{
  "title": "Press Release: IMF Executive Board Approves US$478 Million Stand-By Arrangement for Suriname",
  "publication": "IMF News, May 27, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16251",
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  "summary": "Date: May 27, 2016",
  "publishDate": "2016-05-27",
  "sections": [
    {
      "heading": "Overview and approval",
      "content": "- Date: May 27, 2016\n- The Executive Board approved a 24-month Stand-By Arrangement (SBA) for Suriname in an amount equivalent to SDR 342 million (about US$478 million or 265 percent of quota).\n- The Board’s approval enables immediate disbursement of an amount equivalent to SDR 58 million (about US$81 million).\n- Purpose: to support the government’s economic reform program aimed at adjusting to the fall in prices of major commodity exports, restoring confidence, and paving the way to economic recovery."
    },
    {
      "heading": "Key program objectives and instruments",
      "content": "- Primary objectives:\n  - Restore macroeconomic stability and confidence.\n  - Pave the way to economic recovery while protecting the most vulnerable during adjustment.\n  - Rebuild international reserves and improve external current account stability.\n- Critical program ingredients:\n  - Fiscal consolidation to restore fiscal and external current account stability.\n  - Reforms to the exchange rate and monetary policy framework to enhance resilience and allow steady rebuilding of foreign reserves.\n  - Comprehensive structural reforms to support private-sector led growth.\n  - Support measures to protect the most vulnerable (strengthening social safety nets).\n  - Catalyze support from other multilateral institutions and bilateral creditors."
    },
    {
      "heading": "Executive Board statement — summary of assessment",
      "content": "- Causes of crisis:\n  - Drop in international prices of main exports and closure of the country’s alumina production.\n  - Delayed policy response in context of an election cycle.\n  - Resulting effects: substantial fiscal and external current account deficits, run-down of international reserves, economic downturn.\n- Policy priorities emphasized:\n  - Fiscal consolidation including elimination of electricity price subsidies and introduction of a value added tax (VAT).\n  - Strengthening social safety nets to soften impact on the poor.\n  - Move to a market-determined exchange rate to strengthen resilience; expected expansion in gold exports and catalytic effect on external financing to improve current account and reserves.\n  - Tightening liquidity conditions (start of T-bill auctions, planned roll out of open market operations) to reduce inflation and stabilize expectations; Central Bank to address rising banking sector risks.\n  - Structural reforms to improve the business environment, promote diversification, and attract foreign direct investment, supported by IMF and development partners."
    },
    {
      "heading": "Recent economic developments (ANNEX)",
      "content": "- Export and revenue shock:\n  - In 2011, revenues from gold, oil, and alumina accounted for 88 percent of exports and 40 percent of government revenue.\n  - Subsequent price declines and closure of alumina refinery Suralco in late-2015 significantly reduced these revenues.\n- Fiscal and external outcomes:\n  - Fiscal deficit reached 8.8 percent of GDP in 2015 (compared with a small surplus in 2011).\n  - Current account moved from a surplus of 5.7 percent of GDP in 2011 to a deficit of 15.6 percent of GDP in 2015.\n- Reserves, growth, and inflation:\n  - Official foreign reserves declined to perilously low levels.\n  - Recession: growth of -2 percent expected in 2016.\n  - Consumer price inflation reached 37 percent in March 2016, up from an average of 4 percent during 2013–15, driven by exchange rate depreciation and utility tariff hikes."
    },
    {
      "heading": "Program summary — specific policy measures",
      "content": "- Fiscal policy:\n  - Target: reduce fiscal deficit from 8.8 percent of GDP in 2015 to less than 1.5 percent of GDP by 2018.\n  - Measures: phase out electricity subsidies, wage restraint, increase fuel taxes, introduce a VAT to create efficient non-mineral revenue.\n  - Institutional reforms: Sovereign Wealth Fund Law for mineral revenue management; procurement department; modern Treasury Department.\n  - Technical assistance from IMF and IDB to build capacity.\n- Social protection:\n  - Strengthen social safety net, including increased spending on social cash transfer programs.\n  - Electricity price increases to be structured so large consumers bear more of the adjustment; tax breaks to protect taxpayers’ purchasing power.\n- Monetary and foreign exchange policy:\n  - Rebuild international reserves and calibrate monetary policy to return inflation to single digits.\n  - Transition toward a floating market-determined exchange rate (via foreign currency auctions and authorization for banks and bureaux to determine rates).\n- Structural reforms:\n  - Improve business environment to support recovery and medium-term growth, promote diversification, and attract FDI.\n  - Particular emphasis on enhancing productivity and competitiveness of the agricultural sector.\n  - Legal reforms to accelerate starting a company, enforcing contracts, promoting competition, protecting investors, registering property, and expanding access to finance.\n  - Technical assistance from IMF, Caribbean Development Bank, IDB, Islamic Development Bank, and World Bank."
