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Suriname Receives IMF Approval and Funding Boost for Economic Reforms

IMF Lauds Government Commitment and Fiscal Discipline, Allocates $53 Million for Fourth Tranche

Suriname Receives IMF Approval and Funding Boost for Economic Reforms

The board of directors of the International Monetary Fund (IMF) is positive about the implementation of the program and the government’s commitment and dedication to carrying out reforms and adjustments in the economy. Satisfaction is also expressed regarding the budgetary discipline demonstrated so far. In light of this, $53 million has been made available, constituting the fourth tranche. Of this amount, $33 million is allocated for budgetary support, and approximately $20 million is earmarked for international reserves at the Central Bank of Suriname.

Karel Eckhorst, advisor for Suriname in the IMF’s executive board, stated to the Suriname Communication Service that a primary surplus of 1.7% of the gross national product (GNP) is expected to be achieved this year. This surplus is necessary for the implementation of social programs. Eckhorst also emphasized unanimous agreement within the board that there is ample room for improvement in the social safety net program. He highlighted the need for not only implementing and expanding the program but also improving the quality of social security and instruments for social transfers. The issue of “ghost employees” was also discussed, and addressing this problem is seen as a prospect for financial space that can be used to enhance the purchasing power of hardworking civil servants. Eckhorst concluded, “There is still much work to be done.”

Positive reactions are also noted regarding the progress of debt restructuring, with discussions concluded with Oppenheimer bondholders and a principle agreement at a technical level with China Exim Bank. The successful debt restructuring has led to an upgrade of Suriname’s country rating by Standard & Poor, from selective default to CCC+, with positive outlook. This signals to the market that Suriname is now capable of meeting its repayment obligations under a more manageable schedule.

The further implementation, especially concerning the governance of the Central Bank and the implementation of monetary policy, needs to occur swiftly in accordance with the Central Bank Law. The staff report was praised for paying more attention to factors related to climate financing, climate mitigation, the adverse effects of climate change, and the steps being taken in this direction. Eckhorst emphasized the general expectation of a positive meeting and looks forward to the next review scheduled for March.

It’s also noted that the authorities have agreed to a slight extension of the program by a quarter, until March 2025, allowing reforms to be gradually implemented. This extension also expands the originally agreed-upon financial envelope by an additional USD 63 million.

Attention is drawn to the ongoing challenges in the financial sector, and the recent approval of two financial sector laws by the National Assembly is widely applauded. These laws provide more leeway for the Central Bank to intervene in banks that pose a significant threat to the overall banking sector.

Eckhorst stresses that while signs of impending stability are evident, the country has not yet fully achieved it. He emphasizes the need for continued discipline in budgetary and monetary policies, ensuring financial stability, and monitoring aspects such as money growth, exchange rate, and price stability, while also addressing social concerns. The meeting highlights the importance of generating income to cover expenditures for a more balanced budget execution. Challenges remain significant, but ongoing efforts are necessary to alleviate pressure on the exchange rate, prices, and inflation.

The outcome of negotiations with the labor union, resulting in increased purchasing power for this year and the next, is also applauded.

Source: https://www.starnieuws.com/index.php/welcome/index/nieuwsitem/78922

Date: 16 December 2023

Categories:   

Tags:  Exchange Rate, Inflation, International Monetary Fund, Karel Eckhorst, National Debt 

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