{ "title": "IMF Executive Board Concludes 2016 Article IV Consultation with Suriname", "publication": "IMF News, January 24, 2017", "sourceUrl": "https://www.imf.org/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation", "overlayPath": "/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/index.md", "summary": "Notes from the source: - 1/ Includes statistical discrepancy. - 2/ Includes acquisition of a stake in the gold mine and loans to state owned enterprises. - 3/ The debt-to-GDP ratio is different when computed using the definition in the Government Debt Act of Suriname. - 4/ Official reserve assets ex", "publishDate": "2017-01-24", "sections": [ { "heading": "Overview", "content": "- Press Release No. PR17/14; January 24, 2017; IMF Communications Department.\n- On December 19, 2016 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Suriname.\n- Core focus: strategies to improve fiscal sustainability, lower inflation, protect the poor during adjustment, and stimulate private investment and job creation to restore sustained growth." }, { "heading": "Economic context and causes of the crisis", "content": "- Crisis triggered by a significant commodity terms of trade shock and exacerbated by insufficient buffers and policy responses.\n- Key shocks: drop in international gold and oil prices and cessation of alumina production.\n- Consequences: large fiscal and current account deficits and the onset of a deep recession in 2015.\n- During the boom, no institutional arrangement to save resources for future price corrections; limited implementation of IMF advice on strengthening the policy framework.\n- Result: sharper recession, steeper exchange rate depreciation, and larger rise in inflation and government debt than most commodity exporters." }, { "heading": "Policy responses and IMF engagement", "content": "- Authorities launched an ambitious adjustment plan in late 2015:\n - Cut the budget deficit by reining in spending.\n - Began phasing out electricity subsidies.\n - Curbed monetary financing.\n - Floated the exchange rate in March 2016 to rebuild foreign reserves and reduce the current account deficit.\n- International support:\n - 24-month Stand-By Arrangement (SBA) with the IMF approved in May 2016.\n - Financing commitments from other international financial institutions.\n- By mid-2016, progress stalled on several items:\n - Fiscal deficit kept below 6 percent of GDP (annualized); planned reforms, including preparing for VAT, advanced.\n - Decisions to freeze fuel pump prices and partially reverse electricity price increases led to significant public sector losses.\n - Limited action to raise interest rates led to a move out of local currency assets, bouts of exchange rate depreciation, and rapid inflation increases.\n - Inflation reached 77 percent in September 2016.\n - The first and second reviews of the SBA had not taken place." }, { "heading": "Macroeconomic outcomes and outlook (findings and projections)", "content": "- GDP and prices:\n - GDP contraction projected for 2016: 9 percent (following a 2.7 percent contraction in 2015).\n - Recession expected to ease in 2017 with support from the Newmont Merian gold mine (opened October 2016).\n - Inflation projected to be 60 percent at end-2016 and to decline in 2017.\n- External sector:\n - Import compression narrowed the external current account deficit, projected below 4 percent of GDP in 2016.\n - Current account surplus of about 2 percent of GDP expected in 2017, on the back of exports from the new gold mine.\n- Fiscal and debt:\n - Budget deficit projected at about 6 percent of GDP in 2016.\n - Debt-to-GDP ratio projected to reach 68 percent, including the recent issuance of an external government bond.\n- Additional outcome highlighted:\n - Rapid increase in inflation and exchange rate depreciation due to moves out of local currency assets and limited monetary tightening." }, { "heading": "Executive Board assessment — key recommendations and priorities", "content": "- Macro stability and growth require decisive reforms.