee stock options. - For 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. - Consolidation/netting: - Any liabilities issued by the BCG, held as an asset by other entity of the BCG should be netted out. - Since the consolidation is done at the level of BCG, central bank lending to the government is included in the stock of BCG debt. ### Information requirements — reporting frequencies and items - Daily/Semi-weekly reporting: - 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 reporting: - 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 on: instrument type, total open market operations auction volume, settlement date, expiration date, the number of total bids, total amount of bids, the number of total allocated bids, total amount of allocated bids, the minimum bid rate, the cut-off interest rate, the highest bid rate, and the weighted average allotted interest rate. - Weekly submission of daily transactions and rates for the following: interest rates on domestic debt securities by maturity; required and excess reserves of the banking sector in local and foreign currency; total liquidity assistance to banks through normal lending operations, standing facilities, and ELA. Interest rates on OMOs, standing facilities, and ELA by maturity. - 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: - 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. The reporting lag should not exceed four weeks after the end of the month. - Amortization payments of CG and government guaranteed debt by creditor, instrument, and currency. The reporting lag should not exceed four weeks after the end of the month. - Interest payments and fees on CG and government guaranteed debt by creditor, instrument, and currency. The reporting lag should not exceed four weeks after the end of the month. - Stock of CG expenditure arrears, separately including payment of existing arrears and creation of new domestic arrears including the currency of the arrears. The reporting lag should not exceed four weeks after the end of the month. - Stock of CG domestic and external debt arrears, including the currency of arrears. The reporting lag should not exceed two weeks after the end of the month. - New debt contracts (official or private) entered into by the CG and/or SOEs. The reporting lag should not exceed two weeks after the end of the month. - Holdings of domestic T-notes and T-bills (SRD-denominated and foreign currency-denominated) by investor, maturity, and currency. The reporting lag should not exceed four weeks after the end of the month. - Legal measures that affect the revenue of the CG, such as tax rates, import tariffs, and exemptions. The reporting lag should not exceed six weeks after the end of the month. - Balance sheet of the CBvS within two weeks of end of the month. - A summary of the monetary survey of the banking system (including CBvS and deposit-taking institutions). This information should be received with a lag of no more than six weeks after the end of the month. - Income statement of the CBvS on a cash and accrual basis, with a lag of no more than three weeks from the end of the month. - Projections of CBvS purchases and sales of foreign currency (FX cash flow table, 12 months ahead). - Information on interconnectedness of the financial sector and related party lending (templates no. 6 and 37) in accordance with the Enhanced Supervision framework, within four weeks after the end of the month. - The deposit funding structure of the banks (template no.8) in accordance with the Enhanced Supervision framework, within four weeks after the end of the month. - Information on measures taken by the banks in the context of the COVID-19 pandemic (templates no.33-35), within four weeks after the end of the month. - Banks’ claims on the government and State-owned Entities with breakdown by type (debt types, loan types including the gross amount of overdrafts) within four weeks after the end of the month. - The Monthly Returns as reported to the CBvS, within four weeks of the end of the month. - A written update on the progress of the Asset Quality Review (until the review has been concluded) that includes any issues encountered by CBvS and/or their advisor and any remedial actions taken. - Data on foreign reserve assets and foreign reserve liabilities for NIR target purposes (Table 2) evaluated at both official and program exchange rates, within two weeks of the end of the month. - Data on NDA, NFA, and reserve money (Table 4) evaluated at both official and program exchange rates, within two weeks of the end of the months. - Data on foreign reserve assets split into ring-fenced and non-ring-fenced assets evaluation at official exchange rates, within two weeks of the end of the months. - Consumer price index, including by sub-components of the CPI index within four weeks after the end of the month. - Cash flow of EBS showing government transfers to cover the gap between the average electricity tariff and EBS recovery cost within eight weeks after the end of the month. - Electricity average tariff, total electricity consumption volume, total billing and amount collected (in SRD) to be provided by consumption categories (household, commercial, and industrial) and by consumption volume. This information should be received with a lag of no more than eight weeks after the end of the month. - Electricity costs including: (i) production costs: fuel costs, Staatsolie