## 1surea2024001 ## Source details **Canonical URL:** [1surea2024001](https://www.imf.org/-/media/files/publications/cr/2024/english/1surea2024001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2024/english/1surea2024001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2024/english/1surea2024001.pdf.json) --- ### Program actions and IMF approvals - Executive Board completed the fourth review under the EFF arrangement for Suriname, allowing the authorities to draw the equivalent of SDR 39.4 million (about US$53 million), bringing total purchase under the EFF to SDR 197 million (about US$263 million). - Board approved an augmentation of access equivalent to SDR 46.8 million (about US$ 63 million) and an extension of the EFF arrangement to end-March 2025. - With this augmentation, the total access expected under the EFF arrangement is SDR 430.7 million (about US$ 577 million). - The EFF arrangement was originally approved on December 22, 2021. ### Macroeconomic outcomes and recent developments - Fiscal discipline and tight monetary policy contributing to stabilization: economy growing, inflation coming down, investor confidence returning. - Authorities completed the private debt exchange and near-concluded agreements with remaining creditors; agreement in principle at the technical level with Exim China under internal approval for signature. - Implemented reforms: complete elimination of fuel subsidies; gradual phasing out of electricity subsidies; curtailing wage payments to unregistered public servants; broadening the VAT base. ### Policy priorities and Fund recommendations - Near-term priorities: - Maintain fiscal prudence while protecting the most vulnerable. - Preserve structural reform momentum and avoid policy backtracking. - Ensure the 2025 budget is consistent with the 3.5 percent of GDP primary balance target (medium-term debt sustainability anchor). - Fund advice and assessment: - Adopt a more gradual path of fiscal consolidation than planned at the previous review to protect the fragile recovery and scale up growth-enhancing investment. - Swiftly implement the new Central Bank Act and finalize its recapitalization plan to strengthen operational independence and financial autonomy. - Address banking system vulnerabilities through stronger oversight and prompt finalization of government-owned bank’s recapitalization assessment. - Continue measures to strengthen anti-corruption and AML/CFT frameworks and ensure alignment with international standards. - Prioritize structural reforms to strengthen institutions, governance, and data quality with continued capacity building support. ### Program performance and reform implementation - End-September 2023 quantitative performance criteria (PC) met: cumulative central government primary balance, net domestic assets, net international reserves, and central government mineral revenue in local currency. - Indicative target (IT) on social spending was missed. - Structural benchmark outcomes: - Met end-September SB to start publishing quarterly budget execution reports. - Met end-October SB to start publishing a quarterly update to electricity tariffs. - Missed end-September SB on establishing an electronic FX trading platform; implementation delayed to December. - Missed end-September SB on enacting the new Procurement Law; implementation delayed to December. - End-October SBs to issue a decree detailing procedures for halting payments to unregistered workers and central bank review of bank recapitalization plans were implemented in November. - Quantitative target assessments (selected): - Primary fiscal balance (cash basis) of central government (floor): Met / Not Met / Met / Met (as listed). - Net domestic assets of the central bank (ceiling): Not Met * / Not Met / Met / Met. - Footnote: * The end-March NDA target was assessed as Met at the time of the 1st review; it is now reclassified as Not Met due to a data misreporting. ### Debt restructuring status and arrears clearance - Private bondholder debt exchange finalized in November with a 96 percent participation rate. - Agreement-in-principle at the technical level reached with Exim China; under internal approval for signature. - Debt treatment with China stated to be in line with other creditors and consistent with debt sustainability objectives. - Paris Club: no face value reduction of official debt; amortization paused for 7 years (PC) and for 8 years (ECA-backed) respectively. - Domestic arrears: - Total stock of accounts payable projected to increase to SRD 3.5 billion by end-2023; 60 percent considered supplier arrears. - Legacy debts to the CBvS restructured into a new loan with a grace period of 2 years and a maturity of 27 years. - Authorities committed to net clearance of at least SRD 1.7 billion in 2023 and clearing all other accounts payable by 2025. ### Monetary, exchange rate, and financial sector developments - Monetary policy stance: appropriately tight, helping ease inflationary pressures. - Exchange rate policy: commitment to a flexible, market-determined exchange rate; CBvS refrained from FX intervention. - FX market measures: - Indirect FX sales by mineral exporters to importers of essential goods to be terminated by end-June 2024. - Planned launch of electronic FX trading platform delayed to December. - Banking system: - Asset quality reviews indicate significant capital shortfalls in two banks. - System-wide NPLs and provisioning levels have increased; banks face tighter funding conditions as local currency liquidity is withdrawn by the central bank. - Reported system capital adequacy: 18.7 percent; two banks do not meet regulatory minima. - Banking sector aggregate liquidity: 53.7 percent of assets liquid, skewed toward two large systemic banks. - CBvS approved private bank recapitalization plan; state-owned bank’s plan requires immediate solution agreed between MOF and CBvS. - Central Bank (CBvS) strengthening: - Urgent action needed to fully implement the Central Bank Act of 2022; establishment of Executive Board and Council outstanding. - FY2020 audited financial statements published; work on FY2021-22 audits (end-March 2024 SB) to commence; completion essential for recapitalization plan. ### Risks and outlook - Near-term downside risks: policy implementation challenges, worsening social discontent, rising NPLs or financial system risks, and weak capacity to implement reforms. - Main external risk: worsening terms of trade (notably from materially higher oil prices). - Medium- to long-term upside: potential development of large new oil fields (no final investment decision yet) could boost growth, exports, fiscal revenues, balance of payments, and improve debt dynamics. ### Key statistics and projections (selected) - Real GDP Growth: 2022: 2.4; 2023: 2.1; 2024 (Proj.): 3.0 - Nominal GDP Growth: 2022: 47.3; 2023: 55.9; 2024 (Proj.): 22.5 - Consumer prices (end of period): 2022: 54.6; 2023: 39.3; 2024 (Proj.): 14.9 - Consumer prices (period average): 2022: 52.4; 2023: 52.9; 2024 (Proj.): 21.1 - Broad money: 2022: 45.1; 2023: 22.8; 2024 (Proj.): 14.0 - Private sector credit: 2022: 65.7; 2023: 26.1; 2024 (Proj.): 13.8 - Central government revenue and grants (% of GDP): 2022: 26.8; 2023: 25.7; 2024 (Proj.): 25.4 - Mineral revenue (% of GDP): 2022: 14.3; 2023: 10.8; 2024 (Proj.): 9.9 - Total expenditure (% of GDP): 2022: 29.5; 2023: 26.7; 2024 (Proj.): 26.5 - Overall Balance (Net lending/borrowing) (% of GDP): 2022: -2.7; 2023: -1.0; 2024 (Proj.): -1.1 - Primary Balance (% of GDP): 2022: 1.0; 2023: 1.6; 2024 (Proj.): 2.7 - Central government debt (% of GDP): 2022: 115.1; 2023: 87.1; 2024 (Proj.): 92.1 - Domestic (% of GDP): 2022: 27.4; 2023: 14.0; 2024 (Proj.): 18.0 - External (% of GDP): 2022: 87.7; 2023: 73.2; 2024 (Proj.): 74.1 - Current account balance (% of GDP): 2022: 2.1; 2023: 2.4; 2024 (Proj.): 2.3 - Capital and financial account (% of GDP): 2022: 10.8; 2023: 10.6; 2024 (Proj.): 5.5 - Gross international reserves (US$ millions): 2022: 1,195; 2023: 1,196; 2024 (Proj.): 1,464 - In months of imports: 2022: 6.4; 2023: 6.4; 2024 (Proj.): 7.6 - Usable gross international reserves (US$ millions)1/: 2022: 865; 2023: 962; 2024 (Proj.): 1,230 - In months of imports: 2022: 4.6; 2023: 5.1; 2024 (Proj.): 6.4 - Official exchange rate (SRD per US$, Average): 24.6 1/ Excluding the PBOC swap and ring-fenced banks' FX required reserves. ### Fiscal projections, composition, and key fiscal statistics - Public debt expected to fall below 70 percent by 2030 (text chart). - Proposed PB target of 2.7 percent of GDP in 2024 (from 3.5 percent previously) implies fiscal consolidation of 1.1 percent of GDP in 2024. - SDR 76.8 million (41 percent of the total IMF disbursement of SDR 186.9 million or 2.3 percent of GDP) would be made available for budget support in 2024. - Selected 2023 fiscal projection differences (Third Review vs. Latest Projection): - Primary Balance (percent of GDP): 1/ 1.7 / 1.6 / 0.0 - Revenue (percent of GDP): 26.1 / 25.7 / -0.5 (difference in millions of SRD: 381) - Of which: Mining revenues: 7.4 / 6.3 / -1.1 (difference: -1,209) - Primary Expenditure: 24.5 / 24.0 / -0.4 (difference: 381) - Wage Bill: 6.7 / 6.7 / 0.0 (difference: 266) - Non-mining primary balance: -10.2 / -9.1 / 1.1 (difference: 1,069) - Note: 1/ Primary balance target unchanged in nominal SRD terms but lower in percent of GDP due to upward revision to nominal GDP. ### Fiscal policy measures and institutional reforms (selected) - Wage bill: - Authorities plan to raise real wage of public sector workers; maintain wage bill at 6.7 percent of GDP in 2024. - Ministerial decree to halt payments to unregistered workers published on November 10. - Removal of unregistered workers expected to create space for real wage increases of around 0.4 percent of GDP in 2024. - 18 percent of the public workforce remain unregistered. - VAT: - Coverage expanded to 60 percent of the consumption basket. - New 5 percent rate to be introduced on water, electricity and cooking gas in June 2024. - Number of companies registered under VAT increased by 41 percent between January and end-September. - Fuel taxes and subsidies: - Fuel subsidies discontinued in March; fuel prices determined by automatic pricing mechanism. - Specific taxes on fuel reinstated in May of SRD 3.50 per liter, expected to generate 0.7 percent of GDP in revenue in 2023. - Government fuel tax reduced to SRD 2.50 per liter for one month in December; revenue loss estimated less than 0.05 percent of GDP; automatic reset to SRD 3.50 per liter on January 1, 2024. - Electricity tariffs and subsidies: - June approval: immediate 28 percent increase in average electricity tariffs; further increases in Q3 and Q4 by 42 percent and 21 percent respectively. - Tariffs to be adjusted again effective January 2024 and quarterly going forward to reach cost-recovery by end-2024. - Liquified petroleum gas (LPG): - September price increase of around 425 percent, reducing subsidy to 55 percent of the cost. - Further fixed quarterly price increases beginning December 2023, yielding full year savings of 0.2 percent of GDP in 2024. - Cash transfers and social protection: - Increases in traditional social protection programs (examples: General Old-Age Pension from SRD 1250 to SRD 1750; General Child Benefit from SRD 125 to SRD 200; Financial Assistance for Persons with Disabilities from SRD 1750 to SRD 2500; Financial Assistance for Weak Households from SRD 1250 to SRD 1750). - One-off payment of SRD 2500 on average to all social program beneficiaries in December. - Monthly publication of beneficiaries and values per district proposed by end-January 2024. - Capital spending: - Aim to expand capital expenditure to 3.3 percent of GDP in 2024, prioritizing growth-enhancing projects and climate considerations. - Strengthen PIM framework and issue a new manual with guidance on economic appraisal and climate considerations (new proposed end-September 2024 SB). - Customs reforms: - Improve collections of unpaid charges for storage of imports to yield 0.1 percent of GDP in additional revenue in 2024. ### Debt sustainability, DSA highlights and scenarios - Under agreed debt treatments for official and private debt, Suriname’s debt judged sustainable on a forward-looking basis (Annex I). - DSA baseline projections (selected): - Public debt (percent of GDP): 2022: 115.1; 2023: 87.1; 2024: 92.1; 2025: 85.7; 2026: 81.4; 2030: 67.3. - Gross financing needs (GFN) including arrear clearance (percent of GDP): 2022: 12.0; 2023: 8.3; 2024: 7.7; 2025: 5.0; 2026: 3.5; 2031: 10.4. - Nominal haircut by restructuring (percent of GDP): 0.0 (2022); -6.7 (2023). - Recapitalization assumption adds 9.1 percent of GDP to public debt stock in 2024 under one scenario. - Overall risk of sovereign stress: High. - Restructuring scenario objective: reduce public debt to 60 percent of GDP by 2035 and lower GFNs to average of 9 percent (with an upper limit of 12 percent in any year). ### Structural benchmarks, conditionality, and monitoring - Staff supports extension to end-March 2025 and augmentation of access of 36.3 percent of quota (SDR 46.8 million). - Proposed modifications: - 2024 QPCs on NIR and NDA proposed to be adjusted to align with revised macro-framework. - 2024 QPCs on primary fiscal balance proposed to be revised downward to protect growth and social cohesion. - 2024 ITs on social spending proposed to be adjusted to account for quarterly increases in cash transfer values. - New 2024 SBs proposed in areas of climate investment adaptation, debt management, and social assistance spending transparency. - Monitoring and reporting requirements: extensive daily/weekly/monthly/quarterly/annual data submission timetables covering FX transactions, CBvS balance sheet, NDA/NIR, fiscal GFS data, social spending, arrears, and banking sector templates. ### Program financing, capacity to repay, and donor/IFI support - Proposed program financing (selected figures, US$ millions, staff calculations): - Financing gap: 237 421 505 466 1441 1,773 (table sequence provided). - Official financing: 342 533 084 016 31,059 (table sequence provided). - IMF financing in staff calculations: 54, 158, 251, 63 (total 581) across 2022–2025 sequence in staff FX flow table. - Capacity to repay assessed as adequate under program baseline but subject to significant risks; Fund credit outstanding will peak in 2025 at 46¼ and 13¼ percent of usable reserves and GDP, respectively (staff estimate). - IDB commits to providing budget support of at least USD 150 million in 2023 conditional on IMF program review and USD 150 million in 2024 confirmed. ### Staff appraisal (selected conclusions) - Quantitative program performance strong: all end-September QPCs met. - Authorities on track to reach 1.6 percent of GDP primary balance target in 2023. - IT on social spending missed but corrective measures and additional December payment planned. - Authorities implemented politically costly structural reforms (eliminating fuel subsidies, phasing out electricity and gas subsidies, broadening VAT base) to restore public finances and protect the vulnerable. ### Letter of Intent commitments (Paramaribo, December 4, 2023) - Requests: - Completion of the fourth review to make available SDR 39.4 million (30.6 percent of quota or about USD 52 million), of which SDR 25.6 million (about USD 34 million) for budget support. - Extension of EFF through March 31, 2025. - Augmentation of access by SDR 46.8 million. - Quantitative program targets set until December 2024 and new structural benchmarks. - Key program objectives reiterated: - Restore fiscal sustainability and strengthen fiscal management. - Bring public debt down to sustainable levels. - Improve the social safety net. - Upgrade monetary policy framework and adopt flexible, market-determined exchange rate. - Improve financial system viability and bank oversight. - Tackle corruption, strengthen institutions and governance, and enhance AML/CFT framework. *Source: IMF staff report for Suriname — Fourth Review under the Extended Arrangement under the Extended Fund Facility, December 5, 2023.* ### 39.4 million (about US$ 53 million). The Board has also approved the authorities’ request ### 1surea2024001 - 39.4 million (about US$ 53 million). The Board has also approved the authorities’ request ### Program actions and IMF approvals - The Executive Board completed the fourth review under the EFF arrangement for Suriname, allowing the authorities to draw the equivalent of SDR 39.4 million (about US$53 million), bringing total purchase under the EFF to SDR 197 million (about US$263 million). - The Board approved an augmentation of access equivalent to SDR 46.8 million (about US$ 63 million) and an extension of the EFF arrangement to end-March 2025. - With this augmentation, the total access expected under the EFF arrangement is SDR 430.7 million (about US$ 577 million). - The EFF arrangement was originally approved on December 22, 2021. ### Macroeconomic outcomes and recent developments - Fiscal discipline and tight monetary policy are contributing to macroeconomic stabilization: the economy is growing, inflation is coming down, and investor confidence is returning. - The authorities completed the private debt exchange and are close to concluding agreements with remaining creditors, including an agreement in principle at the technical level with Exim China that is under internal approval for signature. - The authorities have implemented difficult reforms, including complete elimination of fuel subsidies, gradual phasing out of electricity subsidies, curtailing wage payments to unregistered public servants, and broadening the VAT base. ### Policy priorities and Fund recommendations - Near-term priorities for the authorities: - Maintain fiscal prudence while protecting the most vulnerable. - Preserve structural reform momentum and avoid policy backtracking. - Ensure the 2025 budget is consistent with the 3.5 percent of GDP primary balance target (medium-term debt sustainability anchor). - Fund advice and assessment highlights: - A more gradual path of fiscal consolidation than planned at the previous review will help protect the fragile recovery, increase support for the poor and vulnerable, prevent further erosion in real wages for registered civil servants, and scale up growth-enhancing investment. - Swift implementation of the new Central Bank Act and finalization of its recapitalization plan will help strengthen operational independence and financial autonomy. - Steadfast progress is necessary to address banking system vulnerabilities through stronger oversight and prompt finalization of the government-owned bank’s recapitalization assessment. - Continue pursuing measures to strengthen anti-corruption and AML/CFT frameworks and ensure alignment with international standards. - Structural reforms to strengthen institutions, governance, and data quality remain key priorities with continued capacity building support by the Fund and other development partners. ### Program performance and reform implementation - End-September 2023 quantitative performance criteria (PC) met: cumulative central government primary balance, net domestic assets, net international reserves, and central government mineral revenue in local currency. - The indicative target (IT) on social spending was missed. - Institutional reforms progress: - Met end-September structural benchmark (SB) to start publishing quarterly budget execution reports. - Met end-October SB to start publishing a quarterly update to electricity tariffs. - Missed end-September SB on establishing an electronic FX trading platform; implementation delayed to December. - Missed end-September SB on enacting the new Procurement Law; implementation delayed to December. - End-October SBs to issue a decree detailing procedures for halting payments to unregistered workers and central bank review of bank recapitalization plans were implemented in November. ### Debt restructuring status - Private bondholder debt exchange finalized in November with high participation rate. - Agreement-in-principle at the technical level reached with Exim China; under internal approval for signature. - Debt treatment with China is stated to be in line with other creditors and consistent with debt sustainability objectives. ### Monetary, exchange rate, and financial sector developments - Monetary policy stance is appropriately tight, helping ease inflationary pressures. - Commitment to a flexible, market-determined exchange rate is supporting accumulation of international reserves. - Usable gross international reserves and imports coverage (selected figures appear in Key Statistics). - Asset quality reviews indicate significant capital shortfalls in two banks; system-wide NPLs and provisioning levels have increased and banks face tighter funding conditions as local currency liquidity is withdrawn by the central bank. - Continued need for stronger oversight of the banking system and prompt finalization of the assessment of the government-owned bank’s recapitalization plan. ### Risks and outlook - Near-term downside risks: policy implementation challenges, worsening social discontent, rising NPLs or materialization of financial system risks, and weak capacity to implement reforms. - Main external risk: worsening terms of trade (notably from materially higher oil prices). - Medium- to long-term upside: potential development of large new oil fields (no final investment decision yet), which could boost growth, export and fiscal revenues, strengthen the balance of payments, and improve debt dynamics. ### Key statistics and projections (selected) - Real GDP Growth: 2022: 2.4; 2023: 2.1; 2024 (Proj.): 3.0 - Nominal GDP Growth: 2022: 47.3; 2023: 55.9; 2024 (Proj.): 22.5 - Consumer prices (end of period): 2022: 54.6; 2023: 39.3; 2024 (Proj.): 14.9 - Consumer prices (period average): 2022: 52.4; 2023: 52.9; 2024 (Proj.): 21.1 - Broad money: 2022: 45.1; 2023: 22.8; 2024 (Proj.): 14.0 - Private sector credit: 2022: 65.7; 2023: 26.1; 2024 (Proj.): 13.8 - Central government revenue and grants (% of GDP): 2022: 26.8; 2023: 25.7; 2024 (Proj.): 25.4 - Of which: Mineral revenue (% of GDP): 2022: 14.3; 2023: 10.8; 2024 (Proj.): 9.9 - Total expenditure (% of GDP): 2022: 29.5; 2023: 26.7; 2024 (Proj.): 26.5 - Overall Balance (Net lending/borrowing) (% of GDP): 2022: -2.7; 2023: -1.0; 2024 (Proj.): -1.1 - Primary Balance (% of GDP): 2022: 1.0; 2023: 1.6; 2024 (Proj.): 2.7 - Central government debt (% of GDP): 2022: 115.1; 2023: 87.1; 2024 (Proj.): 92.1 - Domestic (% of GDP): 2022: 27.4; 2023: 14.0; 2024 (Proj.): 18.0 - External (% of GDP): 2022: 87.7; 2023: 73.2; 2024 (Proj.): 74.1 - Current account balance (% of GDP): 2022: 2.1; 2023: 2.4; 2024 (Proj.): 2.3 - Capital and financial account (% of GDP): 2022: 10.8; 2023: 10.6; 2024 (Proj.): 5.5 - Gross international reserves (US$ millions): 2022: 1,195; 2023: 1,196; 2024 (Proj.): 1,464 - In months of imports: 2022: 6.4; 2023: 6.4; 2024 (Proj.): 7.6 - Usable gross international reserves (US$ millions)1/: 2022: 865; 2023: 962; 2024 (Proj.): 1,230 - In months of imports: 2022: 4.6; 2023: 5.1; 2024 (Proj.): 6.4 - Official exchange rate (SRD per US$, Average): 24.6 1/ Excluding the PBOC swap and ring-fenced banks' FX required reserves. *Source: IMF staff report for Suriname — Fourth Review under the Extended Arrangement under the Extended Fund Facility, December 5, 2023.