\n- Fiscal policy:\n - Fiscal consolidation should be central.\n - Achieve a primary surplus by 2018 to put public debt on a downward path and avoid monetary financing.\n - Eliminate energy subsidies in 2017, fully reinstate fuel taxes, and implement the VAT in 2018.\n - Refrain from large wage increases; launch a broad-based reform of the civil service.\n - Redirect resources to protect the most disadvantaged during adjustment.\n - Institutional reforms: establish a clear fiscal anchor, a sovereign wealth fund for mineral revenue volatility, and a new public financial management law to improve budget preparation and expenditure control.\n- Monetary and exchange rate policy:\n - Central bank should adopt a more active approach to reducing inflation.\n - Prompt initiation of open market operations and raising interest rates to positive levels in real terms.\n - Preserve exchange rate flexibility to rebuild international reserves; phase out central bank role as distributor of foreign exchange to large importers.\n- Financial sector stability:\n - Urgent need to strengthen the framework for addressing banking sector strains.\n - Develop a contingency planning framework with clear modalities for emergency liquidity assistance.\n - Promptly establish a Financial Stability Committee to coordinate systemic stability and crisis management.\n - Expedite adoption of a new bank resolution law to empower the central bank to take preventive and corrective measures.\n - Further strengthen the AML/CFT framework.\n- Structural reforms:\n - Ambitious agenda to promote diversification away from commodity dependence and boost productivity.\n - Reforms to improve the business environment, promote competition, and strengthen governance.\n - Increase labor market flexibility and invest in education, supported by a well-targeted social safety net, to promote job-rich and inclusive growth." }, { "heading": "Selected economic indicators (as presented)", "content": "- National income and prices (annual percent change)\n - Real GDP growth: 2013: 2.9; 2014: 0.4; 2015: -2.7; 2016: -9.0; 2017: -0.7; 2018: 0.9\n - Nominal GDP growth: 2013: 3.3; 2014: 1.8; 2015: -3.6; 2016: 43.9; 2017: 39.6; 2018: 22.0\n - GDP deflator: 2013: 1.5; 2014: -0.9; 2015: 58.1; 2016: 40.6; 2017: 20.9\n - Consumer prices (period average): 2013: 1.9; 2014: 3.4; 2015: 6.9; 2016: 60.3; 2017: 38.6; 2018: 23.3\n - Consumer prices (end of period): 2013: 0.6; 2014: 3.9; 2015: 25.0; 2016: 61.0; 2017: 30.4; 2018: 16.1\n- Money and credit (annual percent change, unless otherwise indicated)\n - Broad money (constant exchange rate): 2013: 14.9; 2014: 7.8; 2015: 0.1; 2016: 4.3; 2017: 5.4; 2018: 9.9\n - Broad money in local currency (percent of GDP): 2013: 26.1; 2014: 27.8; 2015: 28.8; 2016: 21.5; 2017: 17.2; 2018: 16.9\n - Reserve money (constant exchange rates): 2013: -8.8; 2014: 18.0; 2015: 4.0; 2016: 5.2; 2017: 18.5\n - Reserve money (percent of GDP): 2013: 14.1; 2014: 12.7; 2015: 15.6; 2016: 12.1; 2017: 9.2; 2018: 8.9\n - Private sector credit (constant exchange rate): 2013: 17.5; 2014: 8.1; 2015: 5.7; 2016: -6.7; 2017: 3.8; 2018: 5.3\n- Central government (percent of GDP)\n - Revenue and grants: 2013: 25.8; 2014: 24.1; 2015: 22.1; 2016: 13.8; 2017: 16.3; 2018: 20.3\n - Total expenditure 1/: 2013: 32.9; 2014: 32.0; 2015: 31.4; 2016: 20.0; 2017: 20.4; 2018: 22.5\n - Primary expenditure: 2013: 31.6; 2014: 31.1; 2015: 29.9; 2016: 18.3; 2017: 20.1\n - Overall balance (net lending/borrowing): 2013: -7.1; 2014: -7.9; 2015: -9.3; 2016: -6.1; 2017: -4.1; 2018: -2.1\n - Primary balance: 2013: -5.8; 2014: -7.0; 2015: -7.8; 2016: -4.5; 2017: -1.7; 2018: 0.3\n - Net incurrence of liabilities: 2013: 7.1; 2014: 7.9; 2015: 9.3; 2016: 16.8; 2017: 7.0; 2018: 2.1\n- Central government debt (percent of