electricity costs, hydropower costss, separately, (ii) other operational costs: personnel costs and financing costs, and (iii) investment costs. This information should be received with a lag of no more than eight weeks after the end of the month. - EBS committed and executed payments to Staatsolie for purchases of fuel and electricity. This information should be received with a lag of no more than eight weeks after the end of the month. - Quarterly reporting: - Detailed balance of payments data within 60 days after the end of the quarter. - Detailed International Investment Position data within two months after the end of the quarter. - Projections regarding banks’ balance sheets and profit and loss statement (template no. 2 and 3) in accordance with the Enhanced Supervision framework, within four4 weeks after the end of the quarter. - Liquidity forecast and realization (templates no. 14, 16 and 18) in accordance with the Enhanced Supervision framework, within four weeks after the end of the quarter. - Progress reports of the banks on inspection items identified by CBvS, within six weeks after the end of the quarter. - A full set of quarterly Financial Soundness Indicators (FSI) calculated by the CBvS within 60 days after the end of the quarter. - CG spending on social protection programs, by program, as defined for the indicative target on social spending. The reporting lag should not exceed six weeks after the end of the quarter. - Annual reporting: - Financial statements of EBS within six months of year end. - Nominal GDP and real GDP within eight months of year end. - Labor market statistics (including the unemployment rate and labor participation ratio) within twelve months of the year end. ### Statement by the Staff Representative on Suriname (Executive Board Meeting September 25, 2023) - New information: - Recent national account data releases suggest upward revisions to the historical growth numbers for 2019-22. - According to the General Bureau of Statistics of Suriname, real GDP growth in 2022 was higher (2.4 percent versus 1 percent), as the extractive industry, wholesale and retail trade, transportation, and hotel and restaurant sectors performed better than originally estimated. - The real growth estimates for 2019, 2020, and 2021 were also revised upward by 0.1 ppt, 0.1 ppt, and 0.3 ppts respectively. - Despite the growth surprise, economic recovery remains slow, with real GDP expected to remain below its pre-pandemic level until end-2028. *Source: 1surea2023004 - 28. Adjusters: Consistent with the NIR target adjustment mechanism defined above, NDA (IMF staff report content).* ### 3. The authorities have prepared a supplementary budget, that will be debated by the ### 3. The authorities have prepared a supplementary budget, that will be debated by the ### Supplementary budget - The supplementary budget increases both spending and revenue to reflect the May 2023 agreement with unions to pay a purchasing power enhancement to public sector workers, and updated revenue projections. - The supplementary budget is consistent with the end-December central government primary balance QPC. - Risks noted: mining revenue and wage bill restraint. Should these risks materialize, contingency measures to credibly meet the end-December QPC will be discussed at the next review. ### Recent developments and outlook - Economic growth forecast: 2.1 percent in 2023. - Medium-term growth expectation: 3 percent. - Drivers for 2023 growth: higher exports, public capital investments, and private sector absorption. - Significant upside risk: forthcoming investment decision by international oil companies to exploit offshore oil and gas reserves. ### Inflation and monetary stance - With fiscal restraint and monetary tightening, annual inflation is expected to gradually decline to 40 percent at the end of 2023. - Headline inflation in 2023 remains elevated, driven by: - phasing out of subsidies for utilities; - fuel and cooking gas transitioning to market-based pricing; - high global food and energy prices. - More stable foreign exchange market conditions in Q2 2023 contributed to easing inflationary pressures. ### Fiscal policy, social measures, and tax efforts - Primary balance (PB) target: 1.7 per cent of GDP. - Measures to meet PB target: lower expenditures and increase revenues. - Cooking gas price adjustment: from SRD 50 to SRD 150 per 28 lbs bottle as of September 1st, 2023, with quarterly adjustments thereafter. - Nominal wage supplement: SRD 2.500 bonus starting in May 2023, paid for 6 months. - Government and unions agreed to a wage-negotiation freeze until after November 2023 (noted as under pressure). - Social safety net increases as of July 1, 2023: - old age pension increased by 40 per cent; - child support increased by 60 per cent; - financial transfers to people with disabilities increased by 43 per cent; - financial transfers to vulnerable households increased by 40 per cent. - Social Beneficiary Program: 2023 budget assigned SRD 1.2 billion covering 60.000 eligible households and expanded with the group of 50.000 old age pensioners; implementation delayed to February and not all eligible persons have received the purchasing power enhancement. - Indicative floor for social spending was not met in June 2023; Ministry of Social Affairs is working to catch up. ### Treasury, revenue administration, and VAT - Implementation of Treasury function at the