* ### 1. Primary fiscal balance (cash basis) of central government (floor)MetNot MetMetMet ### 1. Primary fiscal balance (cash basis) of central government (floor)MetNot MetMetMet ### Program performance and quantitative targets - Program targets (selected) and their assessment: - 1. Primary fiscal balance (cash basis) of central government (floor): Met / Not Met / Met / Met (as listed). - 2. New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (continuous ceiling): Met / Met / Met / Met. - 3. New central government guaranteed debt (continuous ceiling): Met / Met / Met / Met. - 4. Non-accumulation of central government external debt arrears (continuous ceiling): Met / Not Met / Met / Not Met / Met / Met (as listed). - 5. Gross credit to the central government by the central bank (continuous ceiling): Met / Met / Met / Met. - 6. Net international reserves of the central bank (floor): Met / Met / Met / Met. - 7. Net domestic assets of the central bank (ceiling): Not Met * / Not Met / Met / Met. - 8. Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (continuous ceiling): Met / Met / Met** / Met. - 9. Central government mineral revenue in local currency (ceiling): Met. - Indicative target: - 1. Social spending of central government (floor): Not Met / Met / Not Met / Not Met (as listed). - Footnotes on assessments: - * The end-March NDA target was assessed as Met at the time of the 1st review; it is now reclassified as Not Met due to a data misreporting. - ** Assessed from the 2nd review. The ceiling was breached by direct sales of US$ 13 million in February 2023 while the program was off-track. ### Fiscal projections, composition, and key fiscal statistics - Recent projection notes and implications: - Public debt is expected to fall below 70 percent by 2030 (text chart). - Further fiscal consolidation beyond the program period may be needed to build buffers for the recapitalization of the CBvS and commercial banks (DSA ¶ 2), particularly if downside risks materialize. - Downward revision of mineral revenue projections by 0.4 percent of GDP. - Proposed PB target of 2.7 percent of GDP in 2024 (from 3.5 percent previously) implies a fiscal consolidation of 1.1 percent of GDP in 2024. - SDR 76.8 million (41 percent of the total IMF disbursement of SDR 186.9 million or 2.3 percent of GDP) would be made available for budget support in 2024. - Selected 2023 fiscal projection table extracts (Third Review vs. Latest Projection; differences shown): - Primary Balance (percent of GDP): 1/ 1.7 / 1.6 / 0.0 (as presented in table headers). - Revenue (percent of GDP): 26.1 / 25.7 / -0.5 (difference in millions of SRD: 381). - Taxes (percent of GDP): 17.1 / 16.6 / -0.5 (difference in millions of SRD: 10). - Direct taxes: 9.7 / 9.5 / -0.2 (difference: 86). - Of which: Mining taxes: 4.5 / 4.4 / -0.0 (difference: 140). - Indirect taxes: 7.4 / 7.1 / -0.3 (difference: -75). - Of which: VAT: 3.0 / 3.0 / 0.0 (difference: 92). - Non-tax revenue: 8.6 / 8.6 / 0.0 (difference: 352). - Of which: Mining revenues: 7.4 / 6.3 / -1.1 (difference: -1,209). - Grants: 0.5 / 0.5 / 0.0 (difference: 19). - Primary Expenditure: 24.5 / 24.0 / -0.4 (difference: 381). - Wage Bill: 6.7 / 6.7 / 0.0 (difference: 266). - Electricity subsidies: 2.7 / 2.7 / 0.0 (difference: 157). - Cash transfer programs: 2.9 / 2.8 / -0.1 (difference: 0). - Capital expenditure: 2.6 / 2.6 / -0.1 (difference: -5). - Other primary expenditure: 9.2 / 8.9 / -0.3 (difference: -37). - Non-mining primary balance: -10.2 / -9.1 / 1.1 (difference: 1,069). - Notes on table interpretation: - 1/ The primary balance target remains unchanged in nominal SRD terms, but is lower in percent of GDP due to the upward revision to nominal GDP compared to the 3rd review. - 2/ The size and sign of the difference in percentage points of GDP and in millions of SRD may vary due to the upward revision of projected nominal GDP in 2023. ### Fiscal policy measures and institutional reforms - Revenue and expenditure measures being implemented (selected): - Wage bill: - Authorities plan to raise the real wage of public sector workers; maintain wage bill at 6.7 percent of GDP in 2024. - Ministerial decree to halt payments to unregistered workers published on November 10 (end-October SB). - Removal of unregistered workers from payrolls expected to create space for real wage increases of around 0.4 percent of GDP in 2024. - 18 percent of the public workforce remain unregistered. - VAT: - Coverage expanded to 60 percent of the consumption basket. - A new 5 percent rate to be introduced on water, electricity and cooking gas in June 2024. - Number of companies registered under VAT increased by 41 percent between January and end-September. - Fuel taxes and subsidies: - Fuel subsidies discontinued in March; fuel prices determined by automatic pricing mechanism. - Specific taxes on fuel reinstated in May of SRD 3.50 per liter, expected to generate 0.7 percent of GDP in revenue in 2023. - Electricity tariffs and subsidies: - June approval included immediate 28 percent increase in average electricity tariffs, further increases in Q3 and Q4 by 42 percent and 21 percent respectively. - Tariffs to be adjusted again effective January 2024, and quarterly going forward to reach cost-recovery by end-2024. - Energie Autoriteit Suriname to publish quarterly updates on tariffs, rationale, cost estimates, and remaining subsidy size (end-October SB, met). - Liquified petroleum gas (LPG): - September price increase of around 425 percent, reducing subsidy to 55 percent of the cost. - Further fixed quarterly price increases beginning December 2023, yielding full year savings of 0.2 percent of GDP in 2024. - Cash transfers and social protection: - Increases in traditional social protection programs (examples: General Old-Age Pension from SRD 1250 to SRD 1750; General Child Benefit from SRD 125 to SRD 200; Financial Assistance for Persons with Disabilities from SRD 1750 to SRD 2500; Financial Assistance for Weak Households from SRD 1250 to SRD 1750). - One-off payment of SRD 2500 on average to all social program beneficiaries in December. - Government working with ILO and IDB on time-bound strategic plan to improve efficiency and effectiveness of social benefits (end-Dec 2023 SB). - Monthly publication of beneficiaries and values per district proposed by end-January 2024. - Capital spending: - Aim to expand capital expenditure to 3.3 percent of GDP in 2024, prioritizing growth-enhancing projects and climate considerations. - Strengthen PIM framework and issue a new manual with guidance on economic appraisal and climate change considerations (new proposed end-September 2024 SB). - Customs reforms: - Improve collections of unpaid charges for storage of imports to yield 0.1 percent of GDP in additional revenue in 2024. - Institutional and governance measures (selected): - Established a central institutional repository listing all public entities (end-June SB, met). - Published quarterly budget execution reports (end-September SB, met). - Proposed State decree to provide Minister of Finance authority to access all bank accounts held by government entities at commercial banks (end-December SB, proposed to be reset to end-March 2024). - Will enact a new procurement law in December. - Prepare report of largest SOEs to identify and quantify principal fiscal risks (end-December SB, proposed to be reformulated and reset to end-June 2024). - Improving recording, reporting, and payment of public debt; MOU between MoFP, SDMO, and CBvS proposed for end-January 2024 (new proposed SB). ### Debt restructuring, arrears clearance, and debt sustainability - Domestic arrears and restructuring: - Authorities began to clear domestic debt and suppliers’ arrears; finalized plan to clear all arrears on government treasuries and loans by end-December. - 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 by end-2023. - Total stock of accounts payable projected to increase to SRD 3.5 billion by end 2023 (Annex I, ¶2); 60 percent considered supplier arrears. - Treasury Department working to strengthen cash forecasting; government plans to create a cash management unit by end-2023. - Expand coverage of the Treasury Single Account to all government accounts held at commercial banks by end-2024. - External debt treatment milestones: - Agreement-in-principle with external bondholders reached on May 4; formal exchange finalized in November with a 96 percent participation rate. - Paris Club Secretariat indicates agreement satisfies comparability of treatment relative to official creditors. - Restructuring of lending from India finalized earlier this year; all final documents signed and all arrears repaid. - Bilateral agreements on a two-step debt treatment completed with all the Paris Club creditors. - Agreement in principle at technical level reached with China on both flow and stock treatments, consistent with program parameters and relief provided by Paris Club creditors; includes contingencies on the second phase. - Debt sustainability: - Conditional on agreed debt treatments for both official and private debt, Suriname’s debt is judged to be sustainable on a forward-looking basis (Annex I). ### Monetary policy, inflation, and liquidity management - Monetary stance and liquidity control: - CBvS has maintained an appropriately tight monetary stance through open market operations (OMOs) and issuances of central bank certificates (CBCs). - Reserve money growth has remained well below the CBvS’s target path and will be further tightened in 2024 to support disinflation. - Private sector credit growth remains modest, guided by time-bound, bank-by-bank lending caps. - Net domestic assets of the central bank: Not Met (end-March NDA reclassified as Not Met due to data misreporting). - Specific measures and effects: - Caps aim to contain nominal SRD private sector credit growth to 20 percent over a one-year period through April 2024 and support CBvS’ ability to mop up liquidity through OMOs. - Leakage risks from the credit cap are mitigated by modest demand for loans, regulatory limits on extending FX credit, and the small size of the non-banking sector. - Monetary transmission gradually improving with higher rates on new term deposits; adjustment is slow and market interest rates remain negative in real terms. - Transmission weaknesses reflect concerns over borrower repayment capacity, banking system weaknesses, and high concentration of liquidity in a few banks. *Source: 1surea2024001 - 1. Primary fiscal balance (cash basis) of central government (floor)MetNot MetMetMet* ### 16. The exchange rate has been relatively stable. Tight fiscal and monetary stances continue ### 16. The exchange rate has been relatively stable. Tight fiscal and monetary stances continue to curb FX demand even as importer payment arrears are being cleared. ### Foreign exchange, reserves, and FX market functioning - Findings and actions - Tight fiscal and monetary stances continue to curb FX demand even as importer payment arrears are being cleared. - To support reserve accumulation, the indirect FX sales by mineral exporters to importers of essential goods will be terminated by end-June 2024. - Lower mineral revenues are likely to slow reserve accumulation. - The CBvS has refrained from FX intervention and is working to strengthen its FX reserve investment and risk management framework with planned IMF capacity development support. - FX market improvements and timing - Planned launch of the electronic FX trading platform (end-September SB) delayed to December due to technical setbacks discovered at testing. - Ongoing Fund technical assistance will help strengthen FX reserves management and operations, and FX risk management—supporting improved FX market functioning. - Authorities are drafting amendments to the Foreign Exchange Regulation of 1947 to make it consistent with the new Central Bank Act (end-December SB) with a view to pass these amendments in December. - Authorities are also undertaking a full review of the FX Regulation of 1947 and are in discussions with staff on scope of possible capacity development support. ### FX flows, projections, and reserve adequacy (selected figures from staff calculations) - FX cash flow and reserve developments (years noted in tables/figures) - Inflow of FX (CBvS and Central Government) total for 2022–2025: 590, 523, 685, 378 (total 2,176). - Govt mineral and other FX revenues (same period): 260, 165, 231, 261 (total 918). - IFI financing (budget support): 200, 150, 150, 0 (total 500). - IMF financing: 54, 158, 251, 63 (total 581). - Outflow of FX (CBvS and Central Government) total for 2022–2025: 386, 384, 417, 374 (total 1,560). - Debt service 2/: 134, 255, 306, 262 (total 957). - Change in Gross Foreign Reserves of CBvS (+: Increase): 20, 21, 26, 84, 476 (yearly sequence shown). - Reserve accumulation projected to slow if mineral revenues decline. - Reserve adequacy - Suriname: Usable Reserve Adequacy Projection presented in percent of the RA metric across scenarios (Current; ARA metric 1st review; 2nd review; 3rd review). ### Banking sector risks and bank recapitalization - Key vulnerabilities and metrics - NPLs are high, although they declined in Q3 largely due to repayment of arrears by the government. - Loan losses are being accompanied by higher provisioning levels. - Reported level of capital adequacy for the system: 18.7 percent, but two banks do not meet regulatory minima. - Banking sector aggregate liquidity: 53.7 percent of assets are liquid (in large part due to high reserve requirements); liquidity is unevenly distributed and skewed towards two large systemic banks. - Recapitalization assessment and plans - CBvS assessed recapitalization plans; full implementation of AQR results and provisioning adjustments indicate significant capital shortfalls in two banks. - CBvS reviewed recapitalization plans (end-October SB, not met, implemented with a delay in December). - CBvS approved the plan of the private bank, which proposes recapitalization from private resources. - The state-owned bank’s plan requires an immediate solution via agreement between MOF and CBvS outlining a specific course of action. - CBvS requires the private bank to submit monthly progress reports; conversion of legal status to limited liability and issuance of shares in two phases to be completed by end-June 2024; proposed governance refinements and NPL reduction action plan included. - Supervisory and legislative measures - CBvS and MOF will agree on a new governance framework for government-owned banks to ensure fully commercial operation (end-December SB). - Amendments to the Banking and Credit Supervision Act and draft Bank Resolution Act aligning legislation with international best practices have been sent to the National Assembly; authorities anticipate adoption by end-December. - CBvS prepared guidance for banks on management of nonperforming loans. ### Strengthening the Central Bank (CBvS) - Implementation gaps and deadlines - Urgent action needed to fully implement the Central Bank Act of 2022 (CBvS Act); establishment of an Executive Board and Council remains outstanding. - Authorities committed to expeditiously appoint members of the CBvS Council in line with the new law. - FY2020 audited financial statements recently published; work on FY2021-22 audits (end-March 2024 SB) will commence soon. - Completion of these audits is essential for MoFP and CBvS to finalize a recapitalization plan for the CBvS (end-March 2024). - A special audit of program monetary data for September 2023 was completed in November. ### AML/CFT, governance, and procurement reforms - Anti-corruption and public procurement - With Fund TA, Anti-Corruption Commission will evaluate and propose amendments to require income and asset declarations of politically exposed persons, routine verification, publication, and proportionate sanctions; amendments to bring legal framework into line with Chapter III of the UN Convention against Corruption (end-December SB, proposed to be reformulated and reset to end-June 2024). - With TA from Fund and IADB, authorities will expand governance reforms to state agencies including customs and police. - Authorities ratified CARICOM’s Protocol on Public Procurement in July 2022. - With IDB support, a new procurement law will be enacted in December centralizing publication of tenders/contracts and mandating publication of awarded entities, beneficial owners, awarding officials, and ex-post validation of delivery. - AML/CFT status and planned actions - A 2022 CFATF assessment identified technical compliance deficiencies and placed Suriname on enhanced follow up. - November 2022: new AML/CFT law enacted (drafted with IMF support). - To comply with FATF requirements Suriname needs to: (i) enhance AML/CFT supervision for all financial institutions; (ii) develop and implement risk-based supervisory framework for DNFBPs; (iii) provide 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 implementation of UN Security Council Resolutions for Terrorism and Proliferation Financing. - Authorities working to enact amendments and strengthen risk-based supervision with IMF CD support; second national risk assessment planned to be completed by mid-2024. ### Economic statistics improvements - Progress and recommended actions - Progress made in improving quality and timeliness of monetary, financial and balance of payments statistics. - Further efforts required to improve production and timeliness of GDP statistics and strengthen public debt recording system. - With Fund TA, authorities should invest resources to produce quarterly national accounts and shorten lag of annual national accounts (GDP) statistics to 6 months from current 8 months. - Authorities should provide more disaggregated CPI data. - CARTAC mission on national accounts planned for May 2024. ### Program issues: extension, access, conditionality, and financing - Request and staff support - Staff supports authorities’ request for extension of the arrangement to end-March 2025 and augmentation of access of 36.3 percent of quota (SDR 46.8 million or about US$ 63 Million). - Proposed augmentation would bring total access under the arrangement to about US$ 577 million. - Extension will provide additional time to implement policy agenda and ensure 2025 budget is legislated consistent with the 3.5 percent of GDP primary balance program target (medium-term debt sustainability anchor). - Access would remain within annual and cumulative limits for normal access and below access envisioned at arrangement request (partly reversing reduction at 2nd review). - Capacity to repay the Fund remains adequate; increase in IDB support by US$ 50 million each in 2023 and 2024 will help burden sharing. - With extension, end-December 2024 QPCs are proposed to be set. - Proposed modifications to conditionality - Quantitative targets: 2024 QPCs on NIR and NDA proposed to be adjusted to align with revised macro-framework. - 2024 QPCs on primary fiscal balance of central government proposed to be revised downward to protect growth and social cohesion. - 2024 ITs on social spending proposed to be adjusted to account for quarterly increases in cash transfer values in line with inflation. - New 2024 SB proposed in areas of climate (investment) adaptation (¶11), debt management (¶12) and social assistance spending transparency (¶11). - Access, capacity to repay, and debt dynamics - Suriname’s capacity to repay assessed as adequate under program baseline but subject to significant risks. - Successful program implementation and finalizing a debt restructuring deal with all bilateral creditors is critical. - Fund credit outstanding will peak in 2025 at 46¼ and 13¼ percent of usable reserves and GDP, respectively, and will remain elevated through 2030. - Annual debt service to the Fund peaks in 2029 at 4.2 percent of exports of goods and services. - Out of SDR 39.4 million scheduled for the fourth review, SDR 25.6 million (65 percent) would be made available for budget support. - Arrears, creditor engagement, and program financing - No arrears to multilateral creditors. - Suriname accrues arrears with China: USD 151 million as of end-September. - Authorities actively undertaking good faith negotiations with EXIM China; agreement-in-principle at technical level on both stages (flow and stock relief) reached in line with PC agreement and debt sustainability objectives. - Formal debt exchange for bondholders finalized in November; same restructuring menu offered to other private creditors representing about 9 percent of the stock of arrears to external private creditors at end-2022. - Authorities committed to not make any payments to these other private creditors until a debt treatment has been finalized. - Program financing: staff finds progress with creditors (including AIP with EXIM China expected to be signed soon and implemented) adequate to fill financing gaps during program period and member in position to repay Fund during post-program period; assurances to be reevaluated at each review. - IDB commits to providing budget support of at least USD 150 million in 2023 conditional on IMF program review and its own conditionality and subsequent budget support of USD 150 million in 2024 is also confirmed. Other IFIs commit to disbursing agreed project loans conditional on IMF program review and their own conditionality. ### Staff appraisal (selected conclusions) - Quantitative performance and fiscal progress - Quantitative program performance has been strong: all end-September quantitative performance criteria have been met. - Authorities on track to reach the 1.6 percent of GDP primary balance target this year. - IT on social spending was missed, but authorities are taking steps to expand social safety net coverage and committed to making an additional payment in December to meet the end-year social assistance floor; comprehensive review of social assistance program underway. - Structural reforms and policy trade-offs - Despite socio-political challenges and capacity constraints, authorities implemented politically costly structural reforms: eliminating fuel subsidies, phasing out electricity and gas subsidies, and broadening the VAT base. - These reforms are intended to put public finances on a sound footing and provide resources to protect the most vulnerable and improve public service delivery. *Source: IMF staff report excerpt (chapter/section provided).