Press Release No. 23/423

Suriname and the IMF Reach Staff-Level Agreement on the Fourth Review of the Extended Arrangement Under the Extended Fund Facility

December 4, 2023

• The IMF staff team and the Surinamese authorities reached a staff-level agreement on the fourth review of the authorities’ economic recovery program supported by the Extended Fund Facility (EFF). The authorities have requested an extension (until March 2025) and augmentation of the program (of about US$ 63 million). The review is subject to approval by the IMF’s Executive Board.
• Fiscal discipline and tight monetary policy are bearing fruit in restoring macroeconomic stability. The economy is growing, inflation is coming down, and investor confidence is returning.
• In 2024 the government intends to use some of the dividend from increased stability to expand social assistance programs for the poor and vulnerable, modestly increase real public sector wages for registered civil servants, and raise spending on growth-enhancing infrastructure.

Washington, DC: An International Monetary Fund (IMF) team led by Ms. Anastasia Guscina conducted virtual and in-person discussions with the Surinamese authorities during October 30-November 8 to discuss policies to complete the fourth review of the 36-month Extended Fund Facility approved by the IMF Executive Board on December 22, 2021 .

At the conclusion of the mission, Ms. Guscina issued the following statement:

“The IMF team reached a staff-level agreement with the authorities on the fourth review of Suriname’s economic reform program that is supported by the IMF’s EFF arrangement. Program performance has been strong and all performance criteria for this review were met. Staff support the authorities’ request for an increase in IMF support to Suriname (of SDR 46.8 million or about US$ 63 million) and an extension of the program to March 2025. This would raise IMF support for Suriname to around US$ 650 million. This staff level agreement is subject to approval by the IMF’s Executive Board, contingent on the fulfillment of all relevant Fund policies. Upon completion of this review, Suriname will have access to SDR 39.4 million (about USD 53 million), bringing total program disbursements to date to SDR 197 million (about USD 263 million).

“The authorities’ efforts to stabilize the economy are bearing fruit. Growth is projected at around 2 percent in 2023, inflation is on a downward trend, and usable international reserves have reached almost 5 months of imports. Prudent fiscal and monetary policies are expected to bring inflation to below 20 percent by end-2024. The authorities face important near-term risks, including policy implementation challenges stemming from a more challenging socio-political climate and capacity constraints. Over the medium to long term, there are significant upside risks to growth due to the development of large new oil fields.

“Program performance during the fourth review has been strong. All quantitative performance criteria and indicative targets under the program were met, except for the spending floor on social assistance. The authorities are on track to achieve the central government primary surplus target of 1.6 percent of GDP this year. The structural reform agenda is progressing, albeit with some delays.

“he fragile economic recovery and rising social tensions call for a more measured pace of fiscal consolidation in 2024. Staff and the authorities agreed to reduce the 2024 primary balance target from 3.5 to 2.7 percent of GDP. The 3.5 percent of GDP primary balance target, which underpins debt sustainability, will now be reached in 2025. The authorities are expected to use the additional fiscal space in 2024 to support the recovery, increase support for the poor and vulnerable, prevent further erosion of real wages for registered public sector workers, and scale up growth-enhancing investments. So far, the expansion of social assistance programs has been too slow and particular efforts are going to be made to address constraints in this area.

“Excellent progress has been made with debt restructuring. The debt exchange with private bond holders has been finalized with a participation rate of over 96 percent, and agreements with remaining official creditors are close to conclusion. The government has also made progress in clearing domestic arrears and restructuring domestic debt and the legacy debt owed to the central bank.

“Monetary policy has been actively absorbing domestic currency lliquidity which is starting to be reflected in market interest rates and a reduction of inflationary pressures. The central bank has also demonstrated its commitment to a flexible, market-determined exchange rate while working to improve the functioning of the foreign exchange market.

“Significant vulnerabilities remain in the banking system which are being actively addressed by the central bank. Banks are incorporating the results of their asset quality review into their operations and those banks that do not meet regulatory requirements have submitted time-bound recapitalization and restructuring plans to the central bank. The central bank is also strengthening its oversight over the banks and has submitted enhancements to its framework for bank resolution to the State Council for approval.

“The central bank has cleared the backlog of audits of financial statements and is now able to normalize the auditing cycle and fully implement the new Central Bank Act. A recapitalization plan for the central bank is being finalized and governance reforms are well underway in various areas including anti-money laundering/combating the financing of terrorism, anti-corruption, and public sector procurement.

“The mission would like to thank the authorities for a collaborative and fruitful dialogue. A wide-ranging set of meetings was held 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 Agriculture, the Minister of Natural Resources, the Minister of Health, the Minister of Labor, the Central Bank Governor, members of parliament, other senior officials, representatives of the private sector, civil society organizations, and development partners.”