IMF Wraps 2024 Consultation, Eighth Suriname Review

• The Executive Board of the International Monetary Fund concluded the 2024 Article IV consultation and completed the eighth review under the Extended Fund Facility (EFF) arrangement for Suriname. The completion of the review allows for an immediate purchase equivalent to SDR 46.8 million (about USD 61 million) of which SDR 33.5 million (about USD 44 million) would be for budget support.
• The authorities' steadfast commitment to maintaining prudent macroeconomic policies and implementing difficult but necessary reforms are yielding positive results: the economy is growing, inflation is declining, donor engagement is deepening, and investor confidence is returning. The Final Investment Decision (FID) announcement in the new offshore field, has boosted the medium-term outlook in the country.
• Building on the progress made thus far, the authorities should entrench fiscal discipline, particularly in the run up to the elections while protecting the vulnerable. In view of the upcoming oil wealth, strengthening the fiscal framework, including through the introduction of new fiscal rules, and addressing governance weaknesses is critical.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation ^[1] and the eighth review under the Extended Fund Facility (EFF) arrangement for Suriname. The completion of the review allows the authorities to draw the equivalent of SDR 46.8 million (about USD 61 million), bringing total purchases under the EFF arrangement to SDR 383.9 million (about USD 504 million). In completing the review, the Executive Board approved the authorities' request for a waiver of non-observance of the end-September 2024 performance criterion on the central government primary balance based on the corrective actions the authorities have already taken.

Suriname is implementing an ambitious economic reform agenda to restore macroeconomic stability and debt sustainability, while laying the foundations for strong and more inclusive growth. The program includes policies to restore fiscal and debt sustainability, protect the poor and vulnerable, upgrade the monetary and exchange rate policy framework, address banking sector vulnerabilities, and advance the anti-corruption and governance reform agenda. These policies are supported by the EFF arrangement, which was approved by the Executive Board on December 22, 2021 ( see Press Release No. 21/400 ), in an amount equivalent to SDR 472.8 million (366.8 percent of quota).

Following the Executive Board discussion on Suriname, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:

"The authorities' reforms under the EFF-supported program are increasingly bolstering macroeconomic stability and investor confidence. The economy is growing, inflation is approaching single digits, and donor support is increasing.

"In view of the Final Investment Decision for the country's oil resources, it is critical to put in place robust institutional frameworks, including fiscal rules and improved transparency and accountability safeguards. Such institutional improvements will help Suriname avoid procyclical fiscal policy, prioritize urgent development needs, ensure intergenerational equity, and transform exhaustible resource wealth into financial assets.

"The near-term priority is to maintain the path for debt reduction while protecting the vulnerable from the burden of the adjustment. Phasing out electricity subsidies and strengthening tax administration will help create fiscal space for higher, targeted social assistance and infrastructure spending. Fully implementing the recently finalized social assistance reform plan will make social programs more efficient and effective. Strengthening financial management controls in the electricity company, including regularly publishing its audited financial statements, will help promote accountability and oversight.

"The debt restructuring process is nearing completion. Bilateral agreements with all official creditors and most commercial creditors have been achieved. Domestic debt arrears have been cleared. Improving commitment controls in the budget and addressing weaknesses in cash management will restrain public spending and prevent accumulation of supplier arrears.

"A restrictive monetary policy is supporting disinflation. Promptly implementing the agreed central bank recapitalization plan is critical to ensure a strong central bank balance sheet with clear operational and financial autonomy. The authorities' demonstrated commitment to a flexible, market-determined exchange rate is supporting international reserve accumulation. Timely implementation of recapitalization plans for undercapitalized commercial banks and improving the monitoring of non-bank financial institutions will help bolster financial sector resilience.

"The authorities should persevere with their ambitious structural reform agenda to strengthen institutions, address governance weaknesses, build climate resilience, improve data quality and address gender gaps. This important work will continue to be supported by capacity development from the Fund and other development partners."

Executive Board Assessment ^[2]

Executive Directors agreed with the thrust of the staff appraisal. Directors welcomed the broadly satisfactory program performance, despite the challenging context, as sustained commitment to reforms has strengthened macroeconomic stability and growth. Looking ahead, they considered that Suriname stands at a pivotal moment, and emphasized the importance of maintaining the reform momentum to preserve long‑term stability and sustainability and ensure a productive and prudent use of the oil‑driven windfall to deliver sustained and inclusive improvement for the Surinamese people. Continued close and constructive engagement with the IMF and development partners will be key.

Directors acknowledged spending pressures from the drought, and welcomed the prompt corrective actions to adhere to fiscal consolidation targets, while continuing the path of debt reduction and protecting the vulnerable. They supported the ongoing phase out of utility subsidies and underlined the importance of continued strengthening of well‑targeted social assistance. Directors welcomed the debt restructuring agreements and encouraged the authorities to finalize agreement with the remaining commercial creditors.

Commending the final investment decision on the offshore oil field, Directors underscored the critical importance of proper institutional frameworks to prudently manage the oil wealth. They urged the authorities to promptly revamp the sovereign wealth fund and put in place strong and transparent fiscal rules, as well as to adhere to EITI standards. Directors underscored the importance of institutional changes to increase the efficiency, transparency, and accountability of the energy sector.

Directors underscored the importance of maintaining a restrictive monetary policy stance to sustain the disinflation process. They encouraged prompt recapitalization of the central bank. Directors called for addressing banking sector vulnerabilities by completing bank recapitalizations and improving risk‑based supervision. They also encouraged stepped‑up efforts to strengthen the AML/CFT framework. Directors welcomed steps to develop a macroprudential toolkit to help manage systemic risks associated with the coming oil boom.

Directors encouraged the authorities to persevere with their ambitious reform agenda to strengthen institutions and governance, build climate resilience, and address bottlenecks to growth, including by closing gender gaps. Continued capacity development support from the Fund and other development partners remains critical in this regard.

It is expected that the next Article IV consultation with Suriname will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .