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### Background and Economic Outlook
- Social and external environment:
  - Country ranks 97th out of 182 countries in the UNDP’s 2009 Human Development Index.
  - Mineral and energy sectors (gold, alumina, and oil) account for about 30 percent of GDP.
- Growth and inflation:
  - Real GDP growth: estimated to have slowed to 2½ percent in 2009, from 6 percent in 2008.
  - Potential output growth: estimated at about 5 percent of GDP.
  - Twelve-month inflation: estimated to have fallen from 14½ percent in 2008 to less than 1 percent in 2009.
  - CPI composition: food, energy, and transportation weigh heavily in the CPI (55 percent).
- External and reserves:
  - External current account: shifted from a surplus of 4 percent of GDP in 2008 to a deficit of 2 percent in 2009.
  - Crude oil exports rose by around 35 percent in volume terms.
  - Drawdown from the Netherlands Treaty Fund in August 2009 used to clear arrears with Brazil totaling US$118 million.
  - Recent SDR allocations of about US$125 million.
  - International reserves: estimated at the equivalent of 5¼ months of imports at end-2009, up from 4¼ months in 2008.

### Energy and Mining Sector Developments
- Sector importance:
  - In 2008, alumina, gold, and oil exports amounted to 55 percent of GDP and accounted for some 95 percent of total exports of goods.
- Bauxite / alumina:
  - Expected exhaustion of bauxite reserves around Paranam by 2010 led SURALCO to lower production by 40 percent pending a new mine in eastern Suriname by 2013.
  - SURALCO bought out BHP Billiton’s 45 percent share in July (year implied 2009).
  - Proposed new company for eastern Nassau region with estimated reserves of 10 years.
  - Ongoing negotiations over Bakhuys mountains deposits in western Suriname.
- Gold:
  - Rosebel Gold Mines (IAMGOLD) reports production capacity of 365,000 ounces/year with reserves to last at least 20 years.
  - SURGOLD exploration points to possible reserves of up to 3 million ounces in eastern Nassau.
  - Informal gold sector accounts for 60 percent of total gold production; sold to seven licensed private brokers.
- Oil:
  - Exploitation granted exclusively to Staatsolie by law; other companies via production-sharing agreements.
  - 2008 oil output: 5.9 million barrels; exported 45 percent of crude production.
  - Geological surveys estimate potential oil reserves in the Guyana Basin at 15 billion barrels.
- Fiscal contribution:
  - Total tax and nontax revenues from the three major mining companies accounted for 36 percent of total fiscal revenues in 2008.
  - Tax revenue from SURALCO expected to decline substantially during 2009–10.
  - Staatsolie revenues boosted in 2009 by delayed large dividend payments covering 2008 but projected to decline in 2010.
  - Revenues from IAMGOLD expected to continue to grow.

### Monetary and Credit Developments
- Broad money growth (y/y):
  - Peaked at 33 percent in 2008Q1; decelerated to 8 percent in 2009Q1; rose to 22 percent in September 2009.
- Bank credit to the private sector:
  - Declined from 42 percent in July 2008 to 17 percent in September 2009.
- Central Bank reserve requirements (CBvS):
  - Unchanged since 2007: 25 percent on domestic currency deposits and 33 percent on foreign currency deposits.
  - Banks may hold up to 10 percent of the reserve requirement on domestic deposits in mortgages for low-income housing.
- Additional indicators:
  - Broad money (annual percentage change): 21.1 (2006), 30.5 (2007), 10.9 (2008), 19.1 (2009), 12.9 (2010 proj.).
  - Private sector credit: 25.1 (2005), 27.6 (2006), 31.2 (2007), 36.3 (2008), 12.9 (2009), 13.7 (2010 proj.).

### Fiscal Developments and Public Finance
- 2009 deterioration:
  - Fiscal balance estimated to have deteriorated by 4 percent of GDP in 2009.
  - Underlying balance (excluding one-off Brazilian debt transactions) projected to deteriorate by close to 5 percent of GDP.
- Revenue and expenditure drivers:
  - 2006–08: public sector large surpluses (about 2 percent of GDP on average).
  - 2009: drop in oil and mineral prices and reduction in alumina output depressed tax revenues.
  - High dividend receipts from Staatsolie and the central bank mitigated revenue decline.
  - Civil service wage increases starting March 2009: 3.1 percent of GDP.
  - Higher spending on goods and services: 2.5 percent of GDP.
  - Elevated pension and other transfers, including mortgage subsidy scheme: 1.2 percent of GDP.
- Public debt and arrears:
  - Public debt-to-GDP ratio reduced from 37 percent in 2005 to around 19 percent in 2009.
  - Clearance of Brazilian arrears: US$118 million, including write-off of US$44 million.
  - Remaining bilateral arrears with the United States: US$31 million, or 1 percent of GDP (half in penalties).

### Civil Service Wage Reforms (FISO)
- FISO-1 (launched March 2009, retroactive to January 1, 2008):
  - Grading of ~40,000 positions into eleven pay grades with three sub-grades.
  - One month’s additional wage adjustment paid every month for 14 months to cover back pay through February 2009.
  - Wage bill expected to increase from SRD 760 million in 2008 to about SRD 980 million in 2009.
- FISO-2 (scheduled early 2010, retroactive to January 1, 2009):
  - Objective to decompress the wage bill by providing wage increases to higher grades of up to 45 percent.
  - Estimated wage bill increase of at least another 20 percent; full implementation of FISO-1 and FISO-2 would expand the wage bill by more than 50 percent, equivalent to 5.4 percent of 2009 GDP over two years.
- Staff recommendation:
  - Delay FISO-2 and implement gradually (recommended over 3-4 years, beginning January 2011).

### Medium-Term Outlook, Debt Sustainability, and Risks
- Medium-term framework assumptions:
  - Fiscal prudence aiming for fiscal balance by the end of the projection period.
  - Gradual phase-in of FISO-2 starting in 2011.
- Fiscal path and projections:
  - Small further deterioration in 2010, progressive improvement thereafter, reverting to a small surplus beginning in 2014.
  - Under the scenario, public and external debt levels remain below 23 percent of GDP and 11 percent of GDP, respectively.
  - Even under standard and combined shocks, public debt would not rise above 33 percent of GDP; a permanent ½-standard-deviation shock could push public debt-to-GDP to 32 percent.
- External and sectoral developments:
  - External current account expected to deteriorate near term then rebound beginning in 2013 when bauxite and gold mines and expanded refining capacity come on stream.
  - In 2013, current account balance projected to turn positive and reach 4¾ percent of GDP; reserve coverage to rise to 7 months of imports by 2014.
- Key macro assumptions in Appendix:
  - Potential output: 5 percent.
  - Inflation expected steady at 5½ percent a year.
  - Real GDP path (select): 5.2, 6.0, 2.5, 4.0, 4.7, 5.5, 7.5, 6.0 (period sequence as presented).
  - Gross international reserves (US$ millions): 433, 666, 778, 813, 867, 930, 1,171, 1,422 (period sequence as presented).