    },
    {
      "heading": "Selected economic indicators (as presented)",
      "content": "- Real sector\n  - GDP at current prices (SRD billions): 16.4; 16.9; 17.2; 17.6; 22.8; 25.8 (columns correspond to 2012, 2013, 2014, 2015, 2016 Prel., 2017 Proj.)\n  - Real GDP growth (annual percentage change): 3.1; 2.8; 1.8; 0.1; -2.0; 2.5\n  - GDP deflator: 10.3; 0.2; -0.3; 2.2; 32.3; 10.4\n  - Consumer prices (end of period): 4.4; 0.6; 3.9; 25.0; 24.1; 8.9\n  - Consumer prices (period average): 5.0; 1.9; 3.4; 6.9; 36.8; 12.5\n- Money and credit\n  - Banking system net foreign assets: 17.5; -11.3; -16.3; -22.0; 48.3; 21.6\n  - Broad money: 19.6; 14.1; 8.0; 10.2; 19.9; 5.7\n  - Private sector credit (devaluation adjusted): 16.7; 18.4; 9.0; 7.3; 5.3; 7.7\n  - Public sector credit (increase in percent of M2): 0.4; 8.4; 10.1; 12.6; 1.0; -0.5\n- Savings and investment (in percent of GDP)\n  - Private sector balance (saving-investment): 0.5; -1.0; -8.5\n  - Public sector balance: -4.5; -4.4; -7.0; -7.7; -3.4\n  - Saving: 0.0; -1.8; -4.6; -4.9; 0.3; (no value shown)\n  - Investment: 4.5; 5.2; 3.7\n  - Foreign saving: -3.3; 3.8; 15.6; 8.7\n- Central government (in percent of GDP)\n  - Revenue and grants: 25.7; 25.9; 24.2; 21.0; 20.6; 23.6\n  - Total expenditure1/: 29.6; 33.6; 32.1; 29.7; 27.0;  (note: 1/ Includes statistical discrepancy.)\n  - Primary expenditure: 28.6; 32.2; 31.3; 28.3; 25.3\n  - Overall balance (net lending/borrowing): -3.9; -7.9; -8.8; -6.4\n  - Primary balance: -2.9; -7.4; -1.7\n  - Net acquisition of financial assets: -1.3\n  - Net incurrence of liabilities: 7.9; 8.8\n  - Net domestic financing: 6.4; 7.2\n  - Net external financing: 2.1; 3.3; 1.5; 8.1; 3.0\n  - Central government debt: 21.7; 31.7; 29.4; 43.5; 46.2; 44.0\n    - Domestic: 16.8; 13.1; 17.3; 15.4\n    - External: 11.6; 14.9; 16.2; 28.9\n- External sector\n  - Current account balance: -3.8; -8.0; -15.6; -8.7\n  - Capital and financial account: 9.6; 13.2; 13.4\n  - Gross international reserves (US$ millions): 1,008; 779; 625; 355; 538; 837\n  - In months of imports: 4.2\n\nInternational Monetary Fund press release, May 27, 2016.\n\n---\n\n\n References\n\n- Suriname and the IMF\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/country/SUR/\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16251"
    }
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    "Published: May 27, 2016",
    "Date: May 27, 2016",
    "The Executive Board approved a 24-month Stand-By Arrangement (SBA) for Suriname in an amount equivalent to SDR 342 million (about US$478 million or 265 percent of quota).",
    "The Board’s approval enables immediate disbursement of an amount equivalent to SDR 58 million (about US$81 million).",
    "Purpose: to support the government’s economic reform program aimed at adjusting to the fall in prices of major commodity exports, restoring confidence, and paving the way to economic recovery.",
    "Primary objectives:",
    "Critical program ingredients:",
    "Causes of crisis:",
    "Policy priorities emphasized:",
    "Export and revenue shock:",
    "Fiscal and external outcomes:",
    "Reserves, growth, and inflation:",
    "Fiscal policy:",
    "Social protection:",
    "Monetary and foreign exchange policy:",
    "Structural reforms:",
    "Real sector",
    "Money and credit",
    "Savings and investment (in percent of GDP)",
    "Central government (in percent of GDP)",
    "External sector",
    "[Suriname and the IMF](http://www.imf.org/external/country/SUR/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/country/SUR/](https://www.imf.org/external/country/SUR/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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