Ministry of Finance and Planning (MoFP) is proceeding; Liquidity Planning Tool (LPT) accepted and started operation. - Roadmap for Treasury concludes in March 2024 to have all Treasury core functions defined and in execution. - Amended VAT bill approved by the National Assembly to close loopholes and broaden the base; implementation has been more challenging than envisaged. - VAT Evaluation Commission installed and presented its first evaluation. - Semi-Autonomous Revenue Authority (SARA) launched to improve revenue administration and collection efficiency. ### Monetary and financial sector policies - Central Bank of Suriname (CBvS) met all end-June 2023 monetary criteria and targets (QPCs): net domestic assets (NDA), net international reserves (NIR), and zero net gross credit to the Government. - Monetary tightening measures: open market operations, increased reserve requirements in local currency, capping private sector credit, and monitoring CBvS–Government transactions. - Transmission to market interest rates remains weak due to commercial banks’ concerns over bank asset quality and borrower repayment capacity and uneven distribution of excess liquidity. - Excess liquidity has been mopped up, stabilizing growth of reserve money and setting stage for downward inflation trend; several banks have recently announced increases in term deposit and lending rates. - Asset Quality Review (AQR) completed; roadmap for recapitalization, restructuring and governance reform of banks completed. - Banks not yet compliant submitted time-bound recapitalization and restructuring plans by end-August 2023; CBvS to assess and approve these plans by end of October 2023 and monitor implementation monthly. - Recapitalized banks will have a capital adequacy ratio in line with prescribed regulations. - Bank Resolution Bill and revised Banking and Credit System Supervision Act submitted to the National Assembly; proceedings for enactment have commenced. ### Exchange rate policies - Turbulence and prolonged depreciation of the local currency subsided; demand management, fiscal restraint, monetary tightening, and improved availability of foreign currency contributed to stability and reduced volatility. - Calmness in the foreign exchange market helped businesses and households plan investment and spending decisions. - CBvS submitted guidelines to banks to enhance enforcement of surrender requirements addressing multiple currency practice (MCP); MCP corrected by new CBvS circular. - MCP based on potentiality was ruled out by revised policy approved by the Board on July 1st, 2022; effectiveness delayed due to unfinished staff guidance note and extension of transitional period in March 2023. - Authorities remain committed to exchange rate flexibility and are discussing measures with the Fund to improve foreign exchange market functioning. ### Debt management and restructuring - Substantial progress in debt restructuring since EFF program start: - Bilateral agreements with all Paris Club creditors completed. - Agreement to restructure official credit line from EXIM India reached in March (year implied 2023). - Agreement on the loan backed by EXIM India reached in May (year implied 2023). - Agreement in-principle with bondholders reached in May 2023; actual debt exchange expected to be launched in the coming months. - Negotiations continue with EXIM China; a counterproposal by EXIM China is forthcoming and expected to be compatible with the IMF’s debt sustainability framework and comparable to other bilateral agreements. - Authorities committed to not making any debt servicing payments while agreements consistent with program parameters and comparable treatment among creditors are not reached. - Legacy debt with the central bank was restructured in July (year implied 2023). - Plan to clear all domestic debt arrears by end-2023 is well on track. - Memorandum of understanding (MOU) between SDMO, MoFP and CBvS to be signed to specify responsibilities for timely information provision and processing of payments; back-office capacity of SDMO being upgraded. ### Governance, anti-corruption, and procurement - Government committed to strengthening anti-corruption regulatory framework in line with international treaties and best practices; improvements to the Anti-Corruption Law are ongoing. - Steps taken toward routine registration, verification and eventual publication of assets and incomes of high-ranking and high-risk public officials, and registration of receipts; a State Decree issued including the standard registration form. - New Procurement Law to be approved by Parliament to mandate more transparency and information on awarded contracts for public works. ### Program implementation and monitoring - Private sector established the Suriname Economic Oversight Board (SEOB) to strengthen accountability and domestic ownership of the EFF-supported program. - The Board, with representatives from public and private sector, unions, academia, and civil society, has started publishing progress on implementation of institutional and socio-economic measures in the IMF-supported program. - Authorities remain committed to sound policy implementation to achieve broader economic and social objectives under the IMF-supported program. *Statement by Mr. Bevilaqua, Mr. Saraiva, and Mr. Eckhorst on Suriname September 25, 2023* --- _Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1surea2023004.pdf_