* ### 30. Fiscal discipline and tight monetary policy are bringing about the long-awaited ### 1surea2024001 - 30. Fiscal discipline and tight monetary policy are bringing about the long-awaited ### Macroeconomic stabilization and confidence - Fiscal discipline and tight monetary policy are bringing about the long-awaited stability and confidence is returning. - The exchange rate has been broadly stable in recent months and inflation, though still high, is on a downward trend. - The central bank’s open market operations, which are necessary to absorb excess liquidity, are beginning to gain traction. - Reserve money growth has been stable and has remained below the central bank’s targeted path. - Fiscal balances are improving, and public debt has declined. - Investor confidence is returning; international bond spreads are the lowest they have been since 2018. - Donors are reengaging and the perception of Suriname in the international community is improving. ### Suriname: Proposed Program Financing (In millions of US dollars) - Financing gap: 237 421 505 466 1441 1,773 - Official financing: 342 533 084 016 31,059 - O/w: IMF: 345 315 825 163 559 - Purchases: 555 315 825 163 580 - O/w: for budget support: 555 310 310 326 340 - Repurchases: 210 000 21 - O/w: IFIs: 0 200 150 150 0 500 - Financing from external arrears accumulation (net): 203 168 -100 371 - Financing from external debt restructuring 1/: 0 0 1976 581 344 - Note: 1/ Calculated as a difference between the debt restructuring and a scenario without debt restructuring. - Source: IMF staff calculations. ### Fiscal policy and VAT - Priority: hold steadfast to achievements and avoid policy backtracking. - The enactment of the VAT amendment to broaden the coverage to 60 percent of the consumption basket was a notable achievement; it would provide the government with the revenues it needs to run its operations and provide quality services to the population. - Strengthening tax administration is important, but cannot replace or substitute for sufficiently broad coverage of the VAT. - Authorities should resist political pressures to undermine the integrity of the law. - Commitment to achieve cost recovery for providing electricity by the end of 2024 remains integral to fiscal adjustment and meeting future electricity demands. ### Public sector reforms - Public sector wages have not kept up with inflation and have increasingly lost competitiveness relative to the private sector, threatening the government’s ability to provide quality services. - Almost 20 percent of the public workforce is unregistered, and unexcused absenteeism is rampant. - The “no work – no pay” amendment to the Personnel Act is an important step to remove unregistered or chronically absent workers from the public payroll and create space for meaningful wage increases for working civil servants. - Recommendation: Prompt removal of all unregistered workers from the public payroll is the fairest and most efficient approach. - Recommendation: Tighter controls are needed to ensure line ministries observe and respect the hiring freeze. ### Social assistance and protection - Urgent attention needed to improve the social assistance program and make it more transparent to the public. - Current efforts to protect the most vulnerable need expansion to reach beneficiaries in districts outside the capital city. - In a high-inflation environment, ensure the value of cash transfers does not get eroded by inflation. - Rationale: Caring for the poor and vulnerable maintains social cohesion, ensures a sustainable adjustment, breaks the poverty trap, and promotes inclusive growth. - Transparency measures recommended: start publishing regular updates on the number of beneficiaries receiving social assistance support in each district, the amounts spent on each social assistance program, and the eligibility criteria. ### Debt restructuring - Substantial progress with debt restructuring has been made. - Bilateral agreements with all Paris Club (PC) creditors and India have been completed. - A debt exchange with private external bondholders has been launched and finalized, with very strong participation. - An AIP at the technical level has been reached with China, modeled after the two-stage PC agreement, including relevant contingencies. - The AIP is in line with restoring debt sustainability. ### Exchange rate policy and central bank independence - Authorities remain committed to a flexible exchange rate and an independent central bank. - Authorities have continued to refrain from direct FX interventions and have continued scaling down indirect FX sales to essential goods importers, supporting continued accumulation of international reserves. - Recommendation: Implement the new Central Bank Act without delay, including measures to ensure that the CBvS is insulated from political interference. - Recommendation: Finalize the recapitalization plan soon to further strengthen the CBvS’ financial autonomy and safeguard its independence. - To improve FX market functioning, development of the electronic inter-bank/cambio FX trading platform is nearing completion. ### Financial sector vulnerabilities and reforms - The financial sector is still weak and rising NPLs bear close monitoring, but reforms are underway to address vulnerabilities. - The CBvS has finalized the framework for assessment of banks’ recapitalization plans. - In line with CBvS instructions, all banks have incorporated the AQR results into their accounts. - The CBvS has assessed time-bound recapitalization and restructuring plans of two banks with capital shortages. - CBvS has approved the plan of a private bank proposing recapitalization from private resources. - To contain losses and preserve financial stability, the recapitalization plan of the state-owned bank requires an immediate solution through an agreement between the MOF and CBvS outlining a specific course of action for the government. - Ongoing efforts to strengthen the AML/CFT framework will support financial sector resiliency and prevent the potential loss of corresponding banking relationships. *Source: IMF staff calculations and IMF mission text.* ### 37. Suriname’s demonstrated commitment to macroeconomic discipline merits Fund ### Suriname’s demonstrated commitment to macroeconomic discipline merits Fund support ### IMF program decisions and authorities' commitments - The authorities are committed at the highest level to restoring macroeconomic and financial stability. - IMF staff supports the authorities’ request for: - completion of the fourth review under the EFF arrangement, - extension of the EFF arrangement to end-March 2025, - augmentation of access, - modification of performance criteria, - completion of the fourth review and financing assurances review. ### Recent economic developments and macro outlook - Real GDP (percent change): - 2019: 1.2 - 2020: -16.0 - 2021: -2.4 - 2022: 2.4 - 2023: 2.1 - 2024 (Proj.): 2.1 - 2025 (Proj.): 3.0 - 2026–2028 (Proj.): 3.0 (each year) - Nominal GDP: - 2019: 6.4 - 2020: 22.0 - 2021: 56.9 - 2022: 47.3 - 2023: 56.7 - 2024 (Proj.): 55.9 - 2025 (Proj.): 32.3 - 2026 (Proj.): 22.5 - 2027 (Proj.): 17.0 - 2028 (Proj.): 12.4 - GDP deflator (growth rates): - 2019: 5.2 - 2020: 45.2 - 2021: 60.8 - 2022: 43.8 - 2023: 53.4 - 2024 (Proj.): 52.6 - 2025 (Proj.): 28.5 - 2026 (Proj.): 19.0 - 2027 (Proj.): 13.6 - 2028 (Proj.): 9.1 - Consumer prices (end of period): - 2019: 4.2 - 2020: 60.7 - 2021: 60.7 - 2022: 54.6 - 2023: 40.0 - 2024 (Proj.): 39.3 - 2025 (Proj.): 20.0 - 2026 (Proj.): 14.9 - 2027 (Proj.): 11.8 - 2028 (Proj.): 8.7 - Unemployment rate (percent): - 2019: 8.8 - 2020: 11.1 - 2021: 11.2 - 2022: 10.9 - 2023: 10.6 - 2024 (Proj.): 10.6 - 2025 (Proj.): 10.3 - 2026 (Proj.): 10.3 - 2027 (Proj.): 9.9 - 2028 (Proj.): 8.7 ### External sector and reserves - Gross international reserves (USD millions): - 2019: 648 - 2020: 585 - 2021: 992 - 2022: 1,195 - 2023: 1,234 - 2024 (Proj.): 1,196 - 2025 (Proj.): 1,480 - 2026 (Proj.): 1,464 - 2027 (Proj.): 1,488 - 2028 (Proj.): 1,520 - Usable gross international reserves (USD millions) 5/: - 2019: 505 - 2020: 129 - 2021: 512 - 2022: 865 - 2023: 995 - 2024 (Proj.): 962 - 2025 (Proj.): 1,241 - 2026 (Proj.): 1,230 - 2027 (Proj.): 1,253 - 2028 (Proj.): 1,285 - Current account balance (percent of GDP): - 2019: -11.2 - 2020: 8.9 - 2021: 5.7 - 2022: 2.1 - 2023: 1.5 - 2024 (Proj.): 2.4 - 2025 (Proj.): 1.0 - 2026 (Proj.): 2.3 - 2027 (Proj.): 0.9 - 2028 (Proj.): 1.3 - Trade balance and key external flows: - Exports of goods and services (USD millions): 2019: 2,287; 2020: 2,447; 2021: 2,300; 2022: 2,600; 2023: 2,586. - Imports of goods and services (USD millions): 2019: 2,413; 2020: 1,845; 2021: 1,876; 2022: 2,342; 2023: 2,194. - Of exports f.o.b., gold and petroleum dominated (e.g., gold, petroleum: 2019: 1,903; 2020: 2,114; 2021: 1,996; 2022: 2,218; 2023: 2,152). ### Fiscal developments and public debt - Central government overall balance (net lending/borrowing, percent of GDP): - 2019: -20.2 - 2020: -12.0 - 2021: -5.7 - 2022: -2.7 - 2023: -0.9 - 2024 (Proj.): -1.0 - 2025 (Proj.): -0.4 - 2026 (Proj.): -1.1 - 2027 (Proj.): -0.2 - 2028 (Proj.): -0.5 - Primary balance (percent of GDP): - 2019: -17.3 - 2020: -8.3 - 2021: -0.5 - 2022: 1.0 - 2023: 1.7 - 2024 (Proj.): 1.6 - 2025 (Proj.): 3.5 - 2026 (Proj.): 2.7 - 2027 (Proj.): 3.5 - 2028 (Proj.): 3.5 - Central government revenue and expenditure (percent of GDP, 2023 actual and projections): - Revenues (2023): 26.1; 2024 (Proj.): 25.7; 2025 (Proj.): 25.3. - Total expenditure (2023): 27.1; 2024 (Proj.): 26.7; 2025 (Proj.): 25.6. - Central government debt (percent of GDP): - 2019: 84.0 - 2020: 146.4 - 2021: 115.8 - 2022: 115.1 - 2023: 107.0 - 2024 (Proj.): 87.0 - 2025 (Proj.): 93.9 - 2026 (Proj.): 92.1 - 2027 (Proj.): 85.7 - 2028 (Proj.): 81.4 ### Monetary sector and domestic finance - Broad money (percent of GDP) and levels: - Broad money (percent of GDP): 2019: 60.7; 2020: 82.1; 2021: 76.0; 2022: 74.9; 2023: 65.7; 2024 (Proj.): 59.0. - Reserve money (percent of GDP): 2019: 30.2; 2020: 33.1; 2021: 31.2; 2022: 30.7; 2023: 23.2; 2024 (Proj.): 20.4. - Central government interest burdens: - Total central government debt interest rate (effective): 2019: 3.4; 2020: 2.5; 2021: 1.6; 2022: 1.5; 2023: 2.5. - Domestic central government debt interest rate (effective): 2019: 2.4; 2020: 4.7; 2021: 1.4; 2022: 1.1; 2023: 3.2. ### Key policy and program implications (drawn from staff support and data) - Continued high-level political commitment underpins staff support for program milestones (fourth review, extension to end-March 2025, augmentation of access, modification of performance criteria, and completion of associated reviews). - Macroeconomic stabilization priorities reflected in the projections: - Fiscal consolidation to narrow the overall balance toward small deficits and sustain primary surpluses in projected years. - Preservation and rebuilding of international reserves (gross reserves projected to rise to 1,480 USD millions in 2025 and usable reserves to 1,241 USD millions in 2025). - Reinforcement of monetary tightening and liquidity management (OMO auctions, reserve requirements, and reductions in reserve money as percent of GDP). - Manage external vulnerabilities by monitoring current account and capital/financial flows; current account projected to remain small surplus/near-balance in 2023–2028. - Debt trajectory: central government debt expected to decline from 107.0 percent of GDP in 2023 to 87.0 percent in 2024, with subsequent stabilization in the 80–95 percent range through 2028. *Source: Surinamese authorities and IMF staff calculations and projections.* ### 1. Gross external financing requirements 557-1198223926129116117213186241244 ### 1surea2024001 - 1. Gross external financing requirements 557-1198223926129116117213186241244 ### Gross external financing requirements (levels and percent of GDP) - 1. Gross external financing requirements (levels): 557-1198223926129116117213186241244 - 1. Gross external financing requirements (percent of GDP): 13.9-4.12.76.67.47.84.04.13.01.95.04.8 - A. Current account deficit (levels): 448-260-176-76-54-90-38-94-39-58-53-44 - A. Current account deficit (percent of GDP): 11.2-8.9-5.7-2.1-1.5-2.4-1.0-2.3-0.9-1.3-1.1-0.9 - B. Public sector debt amortization (levels): 122146259308203166194237142116266260 - B. Public sector debt amortization (percent of GDP): 3.05.08.48.55.74.44.95.73.22.55.55.1 - (i) Central government amortization (levels): 9746159202103669413711766241259 - (i) Central government amortization (percent of GDP): 2.41.65.25.62.91.82.33.32.71.45.05.1 - (ii) CBvS amortization (levels): 000000000001 - (ii) CBvS amortization (percent of GDP): 0.00.00.00.00.00.00.00.00.00.00.00.0 - (iii) SOEs amortization (levels): 251001001071001001001002550250 - (iii) SOEs amortization (percent of GDP): 0.63.43.22.92.82.72.52.40.61.10.50.0 - C. Other outflows (levels): -13-5-1711121552828282828 - C. Other outflows (percent of GDP): -0.3-0.20.00.23.15.70.10.70.60.60.60.6 ### Sources of financing (levels and percent of GDP) - 2. Sources of financing (levels): 611-4821-77-71-128-58-10579103-363406 - 2. Sources of financing (percent of GDP): 15.2-1.60.7-2.1-2.0-3.4-1.4-2.51.82.3-7.58.0 - A. Asset sales (net) (Other investment account) (levels): 244-168433600000000 - A. Asset sales (percent of GDP): 6.1-5.81.41.00.00.00.00.00.00.00.00.0 - B. Foreign direct investment (net) (levels): -80-1243-29-643-1314164831 - B. Foreign direct investment (net) (percent of GDP): -0.20.0-4.00.1-0.8-1.70.1-0.30.30.41.00.6 - C. Portfolio flows (net) (levels): 1173547-1900000000 - C. Portfolio flows (net) (percent of GDP): 2.91.21.5-0.50.00.00.00.00.00.00.00.0 - (i) Central government (levels): 12500000000001 - (i) Central government (percent of GDP): 3.10.00.00.00.00.00.00.00.00.00.00.0 - (ii) SOEs (levels): 0510000000000 - (ii) SOEs (percent of GDP): 0.01.80.00.00.00.00.00.00.00.00.00.0 - (iii) Other (levels): -9-1647-190000000-1 - (iii) Other (percent of GDP): -0.2-0.51.5-0.50.00.00.00.00.00.00.00.0 - D. Public sector debt financing (levels): 201985579715053525265178197 - D. Public sector debt financing (percent of GDP): 5.03.41.82.22.01.31.31.31.21.43.73.9 - (i) Central government (levels): 201985579715053525265178197 - (i) Central government (percent of GDP): 5.03.41.82.22.01.31.31.31.21.43.73.9 - (ii) SOEs (levels): 000000000000 - (ii) SOEs (percent of GDP): 0.00.00.00.00.00.00.00.00.00.00.00.0 - E. Other inflows (net) (levels): 57-140-176-114-114-114-1441322-589178 - E. Other inflows (percent of GDP): 1.4-0.50.0-4.8-3.2-3.0-2.9-3.50.30.5-12.13.5 ### Balance and accumulation of reserves - Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (levels): 5471-61-316-332-419-219-277-5217-603161 - Balance (2-1) excluding expected accumulation of gross reserves; Gap (-) Surplus (+) (percent of GDP): 1.32.4-2.0-8.7-9.4-11.2-5.5-6.7-1.20.4-12.43.2 - 3. Expected change in gross reserves of the CBvS; accumulation (-) (levels): 25483-416-225-39-1-246-268-23-321271 - 3. Expected change in gross reserves of the CBvS; accumulation (-) (percent of GDP): 6.32.9-13.5-6.2-1.10.0-6.2-6.5-0.5-0.70.21.4 - 4. Errors and omissions (levels): -289-11424011800000000 - 4. Errors and omissions (percent of GDP): -7.2-3.97.83.20.00.00.00.00.00.00.00.0 ### Financing needs and allocation (levels and percent of GDP) - 5. Financing needs -(2-1+3+4) (levels): -20-402374233714214655457515592-232 - 5. Financing needs -(2-1+3+4) (percent of GDP): -0.5-1.47.711.610.511.211.613.21.70.312.2-4.6 Allocation by: - (i) Official financing (levels): -20-403425425830835140163-13-22-55 - (i) Official financing (percent of GDP): -0.5-1.41.17.07.38.28.89.71.4-0.3-0.5-1.1 - a. IMF (levels): -20-40345415815825125163-13-22-55 - a. IMF (percent of GDP): -0.5-1.41.11.54.54.26.36.11.4-0.3-0.5-1.1 - Purchases (levels): 00555415815825125163000 - Purchases (percent of GDP): 0.00.01.81.54.54.26.36.11.40.00.00.0 - O/w: for budget support (levels): 005653103103501030000 - O/w: for budget support (percent of GDP): 0.00.01.81.52.92.71.32.50.00.00.00.0 - Repurchases (levels): 204021000000132255 - Repurchases (percent of GDP): 0.51.40.70.00.00.00.00.00.00.30.51.1 - b. IFIs (levels): 0002001001501001500000 - b. IFIs (percent of GDP): 0.00.00.05.52.84.02.53.60.00.00.00.0 - (ii) External arrears (net) (levels): 203168-1-1000000 - (ii) External arrears (percent of GDP): 6.64.60.00.00.00.00.00.00.00.0 - (iii) Financing from external debt restructuring 1/ (levels): 1141141141441228614-177 - (iii) Financing from external debt restructuring 1/ (percent of GDP): 3.23.02.93.50.30.612.6-3.5 - Sources: Fund staff estimates and projections. - 1/ Calculated as a difference between the debt restructuring scenario and a scenario without debt restructuring. - (In percent of GDP) Proj. ### Monetary and reserves aggregates (Monetary Survey and Central Bank accounts; selected items) - Monetary Survey (Millions of SRD; selected rows, levels across years) - Net foreign assets: 6,3658,4305,86711,67423,82747,47370,16865,48082,74277,949 - Net international reserves (Held by the CBvS): 2,5153,6854,3457,90520,72736,87647,24043,34453,75552,910 - Net other foreign assets: 3,8504,7451,5223,7693,10010,59622,92822,13628,98725,039 - Net domestic assets: 10,6699,97613,43020,11922,35819,54418,85416,79121,16115,859 - Net claims on the public sector: 3,7263,4624,78711,31010,6824,6841,693607894-265 - Credit to the private sector: 7,6187,2787,3109,29911,01918,25523,93823,02228,73126,199 - Broad money 1/: 17,03018,40319,26931,79346,18567,01689,02282,271103,90393,808 - Currency in circulation: 1,2881,5041,9733,4984,3975,5786,6966,4737,9857,712 - Foreign currency deposits: 10,95911,16810,45419,82331,16548,11765,10259,14974,83765,735 - Central Bank (CBvS) (selected items, Millions of SRD) - Net foreign assets: 5121,9922,3944,03911,26628,02035,49732,35640,85640,766 - Net international reserves: 2,5153,6854,3457,90520,72736,87647,24043,34453,75552,910 - Gross International Reserves: 3,1404,2964,7908,19920,73037,93451,73646,85267,86863,141 - Liabilities: -625-611-445-294-3-1,058-4,496-3,508-14,113-10,231 - Net other foreign assets: -398-1,694-1,951-3,866-9,461-8,856-11,743-10,988-12,899-12,144 - Reserve money: 3,6744,9759,59312,81718,96727,47031,37428,39937,53232,310 - Currency in circulation (CBvS): 1,5501,7572,2633,8614,7926,0847,4117,1698,8378,542 - Bankers deposits: 2,0073,1097,2118,86914,05421,22923,71321,00228,42623,522 - Memorandum items (selected percent changes and ratios) - Velocity (GDP/broad money; end of period): 1.61.61.61.21.31.31.51.71.71.8 - Broad money (Percent of GDP): 63.361.760.782.176.074.965.759.058.054.9 - Credit to private sector (Percent of GDP): 28.324.423.024.018.120.417.716.516.015.3 - Reserve money (Percent of GDP): 13.716.730.233.131.230.723.220.420.918.9 - Money multiplier (SRD broad money/reserve mon): 1.91.71.71.61.61.51.51.51.51.6 - Sources: Central Bank of Suriname; and IMF staff calculations and projections. - Note: 1/ The definition of broad money excludes deposits of public nonfinancial corporations (which are included in net claims on the public sector). ### Financial soundness indicators (selected, in percent) - Capital Adequacy (Dec columns and Jun/Sep 2023): - Regulatory capital to risk-weighted assets: 9.611.411.814.516.818.418.7 - Regulatory Tier 1 capital to risk-weighted assets: 9.010.810.513.115.517.316.7 - Tier 1 capital to total assets (leverage ratio): 4.94.94.35.76.17.47.1 - Asset Quality: - NPL to gross loans: 12.010.614.612.812.416.114.3 - Provisions to total NPLs: 61.660.546.0...39.935.7.. - Earnings and Profitability: - Return on assets (ROA, annualized): 0.11.02.01.82.71.22.0 - Return on equity (ROE, annualized): 1.916.734.829.644.816.027.4 - Liquidity and Market Sensitivity: - Liquid assets to total assets: 40.246.851.558.854.352.353.7 - Liquid assets to short-term liabilities: 82.193.4101.3117.0114.0102.7106.7 - Net open positions in foreign currency to capital 1/: 22.211.520.839.423.221.016.8 - Foreign currency liabilities to total liabilities: 66.560.969.271.674.175.075.3 - Source: Central Bank of Suriname - 1/ The increase in net asset position in 2020 and 2021 includes a valuation effect attributable to significant depreciation. ### IMF program financing schedule and program monitoring (selected) - Table 10a/10b: Original and Proposed Schedule of Reviews and Available Purchases - Multiple availability dates with amounts in Millions of SDR and Percent of Quota (examples): - 12/22/2021: 39.430.6 - 3/15/2022: 39.430.6 - 6/14/2023: 39.430.6 - 3/14/2024 onward: 46.736.3 (several review dates) - Total (original schedule): 383.9297.8 - Proposed Total: 430.7334.1 - Memo: Quota128.9 - Table 11: Program Monitoring—Indicators of Fund Credit Under the EFF (In millions of SDR, unless otherwise indicated) - Prospective Drawings (selected years): 39.4118.2186.946.80.00.00.00.00.00.00.00.00.0 - Percent of quota (selected): 30.691.7145.036.30.00.00.00.00.00.00.00.00.0 - Repurchases (selected years): 0.00.00.00.09.816.440.667.971.871.861.955.431.2 - Outstanding Credit (eop) (selected years): 78.8197.0383.9430.7420.9404.4363.8295.9224.2152.490.435.13.9 - Gross International Reserves (US$ million, selected years): 1,1951,1961,4641,4881,5201,5081,4381,3211,182953752572467 - Gross International Usable Reserves (US$ million, selected years): 8659621,2301,2531,2851,2741,2031,086948719518337233 - Exports of G&S (US$ million) (selected years): 2,6002,6852,7442,7602,7862,8752,9473,0363,1543,2843,4273,5853,759 - Table 12: Quantitative Performance Criteria and Indicative Targets Under the EFF (selected items, in millions of Suriname dollars) - Fiscal/debt targets: - Primary fiscal balance (cash basis) of central government (floor) (selected Act./PC/IT outcomes): -2,321-7193343,007Met110159135Not Met221-11014Met331-3161Met (and many subsequent period entries showing Met/Not Met) - New natural resource revenue-collateralized debt (continuous ceiling) (U.S. dollars): 00Met00Met00Met00Met - Non-accumulation of central government external debt arrears (continuous ceiling): 00Met00Met00Met00Met - Monetary targets: - Gross credit to the central government by the central bank (continuous ceiling): 3/10,22900Met00Met00Met00Met (and later periods with 00Met) - Net international reserves of the central bank (floor) (millions of U.S. dollar) (selected): 4/-154348310319Met11-25Met103216Met1143019Not Met (and many subsequent monthly entries with Met/Not Met) - Net domestic assets of the central bank (ceiling) (selected): 2/4/8,777-343161203Not Met-6180-6Met-1,134272113Met-1,13739-118Met - Indicative targets: - Social spending of central government (floor) (selected): 2/6041,070922Not Met371269Not Met; later 742832Met; later 1,1121,315Met - Memorandum items (selected): - Reserve money (selected periods): 12,81718,29418,96718,62918,95019,06119,18019,59718,881 - Gross international reserves (millions of U.S. dollar) (selected): 5859689929799861,0718481,139899 - Usable international reserves (millions of U.S. dollar) (selected): 129501512513505604518673566 - Program exchange rate: 14.018 (repeated) - Notes on performance: Many PC/IT periods list "Met" or "Not Met" outcomes for fiscal and monetary criteria, with specific numeric targets and actuals recorded in Table 12 entries. *Source: IMF staff estimates and projections; Central Bank of Suriname; IMF staff calculations and projections.