Durrant Pate/Contributor

Suriname is set to get an immediate disbursement of US$52 million for budgetary support having successfully completed its third review under its 36-month extended fund facility (EFF) with the Washington DC-based multinational funding institution.

Following its assessment, the IMF Mission Team to Suriname reported, “the authorities’ commitment to macroeconomic stability and fiscal discipline under the program is starting to bear fruit. The economy is stabilizing as exchange rate pressures have eased and inflation, while still high, is on a downward trend.”

In completing the review, the IMF Executive Board approved Suriname’s request for a waiver for non-observance of continuous performance criteria based on the corrective measures already taken. The objective of the EFF to support the authorities’ economic recovery plan to restore fiscal and debt sustainability through fiscal consolidation and debt restructuring, protect the vulnerable by expanding social protection, upgrade the monetary and exchange rate policy framework, address the financial sector’s vulnerabilities, and advance the anti-corruption and governance agenda.

IMF assessment in detail

In its assessment, the IMF Mission Team led by its Deputy Managing Director and Acting Chair, Kenji Okamura highlighted that Suriname’s economy is stabilizing adding that “pressures on the exchange rate have eased and inflation, while still high, is on a downward trend. The authorities’ implementation of difficult reforms in a challenging socio-economic environment is commendable. Elimination of fuel subsidies, gradual phasing out electricity subsidies, curtailing wage payments to unregistered public servants, and broadening the VAT base will help create the fiscal space for expanded social protection spending and growth-enhancing investment.”

The IMF acknowledged that the Surinamese government has made concerted efforts to advance debt restructuring negotiations with the agreements in line with program parameters reached with all creditors except China. Both sides expressed commitment to work towards an agreement on comparable terms with other creditors by the next review.

According to the IMF, “while the recent disinflationary measures are gaining traction, maintaining a tight monetary stance remains necessary to tackle the still-elevated inflation. At the same time, continued commitment to flexible, market-determined exchange rate remains critical to sustainably address Suriname’s external imbalances and support accumulation of international reserves. Swift implementation of the recently enacted new Central Bank Act and finalization of the central bank recapitalization plan upon completion of its financial audits will strengthen its operational independence and financial autonomy.”

Steadfast progress necessary

The IMF cited that steadfast progress is necessary to address banking system vulnerabilities, including through the ongoing assessment of banks’ recapitalization and restructuring plans under the authorities’ recently finalized framework.

In concluding the IMF commented, “continued policy discipline and structural reform momentum are critical for achieving success in the authorities’ economic recovery program. Structural reforms to strengthen institutions, governance, and data quality remain key priorities with continued capacity building support by the Fund and other development partners. The authorities should also continue pursuing measures to strengthen the anti-corruption and AML/CFT frameworks and ensure their alignment with international standards.”