### Key Quantitative Indicators (select)
- Government Revenue From Oil, Bauxite and Gold Production (mn US$):
  - Gold revenues: 16.1 (2007), 53.5 (2008), 71.7 (2009), 77.0 (2010 proj.)
  - Bauxite revenues: 83.0 (2007), 47.5 (2008), 15.2 (2009), 12.2 (2010 proj.)
  - Oil revenues: 97.1 (2007), 178.3 (2008), 187.4 (2009), 151.2 (2010 proj.)
  - Total Contribution (mn US$): 196.3 (2007), 279.3 (2008), 274.3 (2009), 240.4 (2010 proj.)
  - Total Contribution in percent of GDP: 8.1 (2007), 9.1 (2008), 9.3 (2009), 7.4 (2010 proj.)
  - In percent of total revenue: 28.3 (2007), 36.3 (2008), 33.2 (2009), 29.7 (2010 proj.)
- Selected macro indicators (Suriname: Main Economic Indicators):
  - Real GDP (annual percentage change): 3.8 (2006), 5.2 (2007), 6.0 (2008), 2.5 (2009), 4.0 (2010 proj.)
  - CPI inflation (average, percent): 11.3 (2006), 6.4 (2007), 14.6 (2008), 0.7 (2009), 5.5 (2010 proj.)
  - External current account balance: 7.5 (2006), 7.5 (2007), 3.9 (2008), -2.0 (2009), -5.3 (2010 proj.)
  - Central government balance: 0.9 (2006), 3.0 (2007), 2.0 (2008), -1.8 (2009), -3.8 (2010 proj.)
  - Total public debt: 30.2 (2006), 21.1 (2007), 17.9 (2008), 19.2 (2009), 20.8 (2010 proj.)
  - Gross international reserves (US$ millions): 264.3 (2006), 433.4 (2007), 665.6 (2008), 777.8 (2009), 810.0 (2010 proj.)
  - Reserve coverage (months of imports): 2.6 (2006), 3.6 (2007), 4.2 (2008), 5.2 (2009), 4.6 (2010 proj.)

### Policy Recommendations, Staff Appraisal, and Risks
- Fiscal policy guidance:
  - Fiscal policy should be timely, targeted, and temporary; fiscal impulse must be withdrawn once recovery is well entrenched.
  - Staff main messages:
    - (i) delay FISO-2 until fiscal accounts stabilized;
    - (ii) resist pressures to boost spending ahead of May 2010 elections and rein in current spending in 2010 and over the medium term;
    - (iii) strengthen tax collections, using CARTAC technical assistance;
    - (iv) prudently expand foreign borrowing to finance expected investments.
  - Staff advised against reducing the corporate tax rate from 36 percent.
- Current spending recommendations:
  - Postpone FISO-2 and implement gradually over 3-4 years beginning January 2011.
  - Curb growth of nonwage current spending and phase in pension increases over several years.
  - Consider the temporary mortgage subsidy scheme (through end-2010) as justifiable and well targeted.
- Monetary and exchange-rate guidance:
  - If public finances deteriorate, tighten monetary policy; avoid easing despite low inflation because government expenditure is boosting domestic demand.
  - Consider increasing reserve requirements if needed and develop a secondary market for government securities; move toward open market operations.
  - Encourage gradual unification of official and commercial foreign exchange markets and managed-float flexibility; official market may be slightly overvalued (estimated overvaluation 3-6 percent under trade elasticities; PPP-based estimates about 10 percent in a large sample).
- Financial sector and banking soundness:
  - Prompt recapitalization of two undercapitalized state-owned banks; estimated cost small, about 0.4 percent of GDP.
  - Resolve CLICO-Suriname expeditiously to minimize budget cost and avoid contagion.
  - Recommended participation in the Financial Sector Assessment Program (FSAP); authorities requested an FSAP mission as soon as possible.
- Structural and diversification advice:
  - Consider alternatives to boost government take in the mining sector; any equity investment should align with a long-term diversification and sustainability strategy.
  - Encourage diversification toward tourism, rice, and banana sectors.
  - Strengthen revenue administration and improve business environment; CARTAC assistance requested for indirect tax options early 2010.
- Risk assessment:
  - Short-run downside risks: slower global recovery, excessive pre-election spending, recapitalization needs and CLICO resolution costs.
  - Medium-term upside tilt: large capital projects by government and Staatsolie expected to sustain growth through 2013.
  - Political risks: May 2010 elections could create presidential selection stalemate risks.

### FSAP Recommendation, Public Investment, and Structural Priorities
- FSAP:
  - Recommended to assess financial sector health, supervision, and introduction of indirect monetary instruments; authorities agreed and formally requested an FSAP mission.
- Public investment in mining:
  - Mission supported government plan to increase participation as minority shareholder to boost revenues, with caveat to manage risks within a long-term comprehensive growth strategy.
  - Staff encouraged financing public investment through concessionary loans or grants where possible.
- Structural reform priorities:
  - Strengthen revenue administration (CARTAC TA requested).
  - Restructure public companies; rice company restructuring nearly complete; banana company full privatization scheduled in 2010.
  - Improve business environment; World Bank Doing Business Report (2010) ranked Suriname 155th among 183 countries.

*Italic: IMF staff report chapter "Recent Developments and Outlook in the Energy and Mining Sectors."*

### 1.  Recent Developments and Outlook in the Energy and Mining Sectors ................................5

### 1.  Recent Developments and Outlook in the Energy and Mining Sectors

### I. Background and Economic Outlook
- Over the past decade, social peace and a broadly benign external environment have helped promote social and economic development in Suriname; the country ranks 97th out of 182 countries in the UNDP’s 2009 Human Development Index.
- The mineral and energy sectors (gold, alumina, and oil, primarily) account for about 30 percent of GDP.
- Economic activity weakened in 2009 due to the global slowdown and a sharp output decline in the alumina sector:
  - Real GDP growth: estimated to have slowed to 2½ percent in 2009, from 6 percent in 2008.
  - Potential output growth: estimated at about 5 percent of GDP.
  - Twelve-month inflation: estimated to have fallen from 14½ percent in 2008 to less than 1 percent in 2009.
  - CPI composition: food, energy, and transportation weigh heavily in the CPI (55 percent).
- External current account:
  - Shifted from a surplus of 4 percent of GDP in 2008 to a deficit of 2 percent in 2009.
  - Increase in gold and oil exports partly offset lower alumina exports.
  - Crude oil exports rose by around 35 percent in volume terms due to redirection of crude otherwise used for refining.
- Reserves and financing:
  - Drawdown from the Netherlands Treaty Fund in August 2009 was used to clear longstanding arrears with Brazil totaling US$118 million.
  - Recent SDR allocations of about US$125 million.
  - International reserves estimated at the equivalent of 5¼ months of imports at end-2009, up from 4¼ months in 2008.