* ### 1. Primary fiscal balance (cash basis) of central government (floor) 2/1, ### 1surea2024001 - 1. Primary fiscal balance (cash basis) of central government (floor) 2/1, ### Quantitative Performance Criteria — Fiscal/debt targets (selected observations) - 2022 (earlier rows): 1051,788657 Not Met 1,2152,1111,174 Not Met 1,3262,6251,150 Not Met - 2022 end-Oct./end-Nov./end-Dec. (PCAdj. PCAct. Met/Not met): 1,1471,5712,020 Met | 1,3381,6932,189 Met | 1,5291,826[1897][Met] - 2023 end-Jun./end-Jul./end-Aug. (PCAdj. PCAct. Met/Not met / ITAdj. ITAct. Met/Not met): - 1,7211,790[1909][Met] | 1,912TBDTBD | 2,103TBDTBD | 2,294TBDTBD - 2024 monthly PCProp / PCIT sequence (selected): 3847691,5251,1531,5381,9223,0502,3072,6913,0764,7053,4603,8444,2294,613 - New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (continuous ceiling) (U.S. dollars): multiple rows show 0 0 Met / 0 0 Met / 0 0 Met / 0 0 Met across periods. - New central government guaranteed debt (continuous ceiling): multiple rows show 0 0 Met across periods. - Non-accumulation of central government external debt arrears (continuous ceiling) (millions of U.S. dollars): entries include 00 Met 00 Met 00.02 Not Met; other rows show 04 Not Met 00 Met 00 Met and repeated 000000000000000. ### Monetary targets (selected) - Gross credit to the central government by the central bank (continuous ceiling): repeated entries 00 Met across periods. - Net international reserves of the central bank (floor) (millions of U.S. dollar) 2/: - 194169204 Met 196150179 Met 226313332 Met (earlier block) - 2/-57-38-31 Met -55-32-26 Met -54-28-28 Met (2022 end-Oct./end-Nov./end-Dec.) - 2/-53-39-21 Met -57TBDTBD -73TBDTBD -6TBDTBD (2023 end-Jun./end-Jul./end-Aug.) - 2/-7-25-29-37-4411-80-7-28-39-39-46-65-1 (2023 end-Jan. ... end-Dec. line) - Net domestic assets of the central bank (ceiling) 2/: - -1,193-845-111 Not Met -1,063-425435 Not Met -1,332-2,548-1,080 Not Met (earlier) - 2/3,6023,3342,376 Met 4,0063,6833,843 Not Met 4,3974,0302,776 Met (2022) - 2/3,8923,7032,448 Met 4,214TBDTBD 4,722TBDTBD 4,121TBDTBD (2023) - 2/4541,0411,5661,4951,8361,2722,1891,6211,8882,3333,6482,6453,9484,4363,730 (2023 monthly sequence) - Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (millions USD) (continuous ceiling): repeated 00 Met / 000000000000000 across periods. - Central government mineral revenue in local currency (ceiling) (millions of U.S. dollar) 2/: - 57 Not Met 10 11 Not Met (2022) - 1514 Met 20 TBDTBD 25 TBDTBD 30 TBDTBD (2023) - 371515172030303030303030303030 (2023 monthly sequence) ### Indicative Targets - Social spending of central government (floor) 2/: - 1,4831,717 Met (earlier) - 1,9811,058 Not Met (2022) - 2,9711,915 Not Met 3,962TBDTBD (2023) - Monthly sequence: 1,3081,1342,6172,4544,0333,6935,122 (2023/2024) ### Memorandum items (selected exact figures) - Reserve money: 24,27725,20524,66026,51425,04727,470 (earlier block) - Reserve money (local currency portion only): 10,71811,50710,87111,63211,02412,263 - Reserve money (constant exchange rates): 17,22418,58317,37718,71017,52919,414 - NFA (constant exchange rates): 9,2899,7149,3169,2969,47811,514 - Gross international reserves (millions of U.S. dollar): 1,1901,0451,1921,0311,2601,194 - Usable international reserves (millions of U.S. dollar) 5/: 864716866707934865 - Program exchange rate: 14.01814.01814.01814.01814.01814.018 - Additional memoranda (later periods): - Reserve money33,96427,59035,10229,37836,14727,225 - Reserve money (local currency portion only) 14,24914,06414,64215,60214,99814,438 - Reserve money (constant exchange rates)21,46119,44821,89620,91422,29419,457 - NFA (constant exchange rates)9,9599,1729,9909,1709,9978,781 - Gross international reserves (millions of U.S. dollar)1,1531,0911,1551,0961,1561,062 - Usable international reserves (millions of U.S. dollar) 5/835853837857838825 - Later memoranda: Reserve money29,44026,72030,049TBD30,670TBD31,374TBD; Reserve money (local currency portion only) 15,32014,20815,573TBD15,831TBD16,162TBD; Reserve money (constant exchange rates)20,58919,16720,857TBD21,130TBD21,477TBD; NFA (constant exchange rates)8,7978,8198,742TBD8,507TBD9,455TBD; Gross international reserves (millions of U.S. dollar)1,1321,1071,128TBD1,112TBD1,234TBD; Usable international reserves (millions of U.S. dollar) 5/893873889TBD873TBD995TBD; Program exchange rate14.01814.01814.018TBD14.018TBD14.018TBD ### Structural Benchmarks (selected measures, target dates, and status) - Establish competitive FX auctions for the CBvS to undertake buying/selling of FX during periods of disorderly market conditions: December 2021 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 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 Not met — Objective: Strengthen accountability and transparency. - Develop a time-bound plan for the CBvS’s recapitalization agreed between the CBvS and the government: September 2022 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 Not met; implemented with a delay in February 2022 — Objective: Strengthen accountability and transparency. - National Assembly to pass amendments in line with IMF staff recommendations (clarify mandate, autonomy, transparency, limits on monetary financing): January 2022 Not met; implemented with a delay in April 2023 — Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency. - Establish an electronic trading platform for inter-bank/cambio FX trading, with expanded scope to cover bank/cambio trading with gold exporters: 18 September 2023 Not met; implemented with delay in [December] — Objective: Create a consolidated FX market. - Publish FY 2020-2021 audited IFRS on CBvS external website and FY 2022 audited IFRS: 21 March 2024 Proposed to be reset to June 2024 — Objective: Strengthen accountability and transparency. - Develop time-bound recapitalization plan for CBvS: 21 December 2023 Proposed to be reset to March 2024 — Objective: Protect CBvS financial autonomy. - Submit legislative amendment to the Foreign Exchange Regulation 1947 to the National Assembly in consultation with Fund staff: 18 December 2023 — Objective: Enable the CBvS to effectively and independently manage its official reserves and conduct foreign exchange policy. - Financial sector / crisis preparedness (selected): - Undertake full asset quality review for the two largest banks (internationally reputable firm): September 2022 Met — Objective: Diagnose largest banks and potential recapitalization needs. - Submit Credit Institutions Resolution Act to the State Council: January 2022 Not met; implemented with delay in February 2023 — Objective: Strengthen CBvS role in crisis management. - Submit revised Banking and Credit Supervision Act to State Council: January 2022 Not met; implemented with delay in February 2023 — Objective: Solidify oversight over the financial sector. - Operationalize Financial Stability Committee: January 2022 Not met; implemented with a delay in April 2022. - Operationalize a Bank Resolution Unit within the CBvS: February 2022 Not met; implemented with a delay in April 2022. - Undertake full asset quality review for the remaining banks: December 2022 Not met; implemented with a delay in May 2023. - CBvS to instruct banks to incorporate AQR results and review recapitalization plans: 20 October 2023 Met. - Fiscal and Debt (selected): - Publish time-bound plan to implement TA recommendations to streamline treasury functions through the Treasury Single Account (TSA): January 2022 Met. - Develop terms of reference for hiring specialists to audit outstanding supplier arrears: January 2022 Met. - Publish financial assessment of EBS that includes its legacy liabilities: May 2022 Met. - Commence an audit on outstanding supplier arrears: April 2022 Met: audit completed in May 2023. - Passage of laws needed to implement the VAT by the National Assembly: March 2022 Not Met; implemented with a delay in August 2022. - Publish plan to scale back a range of tax exemptions aimed at raising additional revenue of 0.4 percent of GDP: March 2022 Not Met; Implemented in February 2023 budget. - Pass laws/ decrees to expand SDMO mandate to include whole nonfinancial public sector: June 2022 Not Met; implemented with delay in March 2023. - Create a large taxpayer unit to increase taxpayer compliance: June 2022 Not Met; implemented with a delay in July 2022. - Review social protection public expenditure and publish time-bound strategic plan: 11 December 2023 — Objective: Strengthen social spending. - Publish report of the 10 largest SOEs identifying principal fiscal risks: 12 December 2023 Proposed to be reformulated and reset. - Prepare report identifying fiscal risks of largest SOEs: 12 June 2024 Reformulated as new SB. - Establish system to compile and maintain an up-to-date list of public entities (Institutional Table): 11 June 2023 Met. - Enact amended VAT Act to convert zero-rated products to exempt and impose standard 10 percent VAT rate on sales covering at least 60 percent of household consumption: July 2023 Not Met; implemented with a delay in September 2023. - Publish quarterly updates on rationale for each tariff adjustment and remaining subsidy size on EAS external website: 11 October 2023 Met. - Operationalize enacted amendment to Personnel Act by issuing a state decree to halt payments for unregistered workers: 11 October 2023 Not Met; implemented with delay in November 2023. - Issue State Decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks: 12 December 2023 Proposed to be reset to March 2024. - Publish quarterly budget execution report starting with end June 2023 budget outturns: 11 September 2023 Met. - Publish a public investment management manual with guidelines including climate change and flood risk management considerations: 11 September 2024 Proposed new SB. - MoFP, SDMO, and CBvS to sign Memorandum of Understanding detailing responsibilities with respect to external debt payments: 14 January 2024 Proposed new SB. - Publish monthly report on social assistance coverage and cash transfer values by district: 11 January 2024 Proposed new SB. ### Debt Sustainability Analysis (Annex I, summary) - Overall risk of sovereign stress: High - Near term: 1/n.a.n.a. - Medium term: High High - Long term: Moderate - Commentary summary: - Authorities' debt restructuring scenario suggests public debt and GFNs would be sustainable. - Even after restructuring, public debt would remain high (above 87 percent of GDP) until end-2023 and highly vulnerable to macro-fiscal shocks, including recapitalization needs of the banking system and the Central Bank of Suriname (CBvS). - High risk signal of the fanchart driven by historical volatility of macro-fiscal shocks; FX vulnerability mitigated by significant share of government revenues received in foreign currency and potential future oil revenues not incorporated in the DSA. - Projection statement: The projected debt path is expected to stabilize and GFNs will remain at manageable levels. - Final assessment: The overall risk of sovereign stress is high. - Long-term note: Public debt to GDP expected to continue declining but GFN to GDP is gradually increasing until 2033, mainly due to repayments to IFIs including the Fund and restructured debts. *Source: Authorities and IMF staff calculations and projections.* ### 1. Debt coverage in the DSA: 1/CGGGNF ### 1. Debt coverage in the DSA: 1/CGGGNF ### Coverage and consolidation - Chosen coverage: Budgetary central government (Yes). - Subsectors excluded from chosen coverage: - Extra budgetary funds (EBFs): No - Social security funds (SSFs): No - State governments: No - Local governments: No - Public nonfinancial corporations: No - Central bank: No - Other public financial corporations: No - Comment: Suriname's public debt under the DSA refers to central government debt including loans to IMF and CBvS. There is no estimate of local governments' and social security funds' debts but they should be considered minimal if any. There is no estimate of SOE debts, but the government has passed a law to expand the legal mandate of SDMO to include the whole NFPC and is expected to publish audited financial reports of 10 largest state-owned enterprises in 2023. ### Basis of recording and valuation - Recording bases referenced: accrual recording, commitment basis, due for payment, etc. - Valuation notes: - Nominal value definition emphasized. - Face value and market value definitions noted; market value applicable only to traded debt securities. - Consolidation: Not applicable (consolidated reporting not applied across the excluded subsectors). ### Public debt stock and composition (end-2022) - Public debt: 115.1 percent of GDP. - FX debt: explains 100 percent of GDP. - External public debt: 88 percent of GDP. - Multilateral debt: 34 percent of GDP in 2022, about 3/4 of which is owed to Inter-American Development Bank (IADB). - Other official debt: - Bilateral debt: 19 percent of GDP. - ECA-backed debt: 6 percent of GDP. - Official creditor shares: - China: 15 percent of GDP. - Paris Club: 3 percent of GDP. - India: 1 percent of GDP. - Private debt composition: - Two eurobonds account for 21 percent of GDP. - Non-ECA backed securities: 0.4 percent of GDP. - Arrears: - External arrears: 14 percent of GDP as of end-2022. - Domestic arrears (including supplier arrears): 7 percent of GDP as of end-2022. - Domestic debt (end-2022): 27 percent of GDP, composed of: - Debt owed to CBvS: 9 percent of GDP. - Debt to commercial banks: 4 percent of GDP. - Debt to non-banking institutions: 7 percent of GDP. ### Baseline scenario projections (selected figures) - Public debt path (percent of GDP): - 2022: 115.1 - 2023: 87.1 - 2024: 92.1 - 2025: 85.7 - 2026: 81.4 - 2027: 76.8 - 2028: 73.7 - 2029: 70.3 - 2030: 67.3 - 2031: 63.9 - 2032: 60.8 - Change in public debt (percent of GDP): - 2022: -0.7 - 2023: -28.0 - 2024: 5.0 - 2025: -6.3 - 2026: -4.3 - 2027: -4.7 - 2028: -3.0 - 2029: -3.6 - 2030: -3.1 - 2031: -3.3 - 2032: -3.1 - Contribution of identified flows (percent of GDP): - 2022: -0.2 - 2023: -15.4 - 2024: 8.4 - 2025: -5.9 - 2026: -3.7 - 2027: -3.3 - 2028: -2.9 - 2029: -2.9 - 2030: -3.0 - 2031: -3.0 - 2032: -3.0 - Primary deficit (percent of GDP): - 2022: -1.0 - 2023: -1.6 - 2024 onward (2024–2032): -2.7 (2024), -3.5 (2025–2032) — note repeated -3.5 from 2025 onward. - Noninterest revenues (percent of GDP): 26.8 (2022); 25.7 (2023); 25.4 (2024); 25.8 (2025–2032) repeated. - Noninterest expenditures (percent of GDP): 25.8 (2022); 24.0 (2023); 22.7 (2024); 22.3 (2025–2032) repeated. - Automatic debt dynamics components: - Real interest rate and relative inflation (percent): 9.6 (2022); -6.1 (2023); 1.0 (2024); 0.7 (2025); 1.7 (2026); 2.1 (2027); 2.4 (2028); 2.3 (2029); 2.2 (2030); 2.1 (2031); 2.0 (2032). - Real interest rate (percent): -30.7 (2022); -36.2 (2023); -9.6 (2024); -6.9 (2025); -3.0 (2026); -1.6 (2027); 0.7 (2028); 0.7 (2029); 0.7 (2030); 0.7 (2031); 0.8 (2032). - Relative inflation (percent): 21.1 (2022); 30.1 (2023); 10.6 (2024); 7.7 (2025); 4.7 (2026); 3.7 (2027); 1.8 (2028); 1.7 (2029); 1.5 (2030); 1.3 (2031); 1.2 (2032). - Real growth rate (percent): -2.8 (2022); -2.4 (2023); -2.5 (2024); -2.7 (2025); -2.5 (2026); -2.4 (2027); -2.2 (2028); -2.2 (2029); -2.0 (2030); -2.0 (2031); -1.9 (2032). - Other identified flows (percent of GDP): 2.3 (2022); -5.2 (2023); 12.6 (2024); -0.4 (2025); 0.6 (2026); 0.5 (2027); 0.4 (2028–2032) repeated. - Contingent liabilities (percent of GDP): 0.0 across 2022–2032. - Deposit increase (percent of GDP): 4.1 (2022); 0.0 (2023); 0.0 (2024); -2.0 (2025); 0.0 (2026–2032) repeated. - CBvS restructuring (percent of GDP): -1.7 (2022); 0.0 thereafter. - Nominal haircut by restructuring (percent of GDP): 0.0 (2022); -6.7 (2023); 0.0 thereafter. - Recap assumption (percent of GDP): 0.0 (2022); 0.0 (2023); 9.1 (2024); 0.7 (2025); 0.6 (2026); 0.5 (2027); 0.4 (2028); 0.4 (2029–2032) repeated. - IMF finance: BOP (percent of GDP): 0.0 (2022); 0.0 (2023); 1.5 (2024); 3.0 (2025); 0.6 (2026); 0.8 (2027); 0.0 thereafter. - Contribution of residual (percent of GDP): -0.5 (2022); -12.6 (2023); -3.5 (2024); -0.4 (2025); -0.5 (2026); -1.4 (2027); -0.1 (2028); -0.6 (2029); -0.1 (2030); -0.3 (2031); -0.1 (2032). - Gross financing needs (GFN) including arrear clearance (percent of GDP): - 2022: 12.0 - 2023: 8.3 - 2024: 7.7 - 2025: 5.0 - 2026: 3.5 - 2027: 8.3 - 2028: 8.9 - 2029: 9.5 - 2030: 9.7 - 2031: 10.4 - 2032: 9.9 - GFN decomposition (debt service, percent of GDP): - Debt service: 10.9 (2022); 8.0 (2023); 9.1 (2024); 7.6 (2025); 7.0 (2026); 11.8 (2027); 12.4 (2028); 13.0 (2029); 13.2 (2030); 13.9 (2031); 13.4 (2032). - GFN by currency (percent of GDP): local currency and foreign currency listed across years; example values: - Local currency: 0.6 (2022); 1.6 (2023); 1.3 (2024); 0.9 (2025); 1.0 (2026); 2.2 (2027); 2.5 (2028); 2.8 (2029); 3.0 (2030); 3.7 (2031); 4.3 (2032). - Foreign currency: 10.3 (2022); 6.4 (2023); 7.8 (2024); 6.7 (2025); 6.0 (2026); 9.6 (2027); 9.8 (2028); 10.2 (2029); 10.2 (2030); 10.2 (2031); 9.1 (2032). - Gross financing needs (excl. arrear clearance) (percent of GDP): 6.4 (2022); 6.4 (2023); 4.1 (2024); 3.5 (2025); 3.5 (2026); 8.3 (2027); 8.9 (2028); 9.5 (2029); 10.4 (2030); 9.9 (2031); 9.9 (2032). ### Staff commentary on baseline projections - Public debt is projected to decline below 100 percent of GDP by 2023 and to fall below 70 percent in 2030 and below 50 percent by 2036, driven by fiscal adjustment efforts and restructuring agreements. - GFN to GDP peaks at 9.6 percent in 2023 and is expected to decline to 3.5 percent in 2026; projected to increase toward 10.4 percent of GDP in 2031 because repayments to restructured external debts and Fund loans would commence after grace periods. - The GFN path is anchored by sustained primary surpluses; continued fiscal adjustment and maintaining a liquidity buffer (including government deposits) are essential. - The recapitalization assumption (not realized) adds up 10 percent of 2023 GDP on the public debt stock in 2024 (5% for the CBvS and 5% for commercial banks). - The nominal haircut by bondholders reduces the public debt stock by 7 percent in 2023. - IMF BOP finance component is added to the debt stock. - The GFN underlying the GFN tool and restructuring targets reflects arrear clearances. ### Realism and risks of baseline assumptions - Tools indicate rapid reduction in public debt and improvement in primary balance, but projections rely on authorities' strong commitment to fiscal adjustment, ongoing debt restructuring, and recovery from COVID-19. - Interest-growth gap optimism partly due to expected IFI financing with limited external market access until 2026. - Real interest rate projected negative in 2023 due to roll-over of T-bill/T-note arrears with original interests; assumed positive from 2024 as inflation calms and market access improves. - Real exchange rate assumed to converge to an appreciation of 0.6 percent per year due to Balassa-Samuelson effects. ### Medium-term and long-term risk analysis (selected indicators) - Debt Fanchart Module: - Fanchart width: 162.5 2.4 (as presented; preserves formatting) - Probability of debt not stabilizing (pct): 10.0 0.1 - Terminal debt level x institutions index: 58.5 1.3 - Debt fanchart index: ...3.7 - Average GFN in baseline: 7.0 2.4 - Bank claims on government (pct bank assets): 7.2 2.3 - Change in claims on govt. in stress (pct bank assets): 7.7 2.6 - GFN financeability index: ...7.3 - Medium-term index (MTI): 0.3 0.4 ...0.5, High (presented in source formatting) - Prob. of missed crisis, 2023-2028 (if stress not predicted): 54.5 pct. - Prob. of false alarm, 2023-2028 (if stress predicted): 3.4 pct. - Overall assessment: Debt fanchart module points to high risk of debt distress mainly driven by wide fanchart width; GFN financeability module suggests low risk of debt distress supported by declining GFN path in medium term, but fragile domestic banks create liquidity and solvency risks. ### Stress factors and long-term concerns - Recapitalization needs for CBvS and commercial banks could significantly increase immediate GFN needs depending on modality: - Direct equity injections: significant increase in immediate GFN. - Use of securities: reduces immediate GFN and spreads financing over a longer period. - Risks mitigants: significant share of government revenues received in foreign currency and potential future oil revenues. - DSA does not incorporate potential oil production impacts until economic viability of oil reserves is assured. - Medium-term and overall risk considered high even under restructuring scenario due to vulnerability to macro-fiscal shocks and potentially higher GFN needs from recapitalization. ### Restructuring scenario objectives and assumptions (excerpt) - Program overarching objective: reduce public debt to 60 percent of GDP by 2035 and reduce GFNs to an average of 9 percent and an upper limit of 12 percent over 2023-2035. - Rationale: 60 percent debt-to-GDP target consistent with other recent restructurings under IMF-supported programs in the region (example countries cited in source). - Specific baseline program assumption excerpt: - Debt restructuring covers external commercial and official bilateral debt (including arrears), in total amounting to about 50 percent of GDP as of end-2021. - Authorities reached a restructuring agreement with Paris Club creditors on June 24, 2022, followed by bilateral agreements with all the PC creditors. The final bilateral agreement was reached with Italy in June (text ends in source). *Source: 1surea2024001 - 1. Debt coverage in the DSA: 1/CGGGNF* ### 2023. Under the agreement with the Paris Club, there is no face value reduction of official debt ### 2023. Under the agreement with the Paris Club, there is no face value reduction of official debt ### Official and bilateral debt treatment - Under the agreement with the Paris Club (PC), there is no face value reduction of official debt and ECA-backed commercial debt, but amortization is paused for 7 years (until 2028) and for 8 years (until 2029) respectively. - 60 percent of the PC arrears under the bilateral agreement were already paid and the remaining 40 percent is expected to be paid in 2024. - In March 2023, an agreement on official credit lines by EXIM India was made: 60 percent of the arrears have already been paid, while the remaining 40 percent is expected to be paid in 2024. In line with the Paris Club agreements, amortization is paused for 7 years (until 2028) without face value reduction. - An agreement on loans backed by EXIM India was made in May 2023. - An agreement in principle at the technical level was reached with China in November 2023 on both phases of the debt treatment (flow and stock relief), which appears in line with the PC treatment and program parameters. - The agreements with the Paris Club, India and EXIM China do not include a Value Recovery Instrument (VRI). - The agreements with the Paris Club and EXIM China include contingencies for the second phase of debt treatment should the macroeconomic outlook improve, in particular pertaining to oil developments. ### External private creditor restructuring - Authorities reached an agreement in principle (AIP) with bondholders in May 2023; the formal debt exchange with private external bondholders was finalized in November 2023 with a participation rate over 96 percent. - New bonds were issued in an aggregate principal amount of USD 650 million, with an additional USD 10 million issued to cover fees and expenses of the bondholder committee. - Interest structure: - Interest payments start from 2024. - Coupon of 4.95 percent in cash. - Coupon of 3 percent being capitalized until January 2026, when the coupon rate increases to 7.95 percent. - Amortization: 14 semi-annual installments starting in 2027 equal to 1/14th of the outstanding principal amount. - The bonds include a VRI conditional on new revenue streams from a specific oil development project currently under appraisal: - After a “one-off” floor of USD 100 million secured for the government, the annual allocation to the VRI is limited to 30 percent of the royalty revenues from the oil development project. - The aggregate amount paid under the VRI is capped at USD 787 million. - Program baseline does not incorporate the additional oil revenue nor debt services on VRI given that a relevant final investment decision (FID) has not been made. - The VRI would not bring about additional debt sustainability concerns; the new oil development is considered as potential upside risk. - NPV reduction results under the baseline (without the VRI), using typical official creditor methodology: - NPV reductions of 19 percent for official creditors and 21 percent for external commercial creditors at a 5 percent discount rate. - NPV reductions of 50 percent and 40 percent respectively at the 10 percent discount rate. - Note: An agreement on the non-ECA backed loans with private external creditors has not been reached. The Eurobonds comprise 95 percent of the total external debts with private external creditors. ### Central Bank (CBvS) restructuring and domestic arrears - MoFP and CBvS reached an 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 2023. - Losses arising from this agreement are expected to be reflected in the CBvS recapitalization plan, which will follow the restructuring agreement. - Other domestic restructuring: - As of November 2022, accumulated domestic debt arrears peaked at SRD 3.3 billion, excluding arrears with the CBvS. - Part of these arrears was cleared at the end of 2022 (SRD 1.2 billion). - Since then, arrears increased and stood at SRD 2.8 billion in September 2023. - Authorities prepared a concrete action plan for restructuring domestic debts and are on track to completing ongoing domestic restructuring by the end of 2023, while clearing all domestic debt arrears except technical ones. - Supplier arrears and other arrears: - Final audit of legacy supplier arrears as of end-2021 confirmed a stock of SRD 4.1 billion. - Authorities cleared (net basis) SRD 1.7 billion in 2022. - Total stock of accounts payable projected to increase to SRD 3.5 billion by end-2023. - About 60 percent of this stock is more than 90 days past due and hence considered supplier arrears. - Authorities committed to net clearance of at least SRD 1.7 billion in 2023 and to clearing all other accounts payable by 2025, while improving capacity through PFM reforms and TA. - A gold loan agreement in arrears evaluated at SRD 0.4 billion at end-2022 will be cleared in 2024 under a renewed agreement. - Domestic arrear repayment schedule (net basis): - 2023: Arrear repayments SRD 2,666 (1.9% of GDP); CBvS SRD 1,549 (1.1% of GDP); Debt SRD 2,201 (1.6% of GDP); Supplier -SRD 1,084 (-0.8% of GDP). - 2024: Arrear repayments SRD 2,271 (1.2% of GDP); CBvS 0 (0.0% of GDP); Debt 0 (0.0% of GDP); Gold SRD 544 (0.3% of GDP); Supplier SRD 1,727 (0.9% of GDP). - Source: IMF staff estimates. ### Financing assumptions and recapitalization - Financing requirements projected to decline significantly over the medium term due to external debt restructuring (face-value reduction and coupon reduction on existing external bilateral and commercial debt). - Budget finance from multilateral creditors is assumed only until 2024 as a conservative assumption. - Project financing from multilateral creditors is 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; under the baseline, external market access is assumed to resume from 2026 with a potential financing gap in 2025 filled by deposit withdrawal. - Government accumulated deposits of SRD 9.7 billion (11 percent of GDP) by end-2022 provide a liquidity buffer. - Domestic financing expected to be limited in 2024 and 2025 due to ongoing restructuring; domestic financing in 2023-2025 limited to partial roll-over finance (negative net issuance). - Recapitalization needs of the CBvS and commercial banks are conservatively assumed to add to the public debt stock in 2024, increasing it by 10 percent of 2023 GDP (5 percent for the CBvS and 5 percent for the commercial banks). - CBvS recapitalization is assumed to require annual interest payments in local currency equal to 9 percent of the aggregate injection. - Commercial bank recapitalization is assumed to be a one-off operation. - Associated financing needs are not incorporated in the DSA because of uncertainty regarding scale and modalities; modalities (e.g., use of securities) could reduce immediate GFN needs and spread financing over time. ### Public debt sustainability and projections - Public debt is assessed to become sustainable under the restructuring scenario and program implementation. - Public debt trajectory under the restructuring scenario: - Falling below 100 percent in 2023. - Below 70 percent in 2030. - Below 50 percent in 2036. - Gross Financing Needs (GFNs) trajectory: - GFNs decline sharply from 9.6 percent in 2023 to 3.5 percent in 2026. - GFNs would rise to 8.3 percent in the medium to long term due to debt service to IFIs (including the IMF) and repayments of restructured external claims, but would remain at sustainable levels over the long term with GFN to GDP declining from 2033 onwards. - Caveat: If downside risks materialize, fiscal consolidation beyond the program period may be needed to generate buffers for recapitalization of the CBvS and commercial banks. ### External DSA and risk scenarios - External debt projections: - External debt projected to be 118 percent of GDP at end-2023, lower from 148 percent at end-2022. - Total external debt forecast to decline to 80 percent of GDP at end-2028. - External debt expected to track public sector external debt (which accounts for more than 50 percent of total external debt) and decline substantially due to large fiscal adjustment and public external debt restructuring. - Risk assessment: - While external debt projected to decline substantially over the medium term, macroeconomic shocks pose significant risks. - Various shocks generally keep external debt below 150 percent of GDP, but the historical scenario suggests external debt would be considerably higher than the baseline absent fiscal adjustment, public external debt restructuring, and macroeconomic stability (especially exchange rate stability). - Continued internal and external adjustment is critical to ensure external sustainability. *Source: IMF staff estimates.* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Progress under the Extended Fund Facility (EFF) - IMF Executive Board completed the second review on June 14, 2023, and the third review on September 25, 2023. - The extended arrangement under the EFF was approved on December 22, 2021, with access of 366.8 percent of quota (SDR 472.8 million or USD 673 million). - Requests: - Completion of the fourth review of the extended arrangement under the EFF to make available an amount equivalent to SDR 39.4 million (30.6 percent of quota or about USD 52 million) upon completion (out of which SDR 25.6 million or about USD 34 million would be for budget support). - Extension of the EFF through March 31, 2025 (the arrangement expires on December 21, 2024). - Augmentation of access by SDR 46.8 million. - Request that quantitative program targets be set until December 2024 and new structural benchmarks be set. ### Fiscal consolidation and public finances - 2023 targets and outcomes: - Met end-September 2023 quantitative performance criteria (QPCs) on: - Floor on the primary fiscal balance (cash basis). - Floor on net international reserves (NIR). - Ceiling on net domestic asset (NDA) of the central bank. - Ceiling on central government SRD mineral revenue. - Met all other continuous performance criteria; did not meet the indicative target (IT) related to social assistance spending and are taking corrective measures. - 2023 fiscal execution: - On track to achieve central government primary surplus target of SRD 2,294 million for 2023. - Gross financing needs peak at 9.8 percent of GDP in 2023 and average 7.4 percent of GDP over the medium term. - Public debt stood at 116 percent of GDP at end-2022 and is expected to fall below 70 percent by 2028. - 2024 fiscal stance: - A proposed primary balance (PB) target of 2.7 percent of GDP for 2024 (instead of 3.5 percent of GDP) to allow measured consolidation while supporting recovery and social cohesion. - A PB target of 2.7 percent of GDP still implies fiscal consolidation of 1.1 ppts of GDP in 2024. - Key revenue and expenditure measures already implemented: - Eliminated fuel subsidies in March 2023; fuel prices determined by an automatic pricing mechanism based on international prices. - Re-imposed fuel taxes in May: specific taxes on fuel of SRD 3.50 per liter expected to generate 0.7 percent of GDP in revenue in 2023. - Broadened the VAT base via amendment enacted on September 5, 2023: impose standard 10 percent VAT rate on 60 percent of household consumption. - VAT registrations 41 percent higher at end-September compared to end-January. - Electricity tariff adjustments: June implementation includes phasing out monthly household discount of SRD 260 in 6 months and a 31 percent increase for industrial and commercial users; phasing out household discount raises monthly electricity bill by 28 percent on average. - For electricity prices to break even by end-2024, quarterly tariff adjustments to begin in December 2023. - Public sector wage bill and payroll measures: - Wage bill to be kept constant in real terms in 2024 at 6.7 percent of GDP. - Remove 1,000 unregistered workers from public payroll in 2024; estimate up to 18 percent of workers remain unregistered. - Published procedures for halting payments to unregistered workers (structural benchmark for end-October 2023, not met; implemented with delay in November). - Roll out a digital personnel data information system in January 2024. ### Social protection and mitigation measures - Reallocated savings from eliminating inefficient energy subsidies to expand and strengthen social safety net. - July 2023: increased value of cash transfers; December: additional one-off payment to eligible beneficiaries planned. - Intensified efforts to rapidly deliver cash cards to communities to address shortfall in social assistance spending. - Completed review of social protection expenditures; with IMF, ILO, and IDB support will develop a time-bound strategic plan in December to improve efficiency and effectiveness of social benefits. - Electricity tariff mitigation: - Coordinate tariff announcements and offsetting increases in social assistance payments with the Ministry of Social Affairs. - Mitigating measures in the newly-introduced social beneficiary program will be reassessed quarterly. - Formalize process and provide advance schedule for electricity tariff decisions; publish rationale and cost/recovery information. ### Monetary policy, inflation, and FX market - Macroeconomic indicators and monetary stance: - Inflation was 51 percent year-on-year in September (also cited as 50.8 percent year-on-year in September in MEFP). - Nominal exchange rate stable since May. - Reserve money growth stabilized and remained below the central bank’s targeted path. - Usable international reserves at 4.6 months of imports at end-September. - Private sector credit growth remains contained; monetary policy transmission to market rates remains weak with deposit and lending rates negative in real terms, though new term deposit rates are gradually increasing. - Central bank (CBvS) capacity to absorb SRD liquidity has improved. - Exchange rate and FX market reforms: - Commitment to a flexible, market-determined exchange rate; refrained from direct FX interventions. - Indirect FX sales by mineral companies to essential goods importers conducted at market exchange rates; in the process of phasing them out as FX demand pressures ease. - Launch of an electronic FX trading platform in December (initially for inter-institution trades among banks and cambios) to improve price discovery, transparency, and liquidity. - Surrender requirement for exporters to offer a share of FX for sale to the market immediately upon repatriation remains in effect. - Central bank governance and transparency: - Will ensure new governance structure of the CBvS, in line with the new Central Bank Act, is fully constituted as soon as possible and develop a time-bound plan for its recapitalization. - CBvS published FY2020 audited IFRS financial statements on its external website, will proceed with publishing FY2021-22 financial statements, and will continue to implement outstanding safeguards recommendations. - In consultation with the IMF, will review the Foreign Exchange Regulation of 1947 to make it consistent with the new Central Bank Act; in December will submit a legislative amendment to the Foreign Exchange Regulation 1947 to the National Assembly in consultation with the IMF. ### Debt restructuring and arrears - Achievements: - Bilateral agreements with all Paris Club creditors completed. - Agreement to restructure official credit line from EXIM India reached in March; agreement on loan backed by EXIM India reached in May. - Agreement in principle with bondholders reached in May 2023; formal debt exchange finalized in November with participation rate over 96 percent. - Agreement in principle at technical level with China on both first phase (flow relief) and second phase (stock relief) of debt treatments to ensure comparability of treatment among creditors. - Restructuring of legacy debts to the central bank finalized in July. - Domestic arrears and supplier arrears: - On course to implement plan to restructure domestic debt by end-2023 while clearing arrears on all domestic debt except technical ones. - Commit to halting accumulation of supplier arrears, which stood at SRD 3.6 billion in September, and aim to clear all supplier arrears by end-2025. ### Financial sector reforms and supervision - Banks and recapitalization: - Banks incorporated the AQR results and adjusted asset classification and provisions. - CBvS received recapitalization and restructuring plans from banks with capital shortages and reviewed these plans for credibility. - Legislation and governance: - Bank Resolution Bill and amendments to the Banking and Credit System Supervision Act submitted to the State Council; both acts expected to be approved by the DNA in December. - CBvS and MOF to agree on a governance framework for state-owned banks by end-December. - Strengthen implementation of governance reforms in anti-corruption, public procurement, and AML/CFT. - Safeguards and transparency: - Continue implementing outstanding safeguards recommendations and publishing financial statements as noted under monetary policy. ### Program monitoring, accountability, and outreach - Suriname Economic Oversight Board (SEOB): - Established during the second review with members from private and public sectors, unions, academia, and civil society to conduct independent assessments of progress. - SEOB has been publishing a monthly bulletin detailing progress since July. - Commitment to transparency: - Government authorizes the IMF to publish this letter, its attachments, and the related staff report. - Government will provide IMF staff with all relevant information required to complete scheduled program reviews and monitor performance. - Obligations under continuous performance criteria: - Government will observe standard continuous performance criteria against imposing or intensifying exchange restrictions, introducing or modifying multiple currency practices, concluding bilateral payment agreements inconsistent with Article VIII of the IMF’s Articles of Agreement, and imposing or intensifying import restrictions for balance of payments reasons. ### Memorandum of Economic and Financial Policies — Background and outlook - Program objectives: - Restore fiscal sustainability and strengthen fiscal management. - Bring public debt down to sustainable levels. - Improve the social safety net. - Upgrade monetary policy framework and adopt a flexible, market-determined exchange rate. - Improve viability of the financial system and bank oversight. - Tackle corruption, strengthen institutions and governance, and enhance Suriname’s AML/CFT framework. - Economic indicators and outlook: - Real GDP remains below pre-pandemic level despite recovery. - Inflation remains high and is hurting real incomes. - The MEFP sets out updated quantitative targets and structural benchmarks (Tables 1 and 2 referenced in the MEFP). *Paramaribo, Suriname, December 4, 2023 — Appendix I. Letter of Intent* ### 10. We are committed to strengthening fiscal institutions. Reforms are ongoing to improve ### 10. We are committed to strengthening fiscal institutions. Reforms are ongoing to improve ### Public Financial Management (PFM) reform strategy - Four priority areas identified (developed with support of the IDB): - 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. ### Improving treasury management - Move towards a Treasury Single Account (TSA) is a priority. - State decree will provide the Minister of Finance authority to access all banks accounts held by government entities at commercial banks (end-December 2023 SB, proposed to be reset to end-March 2024). - Close separate bank accounts and gradually bring them into the TSA. - Aim to expand TSA coverage to include all government accounts held at commercial banks by end-2024. - IMF capacity development has improved monitoring of supplier arrears. - To prevent further accumulation of supplier arrears, improvements are being made to cash management and commitment controls systems. - Create a cash management unit within the Treasury by end-2023 to oversee the TSA, cover liquidity planning, accounts management, working capital management and cashflow management (facilitated by IMF capacity development). ### Strengthening tax administration - Fully functioning large taxpayers’ unit (LTU) is necessary despite capacity constraints. - Expand LTU functions to include account maintenance, client relationship management, filing and payment compliance. - Begin process of converting the Tax Directorate, including Customs, into a modern semi-autonomous revenue authority. - With IDB support, work on a complete reorganization plan; submit required legislation to convert the existing tax office to a revenue authority to parliament after the reorganization plan. ### Improving debt management and recording - Improve back-office capacity and coordination between SDMO, the MoFP, and the CBvS to ensure timely payments of debt obligations. - Set up an information system to receive and dispatch information regarding upcoming payments to external creditors. - Produce and sign a memorandum of understanding (MOU) between SDMO, MoFP, and CBvS, defining responsibilities for timely information provision and processing of payments (proposed new structural benchmark for end-January 2024). - MOU to specify an escalation process within each agency and procedures for inter-agency monitoring (IMF capacity development support). ### 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 the contracted services (structural benchmark for end-September 2023, not met). - Publish procurement information on an external government website by end-March 2024. - Collaborate with the CARICOM Secretariat to incorporate a procurement module into the Integrated Financial Management Information System and integrate it with the regional system. ### Managing public investment with climate considerations - Improve public investment management (PIM) governance by establishing a dedicated PIM unit. - Allocate resources for planning, pre-investment, and feasibility studies. - Incorporate climate adaptation measures into the PIM manual to safeguard public investment given high vulnerability to climate change. - Publish a public investment management manual with general guidelines for economic appraisal of investment projects including climate change and flood risk management considerations, and sectoral guidelines for key ministries (proposed new structural benchmark for end-September 2024). ### Strengthening fiscal planning - Developed a medium-term macro-fiscal framework with assistance from CARTAC to generate medium-term revenue and expenditure projections. - Use this framework as the basis for the 2024 budget. - Submit a multi-year budget strategy to the parliament by April 2024 as required by law (with further technical assistance from CARTAC). ### Strengthening SOE oversight - Collect and publish latest financial information for the 10 largest SOEs. - SDMO has expanded scope of collecting, recording, and reporting debt of SOEs (with IMF capacity development). - Initiate quarterly financial monitoring of these SOEs. - Prepare a report identifying and quantifying fiscal risk generated by the largest SOEs (end-December 2023 structural benchmark, proposed to be reformulated and re-set for end-June 2024). ### Improving fiscal transparency and accountability - Published a budget execution report for January to June 2023 (structural benchmark for end-September 2023, met). - Continue to publish budget execution reports and aim to improve their content and presentation with IMF capacity development. ### Improving the quality of fiscal data - Established a system to compile and maintain a central up-to-date list of public entities (with IMF capacity development). - Improve collection and processing of source data by signing an MOU between the Directorate of Taxes, MoFP, Finabank, CBvS and SDMO specifying data provision requirements. ### Strengthening the social safety net - Commitment: ensure burden of fiscal consolidation not borne by the poor and vulnerable; channel fiscal space from eliminating generalized energy subsidies to help the poor and vulnerable. - Achieve the social protection spending floor in 2023. - In July increased value of cash transfers by around 45 percent and expanded coverage of the social beneficiary program (SRD 1800 per month) to include recipients of the general old age pension. - In December issued an additional one-off payment to beneficiaries. - Missed the end-September IT by SRD 112 million, but remain committed to expanding coverage and calibrating cash transfers. - Commit to expanding social protection spending to 2.8 percent of GDP in 2023. - Formalize a quarterly review process for nominal benefit and threshold levels to protect households in a high-inflation environment; consider social spending envelope, poverty gap, erosion of real value of benefits, and changes in coverage when recalibrating benefits each quarter. - Adjust eligibility thresholds quarterly and adjust nominal value