IMF and Suriname Finalize Agreement for Economic Recovery Program Review
The IMF and Suriname have reached a staff-level agreement on the final review of a 36-month economic recovery program under the Extended Fund Facility, pending Executive Board approval. The program has led to economic growth, reduced inflation, and strengthened governance, with future efforts focused on fiscal discipline and structural reforms to sustainably manage oil revenues. Through collaborative discussions, Suriname aims to address ongoing challenges and promote social protection for vulnerable populations.
The International Monetary Fund (IMF) and the Suriname government have reached a staff-level agreement regarding the ninth and final review of their economic recovery program under the Extended Fund Facility (EFF). This agreement, contingent upon approval by the IMF’s Executive Board, would grant Suriname access to approximately USD 61.3 million. Key accomplishments of the program include economic growth, decreased inflation, and improved governance within the central bank.
Focus remains on maintaining fiscal discipline as Suriname approaches elections while ensuring protection for vulnerable populations. Additionally, addressing governance issues and reinforcing the fiscal framework, including new fiscal rules and institutional enhancements, will help achieve sustainable management of the country’s oil revenues in the future.
An IMF team, led by Ms. Anastasia Guscina, engaged with Suriname’s authorities from February 5-14 to finalize this review, which follows a 36-month program approved by the IMF Executive Board in December 2021. Despite achieving most quantitative targets, the primary fiscal balance goal was missed, necessitating action by the authorities to meet the 2.7 percent of GDP surplus target for 2025.
The economic outlook has improved significantly, with projected growth of 3 percent this year, a downward trend in inflation, and increasing investor confidence. However, there are near-term risks tied to implementation challenges amid a complex socio-political climate. Suriname’s medium-term prospects have brightened with plans for offshore oil production starting in 2028.
The government remains committed to fiscal responsibility, having established fiscal rules and a Savings and Stabilization Fund through legislation. Additionally, social protection spending has risen to address the needs of impoverished citizens. Efforts are ongoing to ensure social assistance reaches those most in need, particularly in rural areas.
Investor confidence has rebounded following nearly completed debt restructuring, with significant agreements forged with the Paris Club. Domestic debt arrears have been settled, and all obligations are being serviced punctually. The country’s credit ratings have improved, leading to historic lows in international bond spreads.
The Central Bank of Suriname (CBvS) has successfully reduced inflation through its monetary policy. The bank is committed to a flexible exchange rate and is enhancing foreign exchange market operations. Moreover, vulnerabilities within the banking sector are being managed through capital adequacy supervision and oversight of non-bank financial institutions.
Progress on structural reforms is vital for strengthening governance and institutions. The IMF supports the amendment of the anti-corruption framework to mitigate risks linked to the anticipated influx of oil revenues. Transparency in tracking public officials’ assets is essential to combat corruption risks related to these revenues.
The IMF mission expresses gratitude for the cooperation and productive discussions with Surinamese authorities, who included high-ranking officials such as the President, Minister of Finance, and representatives from various sectors, indicating a comprehensive approach to economic recovery and policy implementation.
In conclusion, the staff-level agreement between the IMF and Suriname marks a significant milestone in the country’s economic recovery efforts, contingent upon Executive Board approval. Suriname has achieved broad objectives, including economic growth and increased investor confidence, while maintaining fiscal discipline. Ongoing efforts must focus on structural reforms, governance improvements, and enhanced social protection measures to ensure the effective management of oil revenues and the wellbeing of its citizens. Strong collaborative dialogue reflects a commitment to overcoming the challenges ahead and fostering sustainable growth.
Original Source: www.miragenews.com