### II. Energy and Mining Sector Developments (Box 1)
- Sector importance:
  - In 2008, alumina, gold, and oil exports amounted to 55 percent of GDP and accounted for some 95 percent of total exports of goods.
- Bauxite / alumina:
  - Expected exhaustion of bauxite reserves around Paranam by 2010 prompted SURALCO to lower production levels by 40 percent pending development of a new mine in eastern Suriname by 2013.
  - SURALCO bought out BHP Billiton’s 45 percent share in their joint venture in July (year implied 2009 in source).
  - Proposed new company to develop a bauxite mine in the eastern Nassau region with estimated reserves of 10 years.
  - Ongoing negotiations over exploitation of large bauxite deposits in the Bakhuys mountains in western Suriname.
- Gold:
  - Rosebel Gold Mines (IAMGOLD) reports production capacity of 365,000 ounces/year with reserves to last at least 20 years.
  - Negotiations for SURGOLD (SURALCO, Newmont, government) well advanced; initial exploration points to possible reserves of up to 3 million ounces in eastern Nassau.
  - Informal gold sector accounts for 60 percent of total gold production; weakly regulated and largely untaxed. Gold is sold to seven licensed private brokers for export processing.
- Oil:
  - Exploitation of oil resources is granted exclusively to Staatsolie by law; other companies access via production-sharing agreements.
  - 2008 oil output: 5.9 million barrels (record high), making Suriname broadly self-sufficient; exported 45 percent of crude production while importing processed petroleum products of about equal value.
  - Staatsolie’s investment program aims to expand refining capacity and intensify exploration; geological surveys estimate potential oil reserves in the Guyana Basin at 15 billion barrels.
- Fiscal contribution:
  - Total tax and nontax revenues from the three major mining companies accounted for 36 percent of total fiscal revenues in 2008.
  - Tax revenue from SURALCO expected to decline substantially during 2009–10 due to lower alumina production and prices.
  - Government revenues from Staatsolie were boosted in 2009 by delayed large dividend payments covering 2008 but projected to decline in 2010.
  - Revenues from IAMGOLD expected to continue to grow because of higher gold volume and prices.

### III. Monetary and Credit Developments
- Broad money growth (y/y):
  - Peaked at 33 percent in 2008Q1.
  - Decelerated to 8 percent in 2009Q1.
  - Rose again to 22 percent in September 2009, reflecting higher government spending financed by the central bank.
- Bank credit to the private sector:
  - Declined from 42 percent in July 2008 to 17 percent in September 2009.
- Central Bank reserve requirements (CBvS):
  - Unchanged since 2007: 25 percent on domestic currency deposits and 33 percent on foreign currency deposits.
  - Banks are allowed to hold up to 10 percent of the reserve requirement on domestic deposits in mortgages for low-income housing.

### IV. Fiscal Developments and Public Finance
- Fiscal balance deterioration in 2009:
  - Fiscal balance estimated to have deteriorated by 4 percent of GDP in 2009.
  - Underlying balance (excluding one-off Brazilian debt transactions) projected to deteriorate by close to 5 percent of GDP.
- Revenue dynamics:
  - 2006–08: public sector large surpluses (about 2 percent of GDP on average) driven by rising revenues from mineral sectors.
  - 2009: drop in oil and mineral prices and substantial reduction in alumina output depressed tax revenues.
  - Exceptionally high dividend receipts from Staatsolie and from the central bank mitigated the revenue decline.
- Expenditure drivers in 2009:
  - Civil service wage increases starting in March 2009: 3.1 percent of GDP (see Box 2).
  - Higher spending on goods and services: 2.5 percent of GDP.
  - Elevated pension and other transfer payments, including a mortgage subsidy scheme covering 2009–10: 1.2 percent of GDP.
- Public debt:
  - Public debt-to-GDP ratio reduced from 37 percent of GDP in 2005 to around 19 percent in 2009.
  - Clearance of Brazilian debt arrears: US$118 million, including a write-off of US$44 million.
  - Remaining bilateral arrears with the United States estimated at US$31 million, or 1 percent of GDP (half in the form of accumulated penalties).

### V. Civil Service Wage Reforms (Box 2)
- Purpose: part of a wider civil service reform to improve competitiveness of pay and make the civil service leaner and more efficient over time.
- FISO-1 (launched March 2009, retroactive to January 1, 2008):
  - Grading of some 40,000 civil servant positions into eleven pay grades with three sub-grades each, based on five criteria.
  - Authorities assured no position would be graded below its previous pay-grade, resulting in upward adjustments for nearly all positions.
  - One month’s additional wage adjustment paid every month for 14 months to cover back pay from January 2008 through February 2009.
  - Wage bill expected to increase from SRD 760 million in 2008 to about SRD 980 million in 2009.
- FISO-2 (scheduled early 2010, retroactive to January 1, 2009):
  - Objective to decompress the wage bill by providing wage increases to higher civil service grades of up to 45 percent.
  - Overall additional cost unclear; estimated wage bill increase of at least another 20 percent.
  - If back-pay provisions similar to FISO-1 are applied, the impact on the 2010 wage bill could be substantial.
  - Full implementation of FISO-1 and FISO-2 would result in a cumulative expansion of the wage bill by more than 50 percent, equivalent to 5.4 percent of 2009 GDP over two years.

### VI. Medium-Term Outlook and Risks
- Mission and authorities prepared a medium-term macroeconomic framework assuming fiscal prudence with the goal of attaining fiscal balance by the end of the projection period.
- Fiscal path:
  - After a further small deterioration in 2010 (mainly carry-over effects from 2009 countercyclical policies), fiscal accounts projected to progressively improve and revert to a small surplus beginning in 2014 as output and commodity prices recover.
  - Scenario includes gradually phasing in the second stage of the wage reform program, starting in 2011.
- External and sectoral developments:
  - External current account balance expected to deteriorate in the near term before rebounding beginning in 2013 when large bauxite and gold mines come on stream.
  - Expansion of Staatsolie’s oil refining capacity expected to reduce need for imported refined petroleum products beginning in 2013.
- Debt projections and shock resilience:
  - Under the scenario, public and external debt levels remain low and manageable over the medium term, at below 23 percent of GDP and 11 percent of GDP, respectively.
  - Even under standard and combined shocks, public debt would not rise above 33 percent of GDP.
  - Returning to debt levels at the end of the projection period similar to pre-downturn levels would provide authorities with stable finances and policy space to react to future shocks.