of the social beneficiary program when electricity tariffs are adjusted quarterly. - Intensify administrative and digitalization efforts to expand coverage and improve delivery: - Shift beneficiaries to digital payments using a government-provided debit card system; - With IDB help, purchased 40,000 cards for cash transfer programs; - Initial registrations reached over 70,000 new households. - Establish a monitoring and evaluation unit within the Ministry of Social Affairs and Housing in 2024 (with IDB help). - Begin reporting on performance and coverage of cash transfer programs: - Publish monthly report on the Ministry of Social Affairs and Housing’s external website detailing number of households or individuals covered by each program in each district and the value of cash transfers made to recipients in each district under each program (proposed new structural benchmark for end-January 2024). - Publish eligibility criteria for each program. - Work toward better data collection to identify share of target population covered in each district. - Develop a home-grown strategic plan for social protection (with ILO and IDB) aligned with Multi-Annual Development Plan 2022-26: - Focus on efficiency savings by rationalizing programs and integrating various programs into a single coherent digital registry; - Emphasize improvements to public health insurance for low-income households; - Collaborate across Ministries of Social Affairs and Housing, Health, Education, Labor, and Finance. ### Restructuring public debt - Commit 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. - Follow best practices in sovereign debt restructuring: consider inter-creditor equity and comparability of treatment of all official bilateral creditors. - Reached agreement in principle with Paris Club creditors in June 2022; subsequently reached and signed bilateral agreements with all Paris Club creditors. - Negotiations with private external creditors conducted in good faith; approach based on four pillars: - (i) a fair and equitable treatment for all creditors; - (ii) transparency and constructive dialogue; - (iii) a commitment to fiscal consolidation and reform policies going forward; - (iv) a sustainable debt solution within the IMF debt sustainability framework. - May 2023: agreement-in-principle with the Bondholder’s Committee; debt exchange launched in October and finalized in November with participation of more than 96 percent of the creditors. - Two outstanding Eurobonds exchanged for one fixed income instrument with a face value of USD 660 million, a 10-year maturity, and a coupon of 7.95 percent. - During the first two years, only 4.95 percent will be paid in cash with the remaining 3 percent capitalized. - New bond entails a 29 percent principal haircut on original face value and accumulated past due interest. - Complemented with a value recovery instrument (VRI) paying out only if the Republic of Suriname receives royalties from Block 58. - After an initial USD 100 million of oil royalties goes to the government, creditors would be able to claim 30 percent of the yearly oil royalties from Block 58 to be compensated for the haircut. - VRI structured to ensure the Republic and its population fully benefit from other oil-related revenues (income taxes, a share in profit oil and dividends from Staatsolie). - 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 the July 2022 offer. - Agreement on ECA backed loans with India reached in May 2023 consistent with program parameters. - Agreement in principle at technical level reached with China on two-stage (flow and stock relief) debt treatment; the AIP is comparable with that agreed with Paris Club creditors and consistent with debt sustainability. - Progress on restructuring domestic debt (including arrears) to banks; implementing a 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 and plan to clear all domestic arrears except technical arrears by the end of 2023. - Supplier arrears stood at SRD 3.6 billion in September; commit to stop accumulation of supplier arrears and to gradually clear entire stock of arrears by the end of 2025. - Negotiation on legacy debts with the CBvS concluded in July: - Arrears to CBvS will be settled this year; - Remaining legacy debts restructured into a loan with a grace period of 2 years and a maturity of 27 years. - Government will not provide guarantees to debt contracted by other parties during the program, nor will it or SOEs contract new debt that is collateralized by natural resource revenues (or allow public sector to contract such debt on behalf of the central government). - CBvS has discontinued the issuance of new FX-linked or FX-denominated securities to avoid unduly influencing domestic FX market or complicating reserve money targeting. ### Reducing inflation and monetary policy - Recent tightening of monetary policy showing signs of traction. - SRD liquidity conditions remain tight for much of the banking system, supported by: - continued diligent implementation by the central bank’s open market operations (OMOs), - more regular wholesale auctions and direct issuances of Central Bank Certificates (CBCs), - April increase in the local currency reserve requirement by 5 percent (from 39 to 44 percent). - Private sector credit growth has slowed; CBvS guidance to commercial banks to limit the increase in the stock of nominal credit to 20 percent over a 12-month period through end-March 2024. - Measures and restored fiscal discipline have supported CBvS’s ability to mop up excess system liquidity, stabilize growth of reserve money, and a downward trend in monthly inflation. - CBvS has overperformed relative to its SRD reserve money target in recent months to support faster deceleration in SRD reserve money growth and inflation. - End-September net domestic assets (NDA) remained well below the ceiling agreed under the EFF-supported program. - Transmission from increased OMO interest rates to market interest rates remains weak due to uneven distribution of banking system liquidity, limited interbank market, concerns over bank asset quality and borrower repayment capacity. - Tighter monetary conditions have gradually fed into market interest rates, with interest rates for new term deposits and loans continuing to trend up. - CBvS stands ready to implement further tightening measures, as needed, to support slowing inflation and meeting monetary targets under the program. ### CBvS liquidity facilities and ELA - Standing lending and intraday facilities are in place to help banks cover sudden short-term liquidity gaps. - Standing facility is priced at the weighted average price of open-market operations plus a modest spread to prevent reliance on it. - CBvS will seek to sterilize liquidity from use of the facility through OMOs to minimize disruptions to reserve money targets. - Issued a revised circular on the ELA framework to provide emergency liquidity to banks. - Banks’ access to ELA is subject to CBvS supervisory decision based on assessment of viability and solvency, and, as needed, remedial action. *International Monetary Fund — content unit 1surea2024001* ### 20. Our foreign exchange policies are embedded in our commitment to a flexible, market- ### 1surea2024001 - 20. Our foreign exchange policies are embedded in our commitment to a flexible, market- ### Foreign exchange policy and market functioning - Commitment to a flexible, market-determined exchange rate; authorities have refrained from direct FX interventions. - To mitigate FX supply disruption risks, the government is conducting 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. - Cumulative FX sales through end-September were limited to just over US$10 million to keep total central government SRD mineral revenue receipts under the program US$15 million ceiling, with a view to terminate the indirect sales by end-June 2024. - All other government net FX receipts (including from IFI budget support) will continue to be transferred at the prevailing market exchange rate to the CBvS only, except for transfers required to meet the government’s domestic FX debt service obligations. - The MoFP has strengthened monitoring of indirect sales to ensure they do not give rise to multiple currency practices and to support continued accumulation of international reserves. ### FX market infrastructure and regulations - Electronic inter-bank/cambio FX trading platform (end-September 2023 SB, not met) will be launched in December after procurement and technical delays. - Initial platform participation limited to inter-institutional transactions among banks and cambios; optionality exists to incorporate gold-producers and other non-bank/cambio participants. - Exporter surrender requirement: exporters must offer 35 percent of export proceeds for sale to the market; sale of repatriated FX to follow banks’ own daily rates as per CBvS Circular 2023-2 issued on September 8, 2023. - Authorities committed to consult with the Fund before issuing any additional FX market regulatory guidance. - Authorities will refrain from interventions or administrative measures that could impede efficient FX market functioning 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 banking system capital adequacy ratio: 18.7 percent as of September 2023. - Two banks identified with substantial recapitalization needs per AQR results; nonperforming loans remain high. - Liquid assets comprise 53.7 percent of total assets; liquidity is unevenly distributed and skewed towards two large systemic banks. - CBvS committed to prudently monitor, supervise, and take appropriate measures, including prompt corrective actions, to address problem banks. - Banks with capital shortages submitted timebound recapitalization and restructuring plans to CBvS (structural benchmark); CBvS critically assessed plans to verify credibility. - Among the two banks with capitalization needs, the state-owned bank requires an immediate solution with agreement between the MOF and CBvS. - MoFP will agree with CBvS on a new governance framework for government-owned banks to ensure they are run on a fully commercial basis (end-December structural benchmark). ### Strengthening supervisory and resolution frameworks - Guidance for management of non-performing loan portfolios prepared and shared with banks. - Amendments to the Banking and Credit System Supervision Act and the draft Bank Resolution Bill have been sent to the National Assembly and will be adopted in December. - Draft Bank Resolution Bill will strengthen CBvS powers and tools for early intervention, recovery, and resolution of credit institutions. - Amendments to the Banking and Credit System Supervision Act will enhance risk-based supervision covering: business strategies, governance, risk management (including provisioning policies and AML/CFT compliance), capital planning, budget forecasting, valuation of collateral, and profit and loss projections. - Supervisory focus includes determining and preventing concentration risk within the financial sector. ### Other financial sector reforms and AML/CFT - Commitments to improve supervision of insurance and pension sector, capital market, electronic payment systems; establish credit reporting and deposit insurance; improve electronic transactions. - CBvS drafting relevant acts and regulations; revised AML/CFT regulation to be issued by the end of 2023. - A comprehensive plan to coordinate reform initiatives will be prepared, supported by IMF and other technical assistance. ### Improving monetary governance and central bank transparency - CBvS progress: cleared backlog of financial statement audits; published FY 2015-2019 financial statements and FY 2020 statements; commenced preparation of financial statements in line with IFRS. - Structural benchmark: publish FY 2022 audited financial statement by March 2024 (proposed to be reset to end-June). - Audits of program monetary data for each test date since program start have not raised material issues; these audits will continue for future test dates. - CBvS will co-source specific audits while building internal audit capacity. - IMF technical assistance requested to strengthen governance and oversight of foreign reserves management. ### Central Bank Act implementation and governance actions - Central Bank Act strengthened mandate, autonomy, decision-making structure, and prohibited monetary financing of the government. - Act improvements include: clarifying mandate; aligning institutional, financial, and personal autonomy with international best practice; providing collegial management and improved internal oversight; increasing transparency, accountability, and oversight; defining requirements on accounting, profit distribution, reserves, and eventual recapitalization of the CBvS. - Steps taken: established Audit Committee and Risk and Compliance Committee with approved charters; approved Investment Policy; developing regulation for the Supervisory Board; reviewing the Governance Handbook. - Government in process of appointing members of the CBvS council in line with the new law. ### Foreign Exchange Regulation review and legislative actions - Review and alignment of the Foreign Exchange Regulation of 1947 with the new Central Bank Act. - Two-pronged strategy: - Identify elements not aligned with Central Bank Act in consultation with IMF staff; submit legislative amendment to the National Assembly by end-December 2023 (structural benchmark). In anticipation, the Foreign Exchange Commission has refrained from using the powers covered by the amendments. - Undertake a full review of the Foreign Exchange Regulation of 1947 in consultation with IMF staff and stakeholders; aim to finalize by end of May 2024 in consultation with Fund staff (review delayed due to staffing constraints). ### CBvS recapitalization planning - MoFP and CBvS agreed on consolidating debt, clearance of arrears, and repayment schedule. - Finalize recapitalization plan (delayed by 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). - Recapitalization plan will include: clear target level of capital, a trigger point for recapitalization, assumption of recapitalization through instruments marketable in the future as fiscal restraint becomes more credible, and a binding time frame to complete recapitalization in line with the new CBvS Act. ### Tackling corruption, governance, and AML/CFT enhancements - Anti-Corruption Commission (ACC) installed on May 5, 2023, for a term of 5 years; with Fund TA, ACC will propose legal amendments requiring income and asset declarations of politically exposed persons and related verification, publication, and sanctions (Criminal Code changes end-December 2023 SB, proposed to be reformulated and reset to end-June 2024). - Wages and salaries of high-ranking and high-risk public officials are made public through state decrees; President issued a state decree in August requiring registration of income and assets by high-ranking and high-risk public officials. - Ratified CARICOM’s Protocol on Public Procurement in July 2022; with IDB support, will enact new procurement law (end-September 2023 SB) to mandate publication of beneficial ownership information of awarded procurement contracts. - Enacted a new AML/CFT law in November 2022 to address key technical compliance deficiencies identified by CFATF; further actions to fully comply with CFATF requirements include: - (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 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 in relation to UN Security Council Resolutions Against Terrorism and Proliferation Financing. - Commit to initiate 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 in November 2022; in March 2023 ASC approved a list of High Prioritized Actions for 2023 – Q2 2024 being rigorously implemented; priority to complete second NRA by mid-2024. - Ministry of Finance and CBvS presenting draft legislation to National Assembly to strengthen financial sector supervision; Ministry of Justice and Police presented draft legislation to strengthen gaming sector supervision. - November 2022 law “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 in December 2023 and findings to be reported to CFATF in 2024. - New AML/CFT regulation under discussion and will be issued shortly; legislation in line with FATF requirements pending in the DNA with technical assistance from IMF and UNODC/WB. ### Extractive sector governance - Suriname joined EITI in 2017; published EITI reports for fiscal years 2016 and 2017; reports for fiscal years 2018 - 2020 published in January 2023. - Government intends to address EITI recommendations including: - (i) reforming the mining law to reduce discretion in investor incentives and strengthen framework for mining titles; - (ii) legally compel extractive companies to disclose their beneficial owners. - Work is underway on these measures. ### Statistics and data dissemination - Improvements made to quality and timeliness of monetary, financial, and balance of payments statistics with IMF TA. - Timeliness issues remain: long lag of annual GDP publication and lack of quarterly GDP statistics. - With IMF support, will invest resources to produce quarterly national accounts and shorten lag of annual national account data to six months from the current eight months. - Need to improve data quality especially for CPI, fiscal sector statistics, and public debt data; ensure consistency with other sources (monetary accounts and fiscal flows in the balance of payments). - Will publish detailed monthly CPI data including all subcomponents. - Committed to accurately reporting all domestic arrears on a monthly basis. - Will broaden institutional coverage of fiscal statistics to the public sector and seek technical assistance from international partners. ### Program monitoring - Economic plan to be monitored through reviews, quantitative and continuous performance criteria, indicative targets, and structural benchmarks. - Quantitative performance criteria presented in Table 1; standard non-quantitative continuous targets in para 34 of the Technical Memorandum of Understanding (TMU); structural benchmarks in Table 2. - Program quantitative targets are defined in the attached TMU. *Source: 1surea2024001 - 20. Our foreign exchange policies are embedded in our commitment to a flexible, market- (IMF PDF chapter).* ### 5. Gross credit to the central government by the central bank (continuous ceiling) 3/10,22900Met00Met00Met00Met ### 1surea2024001 - 5. Gross credit to the central government by the central bank (continuous ceiling) 3/10,22900Met00Met00Met00Met ### Quantitative performance criteria — Fiscal/debt targets (selected entries) - Primary fiscal balance (cash basis) of central government (floor): - 2/442166-111 Not Met - 5523008 Not Met - 663707660 Not Met - 2/7731,005311 Not Met - 884946346 Not Met - 9941,218345 Not Met - 1,1471,5712,020 Met - 1,3381,6932,189 Met - 1,5291,826[1897][Met] - 1,7211,790[1909][Met] - 1,912TBDTBD - 2,103TBDTBD - 2,294TBDTBD - Period series (end-Jan to end-Dec): 3847691,5251,1531,5381,9223,0502,3072,6913,0764,7053,4603,8444,2294,613 - New natural resource revenue-collateralized debt contracted by or on behalf of the central government and/or SOEs (continuous ceiling) (U.S. dollars): - Repeated entries: 00Met / 0 / 0 Met / 0TBDTBD / 0 - New central government guaranteed debt (continuous ceiling): - Repeated entries: 00Met / 000000000000000 - Non-accumulation of central government external debt arrears (continuous ceiling): - Repeated entries: 00Met / 04Not Met / 000000000000000 ### Monetary targets (selected entries) - Gross credit to the central government by the central bank (continuous ceiling): - Repeated entries: 00Met / 0 / 0Met / 0TBDTBD / 000000000000000 - Net international reserves of the central bank (floor) (millions of U.S. dollar) — selected points with compliance: - 2/4/-154348310319 Met11-25Met103216Met1143019 Not Met (fragmented series) - 2/1184913 Not Met - 12210492 Not Met - 156150156 Met - 2/158159169 Met - 160168192 Met - 192169193 Met - 2/-57-38-31 Met - -55-32-26 Met - -54-28-28 Met - 2/-53-39-21 Met - -57TBDTBD - -73TBDTBD - -6TBDTBD - Final consolidated series (end-Jan to end-Dec): -7-25-29-37-4411-80-7-28-39-39-46-65-1 - Net domestic assets of the central bank (ceiling) — selected points with compliance: - 2/4/8,777-343161203 Not Met -6180-6Met-1,134272113 Met -1,13739-118 Met (fragmented) - 2/-1,040-67134 Not Met - -941-691-246 Not Met - -1,263-1,188-591 Not Met - 2/-1,142-1,161-91 Not Met - -1,016-1,124-77 Not Met - -1,316-986-14 Not Met - 2/3,6023,3342,376 Met - 4,0063,6833,843 Not Met - 4,3974,0302,776 Met - 2/3,8923,7032,448 Met - 4,214TBDTBD - 4,722TBDTBD - 4,121TBDTBD - Final consolidated series (end-Jan to end-Dec): 4541,0411,5661,4951,8361,2722,1891,6211,8882,3333,6482,6453,9484,4363,730 - Direct purchases/sales of FX by the central bank and/or central government from/to SOEs and private sector (millions USD) (continuous ceiling): - Repeated entries: 00Met / 000000000000000 / 6/ 000000000000000 - Central government mineral revenue in local currency (ceiling) (millions of U.S. dollar) 2/: - 57 Not Met - 10 11 Not Met - 1514 Met - 20 TBDTBD - 25 TBDTBD - 30TBDTBD - Consolidated series (end-Jan to end-Dec): 3715151720303030303030303030 ### Indicative targets - Social spending of central government (floor) — selected entries: - 2/6041,070922 Not Met - 371269 Not Met - 2/742832 Met - 2/1,1121,315 Met - 2/1,9811,058 Not Met - 2/2,9711,915 Not Met - 2/2,9711,915 Not Met / 3,962TBDTBD - End-period entries: 2,9711,915Not Met3,962TBDTBD - Final consolidated series (end-Jan to end-Dec): (indicative only) 2/… series appears intermittently and includes multiple Met/Not Met assessments ### Memorandum items — selected series and levels - Reserve money (multiple date-specific values, in Suriname dollars): - 12,817 18,294 18,967 18,629 18,950 19,061 19,180 19,597 18,881 - 21,223 19,110 21,856 20,025 22,390 20,280 - 22,912 21,413 23,444 22,654 23,858 23,723 - 33,964 27,590 35,102 29,378 36,147 27,225 - 29,440 26,720 30,049 TBD 30,670 TBD 31,374 TBD - Consolidated end-Jan to end-Dec series: 4541,0411,5661,4951,8361,2722,1891,6211,8882,3333,6482,6453,9484,4363,730 - Reserve money (local currency portion only): - 7,342 9,188 9,271 9,341 9,338 9,494 9,570 9,647 9,289 - 9,801 9,516 9,954 9,860 10,107 10,411 - 10,260 11,098 10,413 11,359 10,566 11,450 - 14,249 14,064 14,642 15,602 14,998 14,438 - 15,320 14,208 15,573 TBD 15,831 TBD 16,162 TBD - Reserve money (constant exchange rates): - 12,817 14,838 15,933 14,991 15,893 15,144 16,209 15,297 15,847 - 16,306 16,136 16,459 16,676 16,612 16,879 - 16,765 17,587 16,918 18,084 17,071 18,424 - 21,461 19,448 21,896 20,914 22,294 19,457 - 20,589 19,167 20,857 TBD 21,130 TBD 21,477 TBD - NFA (constant exchange rates): - 4,039 6,403 6,953 6,563 6,920 7,844 7,117 8,000 7,020 - 8,220 7,022 8,277 7,943 8,739 8,490 - 8,778 8,698 8,811 9,182 9,253 9,458 - 9,959 9,172 9,990 9,170 9,997 8,781 - 8,797 8,819 8,742 TBD 8,507 TBD 9,455 TBD - Gross international reserves (millions of U.S. dollar): - 585 968 992 979 986 1,071 848 1,139 899 - 1,000 886 1,004 951 1,094 983 - 1,097 991 1,099 1,018 1,187 1,029 - 1,153 1,091 1,155 1,096 1,156 1,062 - 1,132 1,107 1,128 TBD 1,112 TBD 1,234 TBD - Consolidated end-Jan to end-Dec series: 1,1321,1071,128TBD1,112TBD1,234TBD - Usable international reserves (millions of U.S. dollar): - 5/129501512513505604518673566 - 5/674558678620768656 - 5/771667773698862713 - 5/835853837857838825 - 5/893873889TBD873TBD995TBD - Program exchange rate: - 14.018 repeated across all reported periods (14.01814.01814.01814.01814.01814.01814.01814.01814.018) *Source: 1surea2024001 - 5. Gross credit to the central government by the central bank (continuous ceiling) 3/10,22900Met00Met00Met00Met* ### 1. Social spending of central government (floor) 2/1,3081,1342,6172,4544, ### 1surea2024001 - 1. Social spending of central government (floor) 2/1,3081,1342,6172,4544, ### Key quantitative monetary and reserve indicators - Reserve money: 28,866 29,300 33,018 29,699 30,058 30,387 34,434 30,685 30,973 31,247 35,969 31,512 31,778 32,043 32,310 - Reserve money (local currency portion only): 15,978 16,298 17,255 16,582 16,824 17,036 18,109 17,217 17,386 17,539 19,070 17,684 17,827 17,969 18,112 - Reserve money (constant exchange rates): 20,761 21,085 22,637 21,373 21,619 21,834 23,557 22,018 22,190 22,348 24,584 22,495 22,642 22,788 22,933 - Net foreign assets (NFA, constant exchange rates): 9,112 8,849 9,050 8,682 8,587 9,366 9,347 9,201 9,106 8,818 8,914 8,655 8,559 8,298 9,186 - Gross international reserves (millions of U.S. dollar): 1,188 1,169 1,271 1,225 1,218 1,274 1,359 1,329 1,322 1,302 1,395 1,358 1,351 1,332 1,463 - Usable international reserves (millions of U.S. dollar): 955 936 1,033 991 984 1,040 1,120 1,096 1,089 1,068 1,156 1,124 1,117 1,099 1,229 (Official reserve assets excluding the PBOC swap and ring-fenced reserves. 5/) - Program exchange rate: 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 14.018 - Notes and metadata from source: - Source: Authorities and IMF staff calculations and projections. - 1/ Targets as defined in the Technical Memorandum of Understanding. - 2/ Cumulative flows from begining of the year. - 3/ The 2020 figure is a stock as of end-June 2021. - 4/ The 2020 figure is a stock as of end-December 2020. - 5/ Official reserve assets excluding the PBOC swap and ring-fenced reserves. - 6/ Non-observance for the month February 2023 - Reporting dates referenced in the table: end-Mar., end-Jun., end Sep., 2024, end Sep. ### Structural benchmarks under the EFF — exchange rate, monetary, and safeguards - Establish competitive FX auctions for the CBvS to undertake buying/selling of FX during periods of disorderly market conditions (defined as when the intraday change in the exchange rate versus the U.S. dollar is more than 2 percent) under the agreed rule. - Target date: December 2021 - Status: Met - Objective: Ensure the CBvS has a mechanism to intervene in the FX market. - Establish an electronic trading platform for inter-bank/cambio FX trading. - Target date: 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. - Target date: 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. - Target date: 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. - Target date: 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 aligning with IMF staff recommendations to clarify and strengthen the mandate and autonomy of the CBvS and to introduce strict limits on monetary financing. - Target date: January 2022 - Status: Not met; implemented with a delay in April 2023 - Objective: Strengthen the CBvS’s mandate, autonomy, governance, and accountability and transparency. - Establish an electronic trading platform for inter-bank/cambio FX trading, with expanded scope to cover also bank/cambio trading with gold exporters. - Target date: 21 September 2023 - Status: Not met; implemented with delay in [December] - Objective: Create a consolidated FX market. - Publish on the CBvS's external website the FY 2020-2021 audited IFRS financial statements. - Target date: 26 March 2024 - Status: Proposed to be reset to June 2024 - Objective: Strengthen accountability and transparency, and reduce risk of misreporting. - Publish on the CBvS's external website the FY 2022 audited IFRS financial statements. - Target date: 26 March 2024 - Status: Proposed to be reset to June 2024 - Objective: Strengthen accountability and transparency, and reduce risk of misreporting. - Develop a time-bound plan for the CBvS’s recapitalization agreed between the CBvS and the government. - Target date: 29 December 2023 - Status: Proposed to be reset to March 2024 - Objective: Protect the CBvS’s financial autonomy. - Submit a legislative amendment to the Foreign Exchange Regulation 1947 to the National Assembly in consultation with Fund staff to rectify any misalignments with the amended Central bank Act 2022. - Target date: 28 December 2023 - Objective: Enable the CBvS to effectively and independently manage its official reserves and conduct foreign exchange policy. ### Structural benchmarks under the EFF — financial sector and crisis preparedness - Undertake full asset quality review (AQR) for the two largest banks (by asset size) drawing on internationally reputable specialist firm. - Target date: 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. - Target date: January 2022 - Status: Not met; Implemented with delay in February 2023 - Objective: Strengthen CBvS's role in crisis management. - Submit the revised Banking and Credit Supervision Act to the State Council to facilitate risk-based supervision. - Target date: January 2022 - Status: Not met; Implemented with delay in February 2023 - Objective: Solidify oversight over the financial sector. - Operationalize the Financial Stability Committee (MoF and CBvS representatives). - Target date: January 2022 - Status: Not met; Implemented with a delay in April 2022 - Objective: Improve coordination on financial sector issues. - Operationalize a Bank Resolution Unit within the CBvS with governance, staffing, funding, and internal guidelines. - Target date: February 2022 - Status: Not met; Implemented with a delay in April 2022 - Objective: Strengthen the CBvS's role in crisis management. - Undertake full AQR for the remaining banks (internationally reputable specialist firm). - Target date: December 2022 - Status: Not met; Implemented with a delay in May 2023 - Objective: Diagnose the financial sector and potential recapitalization needs. - CBvS and MoF to agree on a governance framework for state-owned banks. - Target date: 23 December 2023 - Objective: Improve governance of state-owned banks. - CBvS to instruct banks to incorporate the AQR results and review recapitalization plans submitted by the banks to verify credibility. - Target date: 23 October 2023 - Status: Met - Objective: Improve strength of the financial sector. ### Structural benchmarks under the EFF — fiscal and debt measures - Publish a time-bound plan to implement IMF technical assistance recommendations to streamline treasury functions through the Treasury Single Account (TSA). - Target date: January 2022 - Status: Met - Objective: Improve governance and increase transparency. - Develop terms of reference, with international technical assistance, for hiring specialists to audit outstanding supplier arrears. - Target date: January 2022 - Status: Met - Objective: Improve governance and increase transparency; improve fiscal data reporting. - Publish the financial assessment of EBS including legacy liabilities. - Target date: May 2022 - Status: Met - Objective: Achieve full cost recovery in the electricity sector. - Commence an audit on outstanding supplier arrears. - Target date: April 2022 - Status: Met: audit completed in May 2023 - Objective: Improve governance and increase transparency; improve fiscal data reporting. - Passage of laws needed to implement the VAT by the National Assembly. - Target date: March 2022 - Status: Not Met; implemented with a delay in August 2022 - Objective: Ensure fiscal adjustment in line with program parameters. - Publish a plan to scale back a range of tax exemptions aimed at raising additional revenue of 0.4 percent of GDP. - Target date: March 2022 - Status: Not Met; Implemented in February 2023 budget - Objective: Ensure fiscal adjustment in line with program parameters. - Pass laws and issue decrees to expand the legal mandate of the debt management office (SDMO) to include the whole nonfinancial public sector. - Target date: 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. - Target date: June 2022 - Status: Not Met; implemented with a delay in July 2022 - Objective: Improve tax administration. - Review the social protection public expenditure and publish a time-bound strategic plan to improve efficiency and effectiveness of social benefits. - Target date: 16 December 2023 - Objective: Strengthen social spending. - Publish a report identifying and quantifying principal fiscal risks generated by the largest state-owned enterprises. - Original target date: 10 December 2023 - Status: Proposed to be reformulated and reset - Reformulated target: Publish a report that identifies and quantifies the principal fiscal risks generated by the largest state-owned enterprises. - Target date: 10 June 2024 - Establish a system to compile and maintain an up-to-date central list of public entities (Institutional Table), starting with central government entities. - Target date: June 2023 - Status: Met - Objective: Improve fiscal data reporting. - Enact the amended VAT Act to convert zero-rated products to exempt and impose the standard 10 percent VAT rate on sales covering at least 60 percent of household consumption. - Target date: July 2023 - Status: Not Met; implemented with a delay in September 2023 - Objective: Ensure fiscal adjustment in line with program parameters. - Publish on the EAS external website quarterly updates of rationale for each tariff adjustment, estimated cost of providing electricity, and remaining size of the subsidy. - Target date: 9 October 2023 - Status: Met - Objective: Improve governance and increase transparency; improve fiscal data reporting. - Operationalize the enacted amendment to the Personnel Act by issuing a state decree to halt payments of salaries for unregistered workers. - Target date: 9 October 2023 - Status: Not Met; implemented with delay in November 2023 - Objective: Strengthen PFM and ensure fiscal adjustment in line with program parameters. - Issue State Decree to provide the Minister of Finance authority to access all bank accounts held by government entities at commercial banks. - Target date: 10 December 2023 - Status: Proposed to be reset to March 2024 - Objective: Strengthen PFM. - Publish quarterly budget execution report starting with the end June 2023 budget outturns. - Target date: 10 September 2023 - Status: Met - Objective: Strengthen PFM. - Publish a public investment management manual with guidelines for economic appraisal of investment projects including climate change and flood risk management considerations. - Target date: 10 September 2024 - Status: Proposed new SB - Objective: Climate adaptation to contain fiscal risks. - MoFP, SDMO, and CBvS to sign a Memorandum of Understanding detailing responsibilities and processes for external debt payments. - Target date: 10 January 2024 - Status: Proposed new SB - Objective: Improve debt management and reporting, and avoid external debt arrears. - Publish on the Ministry of Social Affairs and Housing’s external website a monthly report detailing program coverage and value of cash transfers by district. - Target date: 15 January 2024 - Status: Proposed new SB - Objective: Improve governance and increase transparency. ### Structural benchmarks under the EFF — governance and anti-corruption, procurement, AML/CFT - Ratify the United Nations Convention Against Corruption (UNCAC). - Target date: January 2022 - Status: Met - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Issue an Implementation Act to amend the Anti-Corruption legal framework to criminalize all corruption acts in line with UNCAC and strengthen income and asset declaration provisions. - Target date: 30 June 2022 - Status: Not Met - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Operationalize the Anti-Corruption Commission and adopt an operational framework in line with UNCAC. - Target date: March 2022 - Status: Not Met; implemented with a delay in May 2023 - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Amend Anti-Corruption legal framework to criminalize relevant UNCAC Articles and require publication and verification of income and asset declarations of politically exposed persons. - Target date: 30 December 2023 - Status: Proposed to be reformulated and reset to June 2024 - Objective: Reduce vulnerabilities to corruption and promote investment and growth. - Enact a new procurement law to centralize and mandate publication of all public procurement tenders and contract awards including beneficial ownership. - Target date: 10/30 September 2023 - Status: Not Met; implemented with a delay in November - Objective: Strengthen procurement efficiency. - Amend AML/CFT legislation and other relevant laws to bring them into line with FATF international AML/CFT standards. - Target date: August 2022 - Status: Not Met; implemented with a delay in November 2022 - Objective: Mitigate the adverse effects of criminal economic activity and promote integrity in financial markets. ### Technical Memorandum of Understanding (TMU) — program definitions and valuation rules - Program accounting exchange rates: - U.S. dollar denominated components of the Central Bank of Suriname (CBvS) balance sheet valued at the official exchange rate of the Surinamese dollar to the U.S. dollar of 14.0180 set by the CBvS as of December 31, 2020. - Cross-rates as of December 31, 2020: Euro = 1.2281 U.S. dollars; Pound Sterling = 1.3600 U.S. dollars; Chinese Yuan = 0.1532 U.S. dollars; SDR = 1.4403 U.S. dollars. - Official gold holdings valued at 1,892.0 U.S. dollars per fine ounce. - General TMU provisions: - The TMU sets definitions of quantitative performance criteria (QPC) and indicative targets (IT), adjusters, and data reporting requirements for the EFF Arrangement described in the authorities’ LOI and MEFP. - For program purposes, all foreign currency-related assets, liabilities, and flows will be evaluated at program accounting exchange rates, except items affecting government fiscal balances, which will be measured at current exchange rates. - Definitions: - Definition of central government (CG): The set of institutions and government units currently covered under the state budget; newly formed public sector entities will be examined and included within the CG perimeter if adjudged to meet the CG unit definition per the Government Finance Statistics Manual 2014. - Definition of State-Owned Enterprises (SOE): 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: Per residency criterion; “debt” means a current, i.e., not contingent, liability created under a contractual arrangement through the provision of value in the form of assets (including currency) or services and which requires the obligor to make one or more payments in the form of assets (including currency) or services at some future point(s) in time. Primary forms include: - i. loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements); - ii. suppliers’ credits (deferred payment contracts after delivery of goods/services); - iii. leases (debt is the PV at inception of all lease payments expected to be made during the agreement excluding payments covering operation, repair, or maintenance). - 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. *Source: Authorities and IMF staff calculations and projections; IMF staff (TMU and MEFP tables).* ### 7. For program purposes, a debt is considered contracted when all conditions for its entrance ### 1surea2024001 - 7. For program purposes, a debt is considered contracted when all conditions for its entrance ### Debt contracting and fiscal year - For program purposes, a debt is considered contracted 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 be also considered as contracting of debt. - The fiscal year is the calendar year, starting on January 1 and ending on December 31. ### Primary Fiscal Balance (Cash Basis) of Central Government (Floor): definitions and measurement - 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. ### Baseline cumulative flows for Primary Fiscal Balance (In SRD millions) - Cumulative flows from the beginning of the fiscal year - End-June 20238,396 - End-July 20239,796 - End-August 202311,195 - End-September 202311,257 - End-October 202312,508 - End-November 202313,759 - End-December 202315,010 - End-January 20241,479 - End-February 20242,957 - End-March 20244,436 - End-April 20245,914 - End-May 20247,393 - End-June 20248,871 - End-July 202410,350 - End-August 202411,828 - End-September 202413,307 - End-October 202414,785 - End-November 202416,264 - End-December 202417,742 ### Reporting and adjusters for the primary fiscal balance - 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: 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. ### 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 20230 - End-July 20230 - End-August 20230 - End-September 20230 - End-October 20230 - End-November 20230 - End-December 2023150 - 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 - End-October 20240 - End-November 20240 - End-December 2024150 - 1/ Excluding IMF disbursements. - External debt from bilateral and private creditors for budget financing 2/ - 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 - End-October 20240 - End-November 20240 - End-December 20240 - 2/ Including international capital markets. - External loans for project financing - End-June 202336 - End-July 202342 - End-August 202348 - End-September 202354 - End-October 202359 - End-November 202365 - End-December 202371 - End-January 20244 - End-February 20249 - End-March 202413 - End-April 202418 - End-May 202422 - End-June 202427 - End-July 202431 - End-August 202435 - End-September 202440 - End-October 202444 - End-November 202449 - End-December 202453 ### New natural resource revenue-collateralized debt (Continuous Ceiling) - Definition: The ceiling on new natural resource revenue-collateralized debt (domestic and external) contracted on a gross basis by or on behalf of the CG and/or SOEs will be a continuous performance criterion throughout the program period. - Natural resource revenue-collateralized debt is external or domestic debt which involves creating a security interest, charge or lien over any natural resource, natural resource receivables, or the proceeds from the sale or lease of natural resources. - Exclusions and clarifications: - The use of a collection account where no charge or lien is created over such account is excluded from this definition. - External debt contracted due to external debt restructuring, to be agreed between the authorities and its creditors, is excluded. - The ceiling also applies to prefinancing arrangements (where debt is contracted against future sales of natural resources). - The official exchange rate will apply to all non-SRD denominated debt. - Reporting: Data will be provided to the IMF on a continuous basis, including any new debt contracts entered into by the CG and/or SOEs to verify they do not include a security interest, charge, or lien over any natural resource. ### New Central Government Guaranteed Debt (Continuous Ceiling) - Definition: The ceiling applies to guarantees issued by the CG for debt contracted by any agency or entity outside the CG. - For program purposes, the guarantee of a debt arises from any explicit legal or contractual obligation of CG to service a debt owed by a debtor outside the CG (involving payments in cash or in kind). - The official exchange rate will apply to all non-SRD denominated debt. - Reporting: Data will be provided to the IMF on a continuous basis. ### 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 will be 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 the nonpayment of debt service for which a rescheduling or restructuring agreement is being sought, based on good faith negotiations, are excluded. - Stock calculation and reconciliation: The stock of external arrears of the CG will be calculated based on the schedule of external payment obligations reported by the Ministry of Finance and Planning (MoFP) and reconciled with relevant creditors. ### Gross Credit to Central Government by the CBvS (Continuous Ceiling) - Definition: The ceiling applies to the change in gross credit provided to the CG by CBvS (including any provision of overdrafts) as a continuous performance criterion. - Measurement: 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. - Valuation: The stock of gross credit will be valued at fair value and at program exchange rates. - Additional clarifications: - Changes in the stock of the COVID-19 Fund approved by Parliament in 2020 would constitute gross credit from the CBvS to the CG. - Rolling over CG principal and interest payments due to the CBvS does not constitute gross credit. - Reporting: Data will be provided to the IMF on a continuous basis. ### Net International Reserves (NIR) of the CBvS (Floor): definitions, reporting, and adjusters - Definition: The 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. - Exclusions from foreign assets: any 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 include: (i) all short-term foreign liabilities of the CBvS vis-à-vis nonresidents denominated in convertible foreign currencies with an original maturity of one year or less; (ii) all outstanding credit from the IMF resulting from purchases; (iii) the nominal value of all derivative positions of the CBvS implying the sale of foreign currency or other reserve assets; and (iv) all foreign exchange liabilities of the CBvS to resident entities excluding foreign exchange liabilities to the CG. - Specific item noted: 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 are identified among liabilities. - Reporting: - Data on foreign reserves and the foreign exchange cash flow will be provided by the CBvS to the Fund once a week. - Data in Table 3 will be provided monthly in both official and program exchange rates, with a lag of no more than two weeks after the end of the month. - At each program test date, the quarterly data on NIR submitted by the CBvS to the IMF will be audited by CBvS external auditors in accordance with International Standards on Auditing. Reports should be submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date. - Data on total foreign exchange mineral revenue will be provided by the government to the IMF on a weekly basis. Inflows of the government’s foreign exchange mineral revenue to the CBvS will be monitored as part of weekly reporting of CBvS purchases and sales of foreign currency. - Adjusters: 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. - 2. upward (downward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to baseline projections in Table 2. - 3. upward (downward) by the full amount of the cumulative surplus (shortfall) in the sum of the government’s total mineral and other revenues received in foreign exchange that are transferred to the CG account at the CBvS, relative to baseline projections reported in Table 4. - 4. downward (upward) by the full amount of the cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to baseline projections 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. ### Total FX Mineral Revenue received by the Government and Other FX Revenues of CG Transferred to CBvS (Baseline Projection) — cumulative flows from beginning of fiscal year (In USD millions) - Cumulative flows from the beginning of the fiscal year (In USD millions) - End-June 202346 - End-July 202367 - End-August 202389 - End-September 2023117 - End-October 2023135 - End-November 2023153 - End-December 2023170 - End-January 202419 - End-February 202438 - End-March 202458 - End-April 202477 - End-May 202496 - End-June 2024115 - End-July 2024135 - End-August 2024154 - End-September 2024173 - End-October 2024192 - End-November 2024212 - End-December 2024231 ### FX Debt Service Payments by the Central Government and CBvS (Baseline Projection) — cumulative flows from beginning of fiscal year (In USD millions) - Cumulative flows from the beginning of the fiscal year (In USD millions) - End-June 202376 - End-July 202392 - End-August 2023112 - End-September 2023121 - End-October 2023136 - End-November 2023163 - End-December 2023204 - End-January 202421 - End-February 202454 - End-March 202476 - End-April 202497 - End-May 2024131 - End-June 2024152 - End-July 2024173 - End-August 2024208 - End-September 2024230 - End-October 2024251 - End-November 2024284 - End-December 2024306 ### Net Domestic Assets (NDA) of the CBvS: definitions, stock, reporting, and adjusters - Definitions and components: - NDA are defined as the difference between reserve money and net foreign assets (NFA). - 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 issued to retail investors as part of open market operations to absorb liquidity are excluded from reserve money. Reserve money excludes balances in deposit auctions and commercial banks’ term deposits at the CBvS. - NFA is calculated as the difference between foreign assets and foreign liabilities (definitions follow NIR section). - Stock levels as of December 31, 2020: - NDA amounted to SRD 8,777.1 million as of December 31, 2020 (Table 6). - Reserve money amounted to SRD 12,816.6 million as of December 31, 2020. - NFA amounted to SRD 4,039.5 million as of December 31, 2020 (Table 6). - 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 CBvS external auditors and reports submitted to the CBvS, with a copy to the IMF, no later than 60 days after each test date. - Adjusters: Consistent with the NIR target adjustment mechanism, NDA targets will be adjusted: - 1. downward (upward) by the full amount of the cumulative surplus (shortfall) in program loan disbursements from IFIs relative to the baseline projections reported in Table 2. - 2. downward (upward) by the full amount of the cumulative surplus (shortfall) in loans from official bilateral and private creditors relative to the baseline projections reported in Table 2. - 3. 