GDP) 3/\n - 2013: 29.0; 2014: 45.7; 2015: 67.8; 2016: 60.7; 2017: 54.4; 2018: (not shown)\n - Domestic: 2013: 16.7; 2014: 13.1; 2015: 16.5; 2016: 10.6\n - External: 2013: 16.0; 2014: 21.6; 2015: 51.2; 2016: 50.1; 2017: 46.5\n- External sector (percent of GDP)\n - Current account balance: 2013: -3.8; 2014: -16.6; 2015: 2.5; 2016: 1.1\n - Capital and financial account: 2013: 8.3; 2014: 15.2; 2015: -13.7; 2016: -9.7; 2017: -3.4\n- Memorandum items\n - GDP at current prices (SRD billions): 2013: 17.0; 2014: 17.3; 2015: 24.0; 2016: 33.5; 2017: 40.8\n - Terms of trade (percent change): 2013: -10.1; 2014: -4.0; 2015: 8.8; 2016: 2.7; 2017: -0.3\n - Gross international reserves (US$ millions): 2013: 779; 2014: 625; 2015: 330; 2016: 447; 2017: 515; 2018: 417\n - In months of imports: 2013: 2.8; 2014: 2.6; 2015: 2.3\n - Adjusted international reserves (US$ millions) 3/: …; 36; 150; 256; 345; 0.2; 1.4\n - Real effective exchange rate (percent change, + = appreciation): 2013: -14.4; 2014: 1.2; 2015: 8.5\n\nNotes from the source:\n- 1/ Includes statistical discrepancy.\n- 2/ Includes acquisition of a stake in the gold mine and loans to state owned enterprises.\n- 3/ The debt-to-GDP ratio is different when computed using the definition in the Government Debt Act of Suriname.\n- 4/ Official reserve assets excluding foreign currency swaps and reserve requirements on banks' foreign currency deposits.\n\nIMF Press Release No. PR17/14; January 24, 2017; IMF Communications Department.\n\n---\n\n\n References\n\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/bundle-manifest.json)", "Published: January 24, 2017", "Press Release No. PR17/14; January 24, 2017; IMF Communications Department.", "On December 19, 2016 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Suriname.", "Core focus: strategies to improve fiscal sustainability, lower inflation, protect the poor during adjustment, and stimulate private investment and job creation to restore sustained growth.", "Crisis triggered by a significant commodity terms of trade shock and exacerbated by insufficient buffers and policy responses.", "Key shocks: drop in international gold and oil prices and cessation of alumina production.", "Consequences: large fiscal and current account deficits and the onset of a deep recession in 2015.", "During the boom, no institutional arrangement to save resources for future price corrections; limited implementation of IMF advice on strengthening the policy framework.", "Result: sharper recession, steeper exchange rate depreciation, and larger rise in inflation and government debt than most commodity exporters.", "Authorities launched an ambitious adjustment plan in late 2015:", "International support:", "By mid-2016, progress stalled on several items:", "GDP and prices:", "External sector:", "Fiscal and debt:", "Additional outcome highlighted:", "Macro stability and growth require decisive reforms.", "Fiscal policy:", "Monetary and exchange rate policy:", "Financial sector stability:", "Structural reforms:", "National income and prices (annual percent change)", "Money and credit (annual percent change, unless otherwise indicated)", "Central government (percent of GDP)", "Central government debt (percent of GDP) 3/", "External sector (percent of GDP)", "Memorandum items", "1/ Includes statistical discrepancy.", "2/ Includes acquisition of a stake in the gold mine and loans to state owned enterprises.", "3/ The debt-to-GDP ratio is different when computed using the definition in the Government Debt Act of Suriname.", "4/ Official reserve assets excluding foreign currency swaps and reserve requirements on banks' foreign currency deposits.", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/index.md", "json": "/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2017/01/24/pr1714-suriname-imf-executive-board-concludes-2016-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T20:30:57.490Z" }