### VII. Key Quantitative Indicators (as reported)
- Sector and fiscal contributions:
  - Government Revenue From Oil, Bauxite and Gold Production (mn US$):
    - Gold revenues: 16.1 (2007), 53.5 (2008), 71.7 (2009), 77.0 (2010 proj.)
    - Bauxite revenues: 83.0 (2007), 47.5 (2008), 15.2 (2009), 12.2 (2010 proj.)
    - Oil revenues: 97.1 (2007), 178.3 (2008), 187.4 (2009), 151.2 (2010 proj.)
    - Total Contribution (mn US$): 196.3 (2007), 279.3 (2008), 274.3 (2009), 240.4 (2010 proj.)
    - Total Contribution in percent of GDP: 8.1 (2007), 9.1 (2008), 9.3 (2009), 7.4 (2010 proj.)
    - In percent of total revenue: 28.3 (2007), 36.3 (2008), 33.2 (2009), 29.7 (2010 proj.)
- Monetary and fiscal macro table (Suriname: Main Economic Indicators, 2006-10; in percent of GDP unless indicated):
  - Real GDP (annual percentage change): 3.8 (2006), 5.2 (2007), 6.0 (2008), 2.5 (2009), 4.0 (2010 proj.)
  - CPI inflation (average, percent): 11.3 (2006), 6.4 (2007), 14.6 (2008), 0.7 (2009), 5.5 (2010 proj.)
  - Broad money (annual percentage change): 21.1 (2006), 30.5 (2007), 10.9 (2008), 19.1 (2009), 12.9 (2010 proj.)
  - External current account balance: 7.5 (2006), 7.5 (2007), 3.9 (2008), -2.0 (2009), -5.3 (2010 proj.)
  - Central government balance: 0.9 (2006), 3.0 (2007), 2.0 (2008), -1.8 (2009), -3.8 (2010 proj.)
  - Total public debt: 30.2 (2006), 21.1 (2007), 17.9 (2008), 19.2 (2009), 20.8 (2010 proj.)
    - Of which external debt: 18.3 (2006), 12.2 (2007), 10.3 (2008), 8.6 (2009), 9.5 (2010 proj.)
  - Gross international reserves (US$ millions): 264.3 (2006), 433.4 (2007), 665.6 (2008), 777.8 (2009), 810.0 (2010 proj.)
    - In months of imports of G&S: 2.6 (2006), 3.6 (2007), 4.2 (2008), 5.2 (2009), 4.6 (2010 proj.)

*Source: IMF staff report chapter "Recent Developments and Outlook in the Energy and Mining Sectors."*

### 8.      Economic risks to the outlook are broadly balanced for the near term, and tilted

### 8.      Economic risks to the outlook are broadly balanced for the near term, and tilted 

### Near-term and medium-term risks
- Local gold production has surged in response to high prices; the recovery in Asia has helped support alumina prices.
- Short-run downside risks:
  - Possibility of a slower global recovery than anticipated.
  - Risk that government spending on wages and goods and services increases excessively in the run-up to the May 2010 elections.
  - Additional budgetary costs from the need to recapitalize two state-owned banks and to resolve problems at CLICO-Suriname.
- Medium-term upside tilt:
  - Large capital projects by the government and Staatsolie are expected to sustain growth through 2013, when a major increase in alumina and gold production is expected.

### Political risks and election-related uncertainty
- 2010 general elections create political risks and uncertainties:
  - The National Assembly must choose the President by a two-thirds majority; failure after two attempts refers the election to the People’s Assembly (simple majority).
  - Risk that the President may not be determined for an extended period following parliamentary elections.
  - Risk of political stalemate if the President is elected by the People’s Assembly but lacks support in the National Assembly.

### Fiscal policy stance and guidance
- Authorities have fiscal space owing to low public debt and prudent past management during the commodity boom.
- Staff view: fiscal policy should be timely, targeted, and temporary; fiscal impulse must be withdrawn once recovery is well entrenched.
- Staff main messages to the authorities:
  - (i) delay the second phase of the wage reform program, planned for early 2010, until fiscal accounts had stabilized;
  - (ii) resist pressures to further boost spending ahead of the May 2010 elections, and rein in current spending in 2010 and over the medium term;
  - (iii) strengthen tax collections, including by making use of CARTAC technical assistance;
  - (iv) prudently expand foreign borrowing to finance expected investments in infrastructure and the mining sectors.

### Revenue outlook and tax policy advice
- 2010 public sector revenue projected to return to more normal levels than in 2009, when weaker direct tax revenue was more than offset by exceptionally high nontax revenue.
- Tax collections expected to benefit marginally from the pickup in economic activity and domestic demand; nontax revenue expected to revert to historic levels.
- Authorities considered reducing the corporate tax rate from its current level of 36 percent; staff advised against such a reduction because over 75 percent of all corporate tax revenue is collected from just three large companies in the mineral sector and a cut would effectively transfer resources to them when public finances are significantly weaker.

### Current spending developments and recommendations
- Under prudent policies, staff projections show noninterest current spending rising from less than 20 percent of GDP in 2008 to around 24 percent in 2010.
- Key components driving increases:
  - Implementation of the first phase of the wage reform (FISO-1) led to an increase in the wage bill of 29 percent in 2009, boosting the wage bill to 12 percent of GDP in 2009.
  - Full implementation of the second phase (FISO-2), scheduled for early 2010 with retroactive effect from January 1, 2009, would raise the wage bill to 13-14 percent of GDP.
  - Expenditure on goods and services rose from 5 percent of GDP in 2008 to 7½ percent in 2009.
- Staff recommendations:
  - Postpone FISO-2 and implement it gradually over several years (recommended implementation over a period of 3-4 years, beginning in January 2011).
  - Curb the rate of growth of nonwage current spending and phase in programmed increases in civil service pensions over several years.
  - Consider the temporary mortgage subsidy scheme (through end-2010) as justifiable and well targeted.

### Authorities’ stance on fiscal pressures
- Authorities acknowledged fiscal deterioration risks, including igniting a new wave of inflation.
- Wage agreements included a clause allowing delay of implementation if justified by fiscal considerations; authorities indicated intent to curb expenditures and delay FISO-2 despite election-related pressures.

### Capital spending and public investment
- Capital spending broadly stable at around 5 percent of GDP in recent years; projected to rise in coming years due to large investments underway or expected in infrastructure and the mining sector.
- Staff and authorities agreed public investment should be implemented sustainably and consistent with absorptive capacity; advised financing via concessionary loans or grants where possible.
- Authorities noted most large public investment projects were being financed through concessionary foreign loans.

### Public debt and external arrears
- Public debt projected to remain relatively low, at 21 percent of GDP by end-2010.
- Given concessional terms on a significant proportion of the debt, the government interest bill is low, at around 1 percent of GDP.
- Staff encouraged clearing remaining outstanding bilateral arrears with the United States to improve credit ratings and reduce costs of external commercial borrowing; authorities offered to pay principal and interest and asked the United States to waive penalties.

### Monetary policy and exchange rate guidance
- If public finances deteriorate more than anticipated, staff noted a likely need to tighten monetary policy.
- Despite sharp decline in inflation, staff advised not to ease monetary policy because domestic demand is being boosted by government expenditure.
- Private sector credit growth remains relatively strong, at 17 percent.
- Staff cautioned that a further fiscal deterioration might require tightening monetary policy through an increase in reserve requirements.
- Recommended developing a secondary market for government securities and moving toward relying on open market operations; encouraged CBvS to seek technical assistance.
- Exchange rate assessments:
  - Dual exchange rate regime with official and commercial markets; an unofficial parallel market exists where the currency has been slightly more depreciated than in the official market by 5-7 percent in recent months.
  - Estimates suggest the official market rate may be slightly overvalued; equilibrium assessments imply an overvaluation of 3-6 percent under reasonable trade elasticities, and PPP-based estimates point to about a 10 percent overvaluation in a large sample.
- Staff encouraged gradual unification of the official and commercial foreign exchange markets and use of managed-float flexibility; authorities agreed unification would reduce distortions but did not support allowing the rate to float at this stage.

