Suriname’s officials are engaged with the IMF to negotiate a new support program as its past deal has expired. The finance minister emphasizes the need for a flexible successor program that garners public support, especially ahead of the elections in May. The country anticipates significant oil production by 2028, which could reshape its economy.
Suriname’s government is in talks with the International Monetary Fund regarding a successor program, following the expiration of a previous $688 million agreement in March. According to Finance Minister Stanley Raghoebarsing, these discussions are taking place as the nation gears up for elections in May. The new government will play a pivotal role in determining whether to pursue further collaboration with the IMF.
Raghoebarsing noted that the last IMF deal had an impact—it helped enhance governance, reduce debt levels, and build international confidence. However, it fell short of putting Suriname on a solid path for sustained economic growth. He highlighted the necessity of a successor program that is flexible and tailored to gain public support, irrespective of political changes.
One significant development on the horizon is Suriname’s potential as a major energy producer, with oil production slated to kick off in 2028, potentially generating $26 billion. As such, stakeholder attention is fixated on the forthcoming government’s commitment to an IMF program.
The IMF projects that Suriname’s $4.5 billion economy will grow by 3.2% in 2025, which is a slight uptick from the anticipated 3% in 2024. However, obstacles remain. Last year, Suriname aimed for a primary budget surplus of 2.7% of GDP but fell short due to drought and low non-tax revenues, only managing a 0.3% surplus instead.
In 2023, Suriname wrapped up a debt restructuring that introduced value-recovery instruments, which promise to pay investors a percentage of oil revenue once production begins. Meanwhile, the nation’s sovereign bonds have yielded a 3.1% return this year, outperforming many emerging market counterparts, as reported by Bloomberg.
The past three years saw Suriname adopting several fiscal measures, including a strict monetary policy that succeeