IMF Executive Board Completes Sixth Review Under the Extended Fund Facility Arrangement for Suriname

IMF News, July 30, 2024

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Published: July 30, 2024

Review outcome and financial disbursements

The Executive Board completed the sixth review under the Extended Fund Facility (EFF) for Suriname on July 30, 2024.
Completion of the review allows an immediate purchase equivalent to SDR 46.7 million (about US$ 61.5 million).
Of the immediate purchase, SDR 19.1 million or about US$25.2 million would be for budget support.
Total program disbursement to date is SDR 290.4 million (about USD 382.6 million).
The Executive Board approved the authorities’ request for a waiver of non-observance of the end-March 2024 performance criteria on:
- the central government primary balance,
- the net international reserves, and
- net domestic assets of the central bank,

based on corrective actions already taken and committed by the authorities.

Macroeconomic context and program objectives

The EFF-supported program aims to restore fiscal and debt sustainability through:
- fiscal consolidation,
- debt restructuring,
- protecting the vulnerable by expanding social protection,
- upgrading the monetary and exchange rate policy framework,
- addressing banking sector vulnerabilities,
- advancing the anti-corruption and governance agenda.
The EFF arrangement for Suriname was approved by the Executive Board on December 22, 2021 (see Press Release No. 21/400).

Staff/Management assessment and key observations (statement by Mr. Kenji Okamura, Deputy Managing Director, and Acting Chair)

Positive indicators cited:
- The authorities’ reforms are increasingly reflected in macroeconomic stability and improving investor perceptions.
- The economy is growing, inflation is declining, donor support is increasing, and international bond spreads have reached historic lows.
Progress on reforms and debt:
- Determination to carry out politically challenging reforms is commended.
- Noteworthy progress on debt restructuring: bilateral agreements with all official creditors and most commercial creditors have been achieved.
- Domestic debt arrears have been cleared.

Policy priorities and recommended measures

Fiscal policy and social protection:
- Ensure continuous fiscal consolidation while protecting the vulnerable.
- Full removal of fuel subsidies, phasing out of electricity, water, and gas subsidies, broadening the VAT base, and containing the public wage bill are identified as necessary (and politically costly) measures.
- Phasing out subsidies and strengthening tax administration will help finance higher social assistance and infrastructure spending.
- Implement the recently finalized social assistance reform plan to promote more efficient and effective allocation of social assistance spending.
- Strengthen commitment controls and address weaknesses in cash management to contain public spending and prevent accumulation of supplier arrears.
Monetary and financial sector measures:
- Monetary policy is supporting disinflation.
- Maintain a flexible, market-determined exchange rate to support international reserves accumulation.
- Finalize the central bank recapitalization plan to help strengthen operational independence and financial autonomy.
- Timely implementation of recapitalization plans of weaker banks to bolster financial sector resilience.
- Additional steps recommended: improve liquidity management, enhance risk-based supervision, and strengthen the AML/CFT framework.
Structural and institutional reforms:
- Persevere with the ambitious structural reform agenda to:
- strengthen institutions,
- address governance weaknesses,
- bolster climate resilience,
- improve data quality.
- Continue capacity development support from the Fund and other development partners.

Press Release No. 24/294 — July 30, 2024. IMF Executive Board Completes Sixth Review Under the Extended Fund Facility Arrangement for Suriname.