### Financial sector soundness and vulnerabilities
- Banking sector has weathered the global financial crisis reasonably well; limited external exposure to risky instruments.
- Commercial bank profitability declined somewhat with weakening domestic demand.
- Nonperforming loan (NPL) ratio rose from 7.9 percent at end-2008 to 8.5 percent in September 2009.
- Two small state-owned banks are significantly undercapitalized; mission encouraged prompt recapitalization, with estimated cost to the budget small, at about 0.4 percent of GDP.
- Dollarization and currency exposure:
  - Bank deposit dollarization rose from 51 percent of total deposits in April 2009 to 54 percent in September 2009.
  - Share of foreign currency loans in total loans declined to 43 percent in September 2009.
  - CBvS maintained a high reserve requirement of 33.3 percent on foreign currency deposits (compared with 25 percent for local currency deposits); banks may hold these in interest-bearing accounts abroad.
  - Banks’ net foreign exchange position is broadly in equilibrium; Ministry of Trade and Industry will enforce regulations requiring goods be priced in Surinamese dollars to reduce dollarization.
- Reserves and banking system coverage:
  - Official international reserves about US$800 million at end-September 2009, equivalent to 5.3 months of imports.
  - Foreign reserves coverage of the banking system rose from 87 percent of banks’ foreign currency deposits at end-2005 to 153 percent at end-September 2009.
- CLICO-Suriname resolution needed:
  - Following a run in July, a court-approved moratorium on payments provided time to facilitate a possible takeover by another local insurer.
  - Mission urged expeditious resolution to stem balance sheet deterioration and avoid contagion; resolution should minimize budget cost while enforcing market discipline to address moral hazard.

*International Monetary Fund staff report excerpt (chapter on policy discussions and risks).*

### 26.      The mission recommended that Suriname participate in the Financial Sector

### 26. The mission recommended that Suriname participate in the Financial Sector Assessment Program (FSAP)

### FSAP recommendation
- The mission recommended that Suriname participate in the Financial Sector Assessment Program (FSAP) to:
  - assess the health of the financial sector;
  - make practical recommendations on how to strengthen bank and nonbank supervision;
  - make recommendations toward the introduction of indirect monetary policy instruments.
- The authorities agreed on the merits of an FSAP exercise and formally requested that an FSAP mission visit Suriname as soon as possible.

### Public investment in the mining sector and structural issues
- The mission supported the authorities’ plan to increase Suriname’s share in the exploitation of its natural resources by undertaking sizeable investments in the mining and energy sectors, primarily as a minority shareholder in private ventures.
  - Rationale: boost Suriname’s share in the development of the country’s natural resources and ensure a greater flow of revenue to the government for the benefit of the broad population.
  - Staff caveat: any direct equity investment entails some risks to the government and should be undertaken within the context of a long-term comprehensive growth strategy of diversification, and economic and environmental sustainability.
- Staff encouraged consideration of alternative fiscal measures to boost the government’s take in the mining sector.
- Diversification recommendations:
  - Encourage diversification away from over-reliance on the mining sector toward new opportunities for growth and employment.
  - The mission welcomed the ongoing increase in the number of hotels and eco-tourism activities and noted growth potential in the tourism industry.
  - Noted promise in the rice and banana sectors for growth and employment.
- Structural reform priorities (endorsed broadly by the authorities):
  - Strengthening revenue administration.
    - Authorities requested technical assistance from CARTAC to do preparatory work in early 2010 on options to improve the efficacy and administration of indirect taxes, to enable the successor government to take informed decisions soon after taking office.
  - Restructuring of public companies.
    - Sustained efforts undertaken; restructuring of the state-owned rice company is almost complete, and the full privatization of the banana company is scheduled to take place in 2010.
  - Improving the business environment.
    - In its 2010 Doing Business Report, the World Bank placed Suriname 155th among 183 countries, the lowest ranking in the Caribbean region.
    - The mission called on the authorities to intensify efforts to reduce red tape and excessive bureaucratic steps associated with establishing and running private businesses, emphasizing that simplifying business licensing requirements and procedures would encourage greater domestic and foreign private investment.

### Staff appraisal — macroeconomic assessment and policy recommendations
- Recent performance and outlook:
  - Suriname weathered the global economic crisis relatively well.
  - While output growth fell below potential in 2009, it is estimated to have remained positive.
  - Weaker activity in the alumina sector was partly offset by stronger performance in the gold and construction sectors.
  - Inflation pressures have diminished markedly, and private credit expansion has eased.
  - The external current account balance shifted to a deficit in 2009, but this deficit was relatively small, and international reserves are at comfortable levels.
- Fiscal policy and public debt:
  - Prudent policies in recent years reduced the public debt-to-GDP ratio to one of the lowest levels in the region, providing some room to relax the fiscal stance to cushion the global slowdown.
  - Any relaxation of fiscal stance needs to be consistent with macroeconomic stability and fiscal sustainability.
  - The staff warned against undue increases in fiscal spending:
    - In 2009 fiscal outlays grew rapidly due to implementation of the first phase of the civil service wage reform, higher pension payments, sharp increases in subsidies, and purchases of goods and services.
    - Concern that full implementation of the civil service reform in the months ahead could lead to excessive pressure on resources and set off an inflationary process.
    - Recommendation: delay the implementation of the second stage of the civil service reform by at least one year, and implement it gradually thereafter over a period of several years.
    - Staff also recommends bringing the growth of other current outlays under control and advises against weakening tax collections through undue reductions in the corporate tax rate.
    - Supports authorities’ efforts to strengthen tax administration, including with technical assistance from CARTAC.
- Monetary and exchange-rate policy:
  - Monetary policy appears appropriate, but if fiscal spending is not restrained or spending growth increases, there may be a need for an early tightening in monetary conditions.
  - Staff encourages the development of a secondary market for government securities and a gradual medium-term move toward relying on open-market operations as the main monetary policy tool.
  - Staff estimates suggest that the Suriname dollar may be slightly overvalued, although computations suggest this is within the margin of error.
  - Staff encourages efforts to gradually unify the official and commercial market exchange rates and to introduce more flexibility in the exchange rate regime.
  - The staff does not recommend approval of multiple currency practices, as there is no timetable for their removal.
- Financial sector and banking system:
  - The Surinamese banking sector has weathered the global financial crisis reasonably well.
  - Banks generally appear well capitalized, but NPL ratios have increased slightly and conditions in individual banks vary considerably.
  - Staff encourages authorities to:
    - promptly recapitalize the two undercapitalized small state-owned banks;
    - resolve the situation in CLICO-Suriname expeditiously and at a minimum cost to the budget.
  - Staff welcomes authorities’ plans to strengthen financial supervision and supports their request for an FSAP in the near future.
- Medium-term prospects and investment:
  - Medium-term prospects are favorable, with large investment projects in infrastructure, and in the mining and oil sectors.
  - Over the medium term, the external current account balance is expected to shift to a robust surplus, benefiting from a sustainable boost in exports from large mining projects in the alumina and gold sectors.
  - Staff encourages continued financing of public sector investments through foreign concessionary financing.
  - Staff endorses the authorities’ plan to increase Suriname’s share in exploitation of its natural resources, noting such investments can be justified by the country’s low public debt ratio and comfortable reserve position and would ensure a greater flow of revenue to the government for the benefit of the broad population.
  - Authorities are encouraged to intensify efforts to simplify business licensing requirements to help promote investment.
- Surveillance recommendation:
  - The staff recommends that the next Article IV consultation with Suriname be held on the standard 12-month cycle.

