IMF Executive Board Approves Extended Arrangement Under the Extended Fund Facility for Suriname
IMF News, December 22, 2021
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Bibliographic details
- Published: December 22, 2021
Arrangement overview
- Approved: 36-month arrangement under the Extended Fund Facility (EFF) for Suriname.
- Amount: SDR 472.8 million (about US$688 million or 366.8 percent of quota).
- Immediate disbursement enabled: SDR 39.4 million (about US$55.1 million).
Program objectives and key policy measures
- Primary aims:
- Restore fiscal sustainability.
- Protect the vulnerable by expanding social safety net programs.
- Bring public debt down to sustainable levels.
- Upgrade the monetary and exchange rate policy framework.
- Stabilize the financial system.
- Strengthen institutional capacity to tackle corruption and money laundering and improve governance.
- Fiscal consolidation:
- Discretionary fiscal consolidation of 10 percent of GDP during 2021-24.
- Fiscal reforms include eliminating costly and poorly targeted electricity price subsidies and introducing a value added tax as a source of non-mineral revenue.
- Strengthening of the social safety net to soften negative impacts on the most vulnerable.
- To achieve debt sustainability, authorities are negotiating debt relief from private and official creditors in line with program parameters.
- External and monetary measures:
- Move to a market-determined exchange rate to strengthen resilience to external shocks and rebuild foreign reserves.
- Tighten liquidity conditions to reduce inflation.
- Adopt a reserve money targeting framework and roll out open market operations to support returning inflation to single digits.
- Financial sector and governance:
- Central Bank of Suriname to address rising banking sector risks related to the exchange rate shift.
- Implement structural reforms to improve institutional capacity for macroeconomic policies, maintain financial sector stability, tackle corruption, and strengthen AML/CFT and governance.
- Technical assistance to be provided by development partners including the IMF, the Inter-American Development Bank, and the World Bank Group.
Kristalina Georgieva — Summary of statement
- Diagnosed problems:
- Systemic fiscal and external imbalances from many years of economic mismanagement.
- COVID-19 pandemic exacerbated substantial fiscal and external current account deficits, unsustainable public debt, run-down of reserves, economic downturn, and high inflation.
- Program rationale:
- Restore macroeconomic stability and confidence, and pave the way to economic recovery while protecting the most vulnerable.
- Fiscal consolidation is critical to restore “fiscal and external stability.”
- Exchange rate flexibility and program catalytic effects on external financing expected to increase foreign reserves to prudent levels.
- Structural reforms are essential for a more prosperous future.
Selected Economic and Social Indicators (Est./Proj.)
(Annual percentage change, unless otherwise indicated)
- Real sector
- Real GDP Growth: 2020: -15.9, 2021: -3.5, 2022: 1.8
- Nominal GDP Growth: 2020: 21.8, 2021: 46.7, 2022: 38.6
- Consumer prices (end of period): 2020: 60.7, 2021: 58.3, 2022: 25.8
- Consumer prices (period average): 2020: 34.9, 2021: 58.6, 2022: 37.9
- Money and credit
- Broad money: 2020: 65.0, 2021: 49.6, 2022: 28.0
- Private sector credit: 2020: 27.1, 2021: 38.5, 2022: 26.9
- Central government (In percent of GDP, unless otherwise indicated)
- Revenue and grants: 2020: 18.4, 2021: 24.1, 2022: 26.6
- Of which : Mineral revenue: 2020: 6.5, 2021: 11.2, 2022: 12.6
- Total expenditure: 2020: 31.8, 2021: 32.0, 2022: 30.8
- Overall Balance (Net lending/borrowing): 2020: -13.4, 2021: -7.9, 2022: -4.1
- Primary Balance: 2020: -9.7, 2021: -1.3, 2022: 1.7
- Central government debt: 2020: 147.7, 2021: 128.9, 2022: 128.5
- Domestic: 2020: 53.4, 2021: 40.6, 2022: 38.8
- External: 2020: 94.3, 2021: 88.2, 2022: 89.7
- External sector
- Current account balance: 2020: 9.0, 2021: 4.1, 2022: -0.9
- Capital and financial account: 2020: 6.6, 2021: -1.0, 2022: 3.1
- Memorandum Items
- Gross international reserves (US$ millions): 2020: 585, 2021: 968, 2022: 1,421
- In months of imports: 2020: 3.5, 2021: 5.8, 2022: 7.7
- Usable gross international reserves (US$ millions) 1/: 2020: 118, 2021: 501, 2022: 955
- Usable reserves in months of imports: 2020: 0.7, 2021: 3.0, 2022: 5.2
- Official exchange rate (SRD per US$, (Average): 2020: 9.3, 2021: …
- Sources listed in the document: Suriname authorities; UNDP HD Report, and IMF staff estimates and projections.
- Note 1/: Excluding the PBOC swap and ring-fenced banks' FX required reserves.
Information from IMF press release, December 22, 2021.
Content in this bundle
- IMF Executive Board keurt Extended Arrangement onder de Extended Fund Facility voor Suriname goed