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, relative to baseline projections reported in Table 4. - 4. upward (downward) by the full amount of the cumulative surplus (shortfall) in CG and CBvS’s debt service payments in foreign exchange relative to baseline projections reported in Table 5. *Source: 1surea2024001 - 7. For program purposes, a debt is considered contracted when all conditions for its entrance into effect have been met.* ### 5. Downward by the full amount of the CBvS’ cumulative purchases of foreign exchange from ### 5. Downward by the full amount of the CBvS’ cumulative purchases of foreign exchange from ### Overview - The chapter specifies treatment, ceilings, definitions, reporting, and information requirements related to the Central Bank of Suriname (CBvS) and central government foreign exchange (FX) operations, mineral revenue, social spending, and a comprehensive monitoring and reporting framework under the Arrangement under the EFF. ### Definitions, Exclusions, and Continuous Ceiling on Direct FX Purchases/Sales - The ceiling on direct purchases/sales of FX by the CBvS and/or central government from/to SOEs and private sector is a continuous performance criterion 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. ### Valuation for Adjusters - For the purposes of calculating adjusters, flows will be valued at program exchange rates. ### Reporting: Direct FX Purchases/Sales - 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 (Ceiling and Reporting) - 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). - 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. - Excluded mineral revenue: (i) wage taxes (including old age fund contributions); (ii) consent right fees; (iii) dividend tax; and (iv) Staatsolie Suriname’s tax and non-tax obligations to the government netted out against accounts receivable from other state-owned enterprises. - 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 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 (Prohibitions) - During the period of the Arrangement under the EFF, Suriname will not: - (i) impose or intensify restrictions on the making of payments and transfers for current international transactions; - (ii) introduce or modify multiple currency practices; - (iii) conclude bilateral payments agreements that are inconsistent with Article VIII; - (iv) impose or intensify import restrictions for balance of payments reasons. ### Indicative Target: 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: Debt Definition and Coverage - In accordance with IMF Government Finance Statistics Manual (GFSM) 2014 and Public Sector Debt Guide, total gross debt covers all liabilities that are debt instruments. - Instruments considered debt instruments: - Special drawing rights (SDRs); - Currency and deposits; - Debt securities; - Loans; - Insurance, pension, and standardized guarantee schemes; - Other accounts payable. - Exclusions from debt in GFSM balance sheet: - Equity and investment fund shares; - Financial derivatives; - 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. ### Monitoring and Data Submission Timetable (Selected Items) - Daily/Semi-weekly (provided within one week after the reporting period unless noted): - 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. - Monitoring Template IMF (no. 26) – Liquid assets held by banks. - Liquidity Coverage SRD template (no. 30). - Net Foreign Currency Position (Net Open Position) template (no. 27) for banks; for cambios this ratio will also be reported. - Weekly/bi-weekly (within two weeks after the reporting period unless noted): - 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). - Large deposits that are equal or exceed 10 percent of Tier 1 Capital (template no. 29). - Liquidity forecast and realization (templates no. 15, 17 and 19). - Liquidity stress testing (templates no. 10-13). - Lending availability in SRD and USD (templates no. 21 and 22). - Table on monitoring of banking sector benchmarks on a bi-weekly basis. - CBvS purchases and sales of foreign currency (FX cash flow table). FX auction amounts, auction bids, highest and lowest prices, cut-off and weighted average prices, FX rate before the auction. - Information on auction results for open market operations no later than two days after the auctions, including instrument type, total open market operations auction volume, settlement date, expiration date, the number of total bids, total amount of bids, the number of total allocated bids, total amount of allocated bids, the minimum bid rate, the cut-off interest rate, the highest bid rate, and the weighted average allotted interest rate. - Weekly submission of daily transactions and rates for: interest rates on domestic debt securities by maturity; required and excess reserves of the banking sector in local and foreign currency; total liquidity assistance to banks through normal lending operations, standing facilities, and ELA. Interest rates on OMOs, standing facilities, and ELA by maturity. - Weekly submission of daily mineral tax and non-tax revenue of major commodity companies and small gold miners, by revenue item and type of commodity (and separately for large-scale gold companies and small-scale gold miners). Data is to be provided within 3 working days of the end of each week. - Monthly (reporting lags specified in each bullet): - 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 within six weeks of the end of the month. - Number of public civil servants and total wage bill by Ministry within six weeks of the end of the month. - CG authorized spending data by Ministry within four weeks of the end of the month. - CG subsidies data by Ministry and programs within six weeks of the end of the month. - CG balance from the financing side by sources and by currency, with a lag of no more than six weeks after the end of the month. - CG domestic and external debt stock, including by: (i) creditor, (ii) currency, (iii) instrument; (iv) collateralized by natural resources revenue; and (v) guaranteed. Reporting lag should not exceed four weeks after the end of the month. - Amortization payments of CG and government guaranteed debt by creditor, instrument, and currency; reporting lag should not exceed four weeks after the end of the month. - Interest payments and fees on CG and government guaranteed debt by creditor, instrument, and currency; reporting lag should not exceed four weeks after the end of the month. - Stock of CG expenditure arrears, separately including payment of existing arrears and creation of new domestic arrears including the currency of the arrears; reporting lag should not exceed four weeks after the end of the month. - Stock of CG domestic and external debt arrears, including the currency of arrears; reporting lag should not exceed two weeks after the end of the month. - New debt contracts (official or private) entered into by the CG and/or SOEs; reporting lag should not exceed two weeks after the end of the month. - Holdings of domestic T-notes and T-bills (SRD-denominated and foreign currency-denominated) by investor, maturity, and currency; reporting lag should not exceed four weeks after the end of the month. - Legal measures that affect the revenue of the CG; 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 within six weeks after the end of the month. - Income statement of the CBvS on a cash and accrual basis, with a lag of no more than three weeks from the end of the month. - Projections of CBvS purchases and sales of foreign currency (FX cash flow table, 12 months ahead). - Information on interconnectedness of the financial sector and related party lending (templates no. 6 and 37) within four weeks after the end of the month. - The deposit funding structure of the banks (template no.8) 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 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 concluded). - 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 evaluated 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) by consumption categories and by consumption volume within eight weeks after the end of the month. - Electricity costs including production costs (fuel costs, Staatsolie electricity costs, hydropower costs, separately), other operational costs (personnel costs and financing costs), and investment costs within eight weeks after the end of the month. - EBS committed and executed payments to Staatsolie for purchases of fuel and electricity within eight weeks after the end of the month. - Quarterly: - Detailed balance of payments data within 60 days after the end of the quarter. - Detailed International Investment Position data within two months after the end of the quarter. - Projections regarding banks’ balance sheets and profit and loss statement (template no. 2 and 3) within four4 weeks after the end of the quarter. - Liquidity forecast and realization (templates no. 14, 16 and 18) 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; reporting lag should not exceed six weeks after the end of the quarter. - Annual: - Financial statements of EBS within six months of year end. - Nominal GDP and real GDP within eight months of year end. - Labor market statistics (including the unemployment rate and labor participation ratio) within twelve months of the year end. ### Statement by the Staff Representative on Suriname (Executive Board Meeting, December 15, 2023) - Item 2 (Inflation update): - Recent consumer price data indicate faster-than-expected decline in inflation in October. - According to the General Bureau of Statistics of Suriname, the monthly inflation in October was lower (1 percent versus 2.2 percent), due to the easing in transportation subcomponents (operations, maintenance, and repair). - Yearly inflation came to 42.9 percent compared to staff’s projection of 44.7 percent. - Staff expect limited impact of the VAT broadening on inflation in November. - If 1 percent monthly inflation continues for the remainder of the year, the end-2023 inflation will reach 34.4 percent compared to staff’s current projection of 39.3 percent. - Item 3 (Credit rating): - Standard and Poor’s (S&P) upgraded Suriname’s sovereign credit rating with a stable outlook. - On December 6, 2023, S&P raised their long and short-term foreign and local currency sovereign credit ratings on Suriname to 'CCC+/C' from selective default ('SD). - The upgrade follows the conclusion of Suriname's foreign currency debt exchange. - S&P noted that further progress on concluding restructuring agreements with the remaining creditors, the implementation of conditions and reform targets of multilateral lending institutions, the continued implementation of proactive economic policies, and strengthened debt management could result in a rating upgrade over the next year. - Item 4 (Legislative developments): - The National Assembly has approved the Bank Resolution Bill and the revised Banking and Credit System Supervision Act. - The Bank Resolution Bill will strengthen the central bank’s powers and tools for early intervention, recovery, and resolution of credit institutions. - The amendments to the Banking and Credit System Supervision Act will enhance risk-based supervision of banks (including provisioning policies and AML/CFT compliance), capital planning, budget forecasting, valuation of collateral, and profit and loss projections. - These measures will allow the supervisors to take timely measures to prevent further deterioration in banks’ financial positions. *Statement by the Staff Representative on Suriname; Executive Board Meeting, December 15, 2023.* ### 5. The government made temporary concessions on fuel taxes. The government fuel tax, ### 5. The government made temporary concessions on fuel taxes. The government fuel tax, ### Fuel tax concession - The government fuel tax, which is SRD 3.50 per liter, will be reduced to SRD 2.50 per liter for one month in December. - The revenue loss is expected to be small (less than 0.05 percent of GDP). - The December primary balance target remains achievable. - The government communicated the opportunity cost of this measure as about SRD 38 million in lost revenues. - The fuel tax will be automatically re-set to SRD 3.50 per liter on January 1, 2024. ### Statement by authorities - Statement by Mr. Bevilaqua, Mr. Saraiva, and Mr. Eckhorst on Suriname — December 15, 2023. - Authorities appreciate Ms. Guscina and her team for constructive dialogue during the fourth review under the Extended Fund Facility (EFF). - Authorities request extension of the EFF arrangement through March 31, 2025, and a corresponding augmentation of access to financing. ### Recent developments and outlook - Projected growth for the Surinamese economy: 2.1 percent in 2023. - Medium-term growth expectation: 3 percent, with potential upside from offshore oil and gas investments expected to start by the end of 2024 and prospects of oil production starting in 2028. - Sovereign spread: reached 670 basis points this week, compared to more than 1100 only three months ago. - Rating: raised from selective default. - Headline inflation: expected to decline to under 40 percent at the end of this year from 54.6 percent at the end of 2022. - 2024: supply factors, including further phasing-out of subsidies on utilities and cooking gas, should exert upward pressures on domestic prices; second-round effects expected to be controlled by the tight policy stance. ### Fiscal, social and tax policies - Primary surplus target for this year: 1.7 percent of GDP. - Policy actions undertaken: - Tripling the prices of cooking gas as of September 1st, 2023, and adopting quarterly adjustments thereafter to reach cost recovery tariff levels. - Reducing subsidies from the energy company EBS to the cooking gas company Ogane. - Increased enforcement of tax compliance boosted tax revenues. - New hirings have been forbidden to contain the wage bill. - Mitigating measures: - Fixed-amount monthly bonus to every civil servant through end-2023, with quarterly evaluations. - Adjustment in income brackets for tax purposes, including an increase in the tax-free income floor, agreed for 2024. - Social safety net enhancements (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 for this program covering 60.000 eligible households and was further expanded with 50.000 old age pensioners. - Ministry of Social Affairs: enhancing administration and distribution mechanisms to meet the indicative floor for social spending by December 2023. ### Public financial management reforms and treasury - Treasury Department at the Ministry of Finance and Planning (MoFP) became operational in November. - Treasury Department focus: government’s banking, payment systems, cash flow, liquidity management and supplier arrears. - MoFP commitment: halt accumulation of supplier arrears and aims to clear all supplier arrears by end-2025. - Information systems and controls: Free Balance system (IFMIS), better cash management, and commitment controls systems improved monitoring of supplier arrears in Q4. - A supplier arrears management strategy is being developed. - MoFP is establishing a cash management unit to oversee the Treasury Single Account (TSA) covering liquidity forecasting, accounts management, working capital management and cashflow management. - A revised Public Financial Management Law is being assessed by the authorities on its way to parliament. ### Revenue administration reforms - Implementation of the VAT proceeds expansion is making progress. - Expansion of the Large Taxpayers Unit to include account maintenance, client relationship management, and filing and payment compliance. - Process of implementing a modern Semi-Autonomous Revenue Authority (SARA) has started; an external firm is drafting a complete reorganization plan with IDB support. - VAT Evaluation Commission expected to present a final report soon on the evaluation of the VAT law and its effect on revenues and inflation. ### Debt management and sustainability - Debt exchange with external private creditors finalized on November 3, with bondholders representing more than 96 percent of the outstanding debt accepting the offer. - Two outstanding Eurobonds exchanged for one fixed income instrument that entails a 29 percent principal haircut on original face value and accumulated past due interest. - Fixed income instrument complemented by a value recovery instrument (VRI) linked to royalties from Block 58. - VRI structured so Republic of Suriname and its population fully benefit from other oil-related revenues: income taxes, a share in profit oil and dividends from Staatsolie. - Debt restructuring with Exim Bank China: - Technical meetings in Paramaribo at end-September; high-level meetings in Beijing in early November. - Working level agreement on two-stage, flow and stock, relief reached and submitted for approval to Exim Bank’s management and the Chinese authorities. - Authorities are confident the renegotiation process is close to an end. ### Monetary and financial policies - Central Bank of Suriname (CBvS) complied with all end-September 2023 monetary criteria and targets. - Tighter policy stance instruments: open market operations, higher reserve requirements and credit growth caps. - Tighter stance contained reserve money growth well below the targeted path, contributing to a downward trend in inflation. - Several banks have recently increased term-deposit and lending rates, signaling gradual improvement in monetary policy transmission. - Central Bank Certificates employed to absorb excess liquidity, resulting in a competitive weighted average annual interest rate. - High inflation continues to be mainly driven by cost-push factors from phasing out subsidies on utilities and cooking gas; demand-pull factors have been contained. - CBvS approved time-bound recapitalization and restructuring plans for two banks with capital shortfalls (one private, one public). - Private bank plan will rely only on private resources and will be monitored monthly. - For the state-owned bank, CBvS and MoF are agreeing on a course of action to provide an immediate solution expected to cost substantially less than initially expected. - Monetary authorities will design a new governance framework for state-owned banks to ensure they run on a fully commercial basis. - National Assembly adopted the Bank Resolution Bill and the revised Banking and Credit System Supervision Act to strengthen CBvS’s resolution and supervisory powers. ### Exchange rate policies - Foreign exchange market stabilized as excess demand has been contained and supply of foreign currency increased. - Market sentiment improved due to fiscal restraint and monetary policy tightening contributing to matching supply and demand conditions in the foreign exchange market. - CBvS supported market functioning through an electronic FX Trading Platform encouraging transparency and competition among banks and money exchange houses (‘cambios’). ### Governance and anti-corruption - Government committed to strengthen anti-corruption regulatory framework in line with international treaties and best practices. - 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 was issued including the corresponding standard registration form. - A new Procurement Law mandating more disclosure of information on awarded contracts for public works was submitted and will be discussed by the National Assembly in the coming weeks. ### Improving program implementation and monitoring - Private-sector-initiated Economic Oversight Board (SEOB) monitoring implementation of the EFF-supported economic program. - SEOB built a dashboard on its website with key performance indicators and presents them in a monthly bulletin. - SEOB will organize stakeholder consultations and information sharing sessions twice a year with representatives from the private sector, public sector, and civil society. *Source: 1surea2024001 - 5. The government made temporary concessions on fuel taxes. The government fuel tax,* --- _Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1surea2024001.pdf_