*IMF staff report excerpt.*

### APPENDIX I. ILLUSTRATIVE MEDIUM-TERM PROJECTIONS AND

### APPENDIX I. ILLUSTRATIVE MEDIUM-TERM PROJECTIONS AND DEBT SUSTAINABILITY ANALYSES (DSAS)

### A. Government Finances — Key assumptions and assessment
- Revenue trajectory and drivers:
  - Revenue is projected to decline over the next three years, and rebound starting in 2013, when the new bauxite and gold mining projects come on stream.
  - Revenue collections will be further boosted by the government’s expected participation in the gold and alumina sectors, and higher revenue from the state oil company after the completion of its new refinery.
  - In the outer years, indirect revenue collections are also assumed to increase marginally.
- Expenditure and consolidation:
  - Fiscal position will gradually improve through fiscal consolidation.
  - FISO-2 is assumed to be implemented gradually over a number of years, capping the annual nominal wage growth at about ten percent.
  - Spending on goods and services and on subsidies and transfers will also be brought under control.
  - Improvement in revenue starting in 2013 will help offset reduction in grants-financed capital expenditure due to drying up of financial assistance under the Netherlands Treaty Fund.
  - More spending associated with government participation in the mining sector is reflected in higher net lending during 2010-13.
- Fiscal balance projections:
  - The overall fiscal deficit is projected to gradually decline to 2.7 percent of GDP in 2012.
  - Once higher mineral revenues kick in, starting in 2013, the fiscal balance is expected to improve rapidly and turn positive in 2014.
- Public debt management assumption:
  - The DSA assumes continuation of prudent public debt management, with external debt contracted in line with implementation capacity and at favorable terms.
- Fiscal DSA assessment:
  - Public debt remains manageable, although sensitive to shocks.
  - Public debt-to-GDP ratio is projected to increase moderately over the next few years, before declining in 2013; during the whole projection period the debt-to-GDP ratio is expected to remain below 23 percent.
  - A permanent ½-standard-deviation shock applied to the real interest rate or primary fiscal balance could push the debt-to-GDP ratio to 32 percent.

### B. Balance of Payments — Key assumptions and assessment
- Macroeconomic and project assumptions:
  - Potential output is estimated at 5 percent. Economy grows below potential up to 2012; three major non-renewable resources projects come on line in 2013.
  - SURALCO is expected to increase alumina production back to the 2008 level in 2013.
  - Staatsolie’s new enhanced refining capacity will come on stream in 2013.
  - The new gold mine SURGOLD is assumed to start production in the Nassau region in 2013.
  - These projects will boost GDP above potential by 2½ percent.
  - Inflation is expected to remain steady, at 5½ percent a year.
- Current account, reserves, and financing:
  - Increase in imports of capital and intermediate inputs related to the three projects will keep the current account in deficit through 2012.
  - Reserve coverage will remain stable, at about 5 months of imports, as capital inflows from FDI remain robust.
  - In 2013, the current account balance will turn positive and reach 4¾ percent of GDP.
  - Reserve coverage will rise to 7 months of imports by 2014.
  - Steady decline in grant inflows reflects the drying up of financial assistance from the Netherlands Treaty Fund.
- External DSA assessment:
  - Path of external debt remains flat at around 10 percent of GDP throughout the projection period; this external debt is less than half of total public debt.
  - External debt ratio particularly sensitive to a non-interest current account shock: if the external current account balance is weaker than assumed, external debt would reach 33 percent at the end of the projection period.
  - A real depreciation shock of 30 percent would raise external debt to 18 percent of GDP by 2014.

### C. Key projected macro-fiscal and external figures (select rows from Appendix I−Table 1)
- Real economy (annual percentage change):
  - Real GDP: 1/ 5.2 6.0 2.5 4.0 4.7 5.5 7.5 6.0
  - Nominal GDP: 1/ 13.8 26.2 -3.1 12.3 12.1 10.8 12.3 10.8
  - Consumer prices (period average): 6.4 14.6 0.7 5.5 5.5 5.5 5.5 5.5
- Savings and investment (percent of GDP):
  - Private sector balance (savings-investment): 5.3 2.0 -0.2 -2.2 -1.5 -0.6 6.0 5.7
  - Public sector balance: 2.2 1.9 -1.8 -3.5 -2.9 -2.7 -1.3 0.2
  - Savings: 7.2 7.0 3.3 2.2 1.2 1.0 2.1 3.2
  - Investment: 5.0 5.0 5.1 5.7 4.1 3.7 3.4 3.0
  - Foreign savings: -7.5 -3.9 2.0 5.7 4.4 3.3 -4.7 -5.9
- Central government (percent of GDP):
  - Revenue and grants: 30.5 27.5 31.2 27.8 26.0 25.1 25.4 25.4
  - Total expenditure 2/: 27.6 25.6 33.1 31.3 29.0 27.8 26.7 25.3
  - Noninterest current expenditure: 21.9 19.9 26.6 24.0 22.1 21.5 21.2 21.2
  - Overall balance: 3.0 2.0 -1.8 -3.5 -2.9 -2.7 -1.3 0.2
  - Net domestic financing: -2.8 -2.3 2.0 1.6 1.5 1.4 0.8 -0.5
  - Net external financing: -0.2 0.3 -0.2 1.9 1.4 1.3 0.5 0.3
  - Total public debt: 21.1 17.9 19.2 21.0 21.7 22.3 21.2 20.1
- External sector (percent of GDP unless indicated):
  - Current account: 7.5 3.9 -2.0 -5.7 -4.4 -3.3 4.7 5.9
  - Merchandise exports, f.o.b.: 57.0 56.9 50.3 50.0 50.1 48.4 51.4 51.4
  - Merchandise imports, f.o.b.: -46.4 -50.3 -49.0 -51.0 -49.4 -46.3 -40.4 -38.9
  - Capital and financial account: -7.7 1.8 -4.5 -2.9 -3.0 -3.0 -0.3 -7.4
  - Of which: foreign direct investment: 5.8 5.5 4.8 6.5 7.6 7.0 5.3 4.1
  - Gross international reserves (US$ millions): 433 666 778 813 867 930 1,171 1,422
  - Reserve coverage (months of imports): 3.6 4.2 5.2 4.8 4.8 5.0 6.3 7.1

