Suriname and the IMF Reach Staff-Level Agreement on the Third Review of the Extended Arrangement Under the Extended Fund Facility
IMF News, August 30, 2023
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- Published: August 30, 2023
Mission, agreement, and administrative details
- IMF mission led by Ms. Anastasia Guscina conducted virtual and in-person meetings with Surinamese authorities during August 7-22.
- The mission discussed policies to complete the third review of the 36-month Extended Fund Facility (EFF) approved by the IMF Executive Board on December 22, 2021.
- The IMF staff team and Surinamese authorities reached a staff-level agreement on the third review; the review is subject to approval by the IMF’s Executive Board.
- Press Release No. 23/297; dated August 30, 2023.
Program access and disbursements
- Upon completion of the review, Suriname will have access to SDR 39.4 million (about USD 53 million).
- Total program disbursements to date will be SDR 157.6 million (about USD 212 million).
Macroeconomic outlook and targets
- Economy is stabilizing; pressures on the exchange rate have eased and inflation, while still high, is on a downward trend.
- Usable international reserves: 4.7 months of imports at end-June 2023.
- Growth projections:
- Recover to 2.1 percent in 2023.
- Converge to 3 percent over the medium term.
- Inflation projection: gradual decline to 40 percent by the end of 2023.
- Fiscal target: authorities are on track to achieve a primary central government surplus of 1.7 percent of GDP in the current year.
Program performance and structural reforms
- Program performance during the third review was good, with most quantitative targets met.
- Structural reform agenda continued to progress, albeit with some delays.
- Authorities face implementation challenges due to capacity constraints, a challenging socio-political environment, and external risks from a renewed worsening in the terms of trade.
- Long-term upside risks to growth exist due to development of large new oil fields.
Social protection and poverty considerations
- Critical to shelter poor and vulnerable groups from fiscal adjustment and high inflation.
- Government actions:
- Expanding the coverage of social assistance programs.
- Will look at ways to protect the value of payments from inflation.
- With support of development partners, will take a comprehensive look at efficiency and effectiveness of existing social protection programs and develop a strategic plan to guide future reform efforts.
Debt restructuring
- Progress made with debt restructuring, a critical element in restoring debt sustainability.
- All negotiations with the country’s official and private creditors, except for China, have been concluded.
- Debt exchange with private external bondholders will be launched next week (relative to mission statement timing).
- Authorities are actively negotiating with China on a debt restructuring agreement in line with program parameters, aiming for more progress by the next program review.
- Government concluded negotiations on restructuring legacy debt owed to the central bank, balancing government financial constraints and central bank financial health.
- Domestic debt and supplier arrears are being cleared.
Monetary policy and banking sector measures
- Monetary stance described as appropriate and increasingly reflected in market conditions.
- Policy actions and effects:
- April increase in local currency reserve requirements and guidance to contain private sector credit growth.
- Reserve money growth has stabilized; private sector credit growth has slowed.
- Median deposit and lending rates, although negative in real terms, are gradually edging up as more banks compete for liquidity.
- Authorities remain committed to a flexible, market-determined exchange rate.
- Central bank actions to strengthen system resilience:
- Finalized the assessment framework for banks’ time-bound recapitalization and restructuring plans.
- Banks implementing recommendations from the Asset Quality Review and adjusting loan loss provisioning.
- Central bank clearing backlog of audits of financial statements and working to normalize the auditing cycle.
- A recapitalization plan for the central bank is being finalized.
Governance, anti-corruption, and AML/CFT
- Authorities implementing reforms to strengthen governance.
- Government steps include increasing transparency in public procurement and strengthening anti-corruption and anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks.
Implementation challenges and stakeholder engagement
- Authorities face important near-term policy implementation challenges reflecting capacity constraints and a challenging socio-political environment.
- External risks include a potential renewed worsening in the terms of trade.
- Mission held wide-ranging meetings with the President of the Republic of Suriname, the Vice President, the Chairman of the National Assembly, the Minister of Finance and Planning, the Minister of Justice and Police, the Minister of Social Affairs and Housing, the Minister of Internal Affairs, the Minister of Natural Resources, the Central Bank Governor, faction leaders and members of parliament, other senior government officials, representatives of the private sector, labor unions, and development partners.
Source: Suriname and the IMF Reach Staff-Level Agreement on the Third Review of the Extended Arrangement Under the Extended Fund Facility — Press Release No. 23/297, August 30, 2023.
References
- Suriname and the IMF
- Press Releases
- PRESS CENTER
- [36-month Extended Fund Facility approved by the IMF Executive Board on
December 22, 2021](https://www.imf.org/en/News/Articles/2021/12/22/pr21400-imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-suriname)