### D. Selected debt-stability diagnostics and scenarios
- Public sector debt dynamics (Appendix I−Table 2, select highlights):
  - Baseline: Public sector debt 1/: 39.1 36.6 30.2 21.1 17.9 19.2 21.0 21.7 22.3 21.2 20.1
  - Debt-stabilizing primary balance: -0.9
  - Change in public sector debt (selected years): -1.9 -2.4 -6.5 -9.1 -3.1 1.3 1.8 0.7 0.6 -1.1 -1.1
  - Primary deficit (percent of GDP): 0.6 0.1 -0.5 -3.6 -2.6 0.5 2.6 1.9 1.6 0.2 -1.2
  - Automatic debt dynamics (contribution): -5.0 -4.1 -4.1 -2.2 -3.7 1.9 -1.2 -1.2 -1.0 -1.3 -1.0
  - Public sector debt-to-revenue ratio 1/: 147.9 132.7 110.1 69.0 65.1 61.5 75.7 83.4 89.0 83.6 78.8
  - Gross financing need 6/ (percent of GDP): 12.4 12.2 9.8 10.0 2.9 8.9 6.8 6.8 6.5 5.1 3.6
  - Gross financing need (in billions of U.S. dollars): 184.7 219.0 208.1 242.0 87.3 262.8 219.5 241.6 253.0 222.7 175.0
- Public debt sensitivity:
  - Under a permanent ½-standard-deviation shock to real interest rate or primary fiscal balance, public debt-to-GDP could reach 32 percent.
- External debt dynamics (Appendix I−Table 3, select highlights):
  - Baseline: External debt (percent of GDP): 25.6 21.4 18.3 12.2 10.3 8.6 10.0 10.3 10.6 10.0 9.3
  - Change in external debt: -4.6 -4.2 -3.1 -6.0 -1.9 -1.7 1.4 0.3 0.3 -0.6 -0.7
  - Current account deficit, excluding interest payments (percent of GDP): 7.9 10.6 -9.9 -9.5 -4.7 0.5 4.9 3.5 2.3 -5.7 -7.0
  - Identified external debt-creating flows (select): -0.6 2.3 -17.4 -15.6 -12.0 -3.1 -1.1 -3.6 -4.2 -10.7 -10.6
  - External debt-to-exports ratio (percent): 41.4 36.1 27.0 18.1 15.6 14.4 16.6 17.7 18.9 17.1 16.1
  - Gross external financing need (in billions of US dollars): 0.2 0.3 -0.1 0.0 -0.1 0.2 0.2 0.2 0.1 0.1 0.1
- External debt sensitivity:
  - Should the external current account balance be weaker than assumed, external debt would reach 33 percent at the end of the projection period.
  - A real depreciation shock of 30 percent would raise external debt to 18 percent of GDP by 2014.

*Source: IMF staff report appendix text and tables.*

### ANNEX I. SURINAME: FUND RELATIONS

### ANNEX I. SURINAME: FUND RELATIONS

### Membership, Quota, and SDRs
- Joined: April 27, 1978.
- Article VIII.
- Quota: SDR 92.10 (100.00 percent).
- Fund holdings of currency: SDR 85.98 (93.35 percent).
- Reserve Position: SDR 6.12 (6.65 percent).
- SDR Department:
  - Net cumulative allocation: SDR 88.09 (100.00 percent).
  - Holdings: SDR 80.67 (91.57 percent).
- Outstanding Purchases and Loans: None.
- Latest Financial Arrangements: None.

### Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs)
- Charges/Interest (Forthcoming by year):
  - 2009: 0.02
  - 2010: 0.02
  - 2011: 0.02
  - 2012: 0.02
- Total (Forthcoming by year):
  - 2009: 0.02
  - 2010: 0.02
  - 2011: 0.02
  - 2012: 0.02

### Nonfinancial Relations with the Authorities — Exchange Rate and Consultations
- National currency: Suriname dollar (SRD), replaced the Suriname guilder in January 2004 at 1,000 guilders per SRD.
- Official exchange rate: SRD 2.745 per U.S. dollar (used for official transactions such as debt service).
- Commercial exchange rate: used by commercial banks and cambios; has remained very close to the official rate in recent years at the suasion of the CBvS.
- Multiple currency practices:
  - Potential for spread between official and commercial rates to exceed two percent.
  - Existence of a special rate for imports of baby milk.
- Last Article IV consultation concluded: June 2, 2008 (IMF Country Report No. 08/131).
- Consultation cycle: standard 12-month.

### Participation and Technical Assistance
- Participation in the GDDS: formal participation announced July 2004.
- Technical assistance since 2005:
  - CARTAC: Mission January 2008 on revenue forecasting; Mission October 2009 to discuss tax reform and other TA needs.
  - FAD: Joint IADB-IMF needs assessment mission May 2007 on public financial management.
  - LEG: Missions November 2006, January and June 2007 on tax legislation.
  - STA:
    - Follow-up Money and Banking Division mission February 2005 on reporting of commercial banks’ data.
    - STA mission August 2009 to improve external sector data.
- Consents and acceptances: Recent two quota increases approved.
- Resident Representative: None.

*Italic: IMF staff report annex content as of November 30, 2009.*

### 2.5 percent, supported by buoyant activity in the gold and construction sectors. Inflation has

### _cr1044 - 2.5 percent, supported by buoyant activity in the gold and construction sectors. Inflation has

### Overview
- Real GDP growth: 2.5 percent in 2009, supported by buoyant activity in the gold and construction sectors.
- Inflation: "estimated to have averaged less than 1 percent during 2009."
- External current account balance: deteriorated from a surplus of 4 percent of GDP in 2008 to a deficit of 2 percent of GDP in 2009.
- International reserves: rose to over 5 months of imports at end-2009, in part reflecting the SDR allocations of about US$125 million.
- Public debt: estimated at 19 percent of GDP at end-2009.

### Fiscal position and public finances
- Fiscal balance: shifted from a surplus of 2 percent of GDP in 2008 to a deficit of 1.75 percent of GDP in 2009.
- Revenue: decline in tax revenue was more than offset by exceptionally high profit transfers from the state-owned oil company and the central bank.
- Expenditures: in 2009 expenditures rose substantially, particularly noninterest current spending.
- Public debt dynamics: "Public debt has declined considerably in recent years and is estimated at 19 percent of GDP at end-2009."
- Directors' fiscal guidance and recommendations:
  - Fiscal expansion in 2009 was considered appropriate to boost domestic demand, but authorities were encouraged to avoid unsustainable increases in spending.
  - Recommended a more gradual implementation of the second phase of civil service reform, given its potentially inflationary impact.
  - Supported efforts to strengthen tax administration, including through technical assistance from CARTAC.
  - Welcomed the decision to postpone the reduction in the corporate tax rate, as this would adversely affect tax collections.
  - Encouraged continued work toward normalizing relations with all creditors.
  - Advised to continue financing public sector investment through concessional external borrowing.

### Monetary policy and banking sector
- Money supply: growth in reserve and broad money supply picked up in recent months, reflecting in part higher government spending financed by the central bank.
- Banking sector resilience: limited exposure to international financial markets; sector has weathered the global financial crisis reasonably well.
- Nonperforming loans: nonperforming loan ratio for the banking sector as a whole rose moderately in 2009.
- Capitalization: most banks appear well capitalized; Directors advised strengthening the capital base of two small state-owned banks.
- Dollarization: declining over past few years but remains high; deposit dollarization ratio at end-September 2009 was 43 percent and credit dollarization ratio was 54 percent.
- Monetary policy guidance:
  - Monetary stance viewed as broadly appropriate.
  - Caution that monetary conditions might need tightening if fiscal spending threatened macroeconomic stability.
  - Encouraged development of a secondary market for government securities and gradual move toward market-based monetary policy tools.

### Exchange rate and external sector
- Staff assessment: the Suriname dollar may be slightly overvalued.
- Exchange rate policy recommendations:
  - Work toward gradually unifying the official and commercial market exchange rates.
  - Move over time to a more flexible exchange rate regime.
- External sector indicators:
  - Terms of trade (percent change): 1.6 in 2009.
  - Current account: -2.0 (percent of GDP) in 2009.
  - Change in reserves (-increase): -3.8 in 2009.
  - Gross international reserves (US$ millions): 778 in 2009.
  - Reserves in months of imports: 5.2 in 2009.

### Structural and sectoral issues
- Growth prospects: medium-term prospects favorable, with large alumina and gold projects expected to come on stream.
- Resource sector policy:
  - Most Directors supported plans for more public participation in the mining sector to increase the share of revenue from natural resources.
- Private sector development:
  - Encouraged intensifying efforts to improve the business environment and diversify the economy to promote greater private-sector led growth.
- Financial sector measures:
  - Welcomed acquisition of CLICO-Suriname’s operations by a local insurance company and encouraged smooth integration at minimum cost to the budget.
  - Supported Suriname’s request to participate in an FSAP review.

### Executive Directors’ overall assessment
- Suriname weathered the global economic crisis relatively well, with strong performance in the gold and construction sectors and international reserves remaining at a comfortable level.
- Praised authorities’ prudent macroeconomic policies, which helped reduce public debt and provided room for countercyclical policies.
- Key challenge: sustain the economic recovery and enhance long-term growth potential while ensuring continued macroeconomic stability and fiscal sustainability.

### Selected economic indicators (exact values)
- Real sector
  - GDP at 1990 prices 1/: 2005 4.4; 2006 3.8; 2007 5.2; 2008 6.0; 2009 2.5; 2010 4.0.
  - GDP current market prices 1/: 2005 20.8; 2006 19.3; 2007 13.8; 2008 26.2; 2009 -3.1; 2010 12.3.
  - Consumer prices (end of period): 2005 15.8; 2006 4.7; 2007 8.4; 2008 9.3; 2009 5.7; 2010 5.5.
  - Consumer prices (period average): 2005 9.9; 2006 11.3; 2007 6.4; 2008 14.6; 2009 0.7; 2010 5.5.
  - Exchange rate (end of period): 2005 2.74; 2006 2.75; 2007 2.75; 2008 2.75; 2009 ...; 2010 ...
- Money and credit
  - Banking system net foreign assets: 2005 3.7; 2006 37.5; 2007 49.1; 2008 26.1; 2009 6.2; 2010 9.1.
  - Broad money: 2005 11.7; 2006 21.1; 2007 30.5; 2008 10.9; 2009 19.1; 2010 12.9.
  - Private sector credit: 2005 25.1; 2006 27.6; 2007 31.2; 2008 36.3; 2009 12.9; 2010 13.7.
  - Public sector credit (percent of GDP): 2005 -0.1; 2006 -6.8; 2007 -10.9; 2008 -18.9; 2009 10.7; 2010 ...
- Savings and investment (percent of GDP)
  - Private sector balance (savings-investment): 2005 -12.3; 2006 6.6; 2007 4.6; 2008 2.0; 2009 -0.2; 2010 -2.2.
  - Public sector balance: 2005 -0.7; 2006 0.9; 2007 3.0; 2008 2.0; 2009 -1.8; 2010 -3.5.
  - Foreign savings: 2005 13.0; 2006 -7.5; 2007 -7.5; 2008 -3.9; 2009 2.0; 2010 5.7.
- Central government (percent of GDP)
  - Revenue and grants: 2005 27.6; 2006 27.4; 2007 30.5; 2008 27.5; 2009 31.2; 2010 27.8.
  - Total expenditure: 2005 30.1; 2006 28.7; 2007 28.3; 2008 25.6; 2009 33.1; 2010 31.3.
  - Of which: noninterest current expenditure: 2005 23.2; 2006 23.3; 2007 21.9; 2008 19.9; 2009 26.6; 2010 24.0.
  - Statistical discrepancy: 2005 1.7; 2006 2.2; 2007 0.7; 2008 0.0; 2009 0.0; 2010 0.0.
  - Overall balance: 2005 -0.7; 2006 0.9; 2007 3.0; 2008 2.0; 2009 -1.8; 2010 -3.5.
  - Net domestic financing: 2005 0.1; 2006 -0.4; 2007 -2.8; 2008 -2.3; 2009 2.0; 2010 1.6.
  - Net external financing: 2005 0.6; 2006 -0.4; 2007 -0.2; 2008 0.3; 2009 -0.2; 2010 1.9.
- Total public debt
  - 2005 36.6; 2006 30.2; 2007 21.1; 2008 17.9; 2009 19.2; 2010 21.0.
  - Domestic: 2005 15.3; 2006 11.9; 2007 8.8; 2008 7.6; 2009 10.6; 2010 11.1.
  - External: 2005 21.4; 2006 18.3; 2007 12.2; 2008 10.3; 2009 8.6; 2010 10.0.
- External sector (selected)
  - Terms of trade (percent change): 2005 -0.8; 2006 -2.8; 2007 -0.6; 2008 1.0; 2009 1.6; 2010 -0.2.
  - Current account: 2005 -13.0; 2006 7.5; 2007 7.5; 2008 3.9; 2009 -2.0; 2010 -5.7.
  - Change in reserves (-increase): 2005 -1.6; 2006 -4.9; 2007 -7.0; 2008 -7.6; 2009 -3.8; 2010 -1.1.
  - Gross international reserves (US$ millions): 2005 161; 2006 264; 2007 433; 2008 666; 2009 778; 2010 813.
  - In months of imports: 2005 1.6; 2006 2.6; 2007 3.6; 2008 4.2; 2009 5.2; 2010 4.8.

*Source: IMF staff estimates and projections, and Surinamese authorities (as presented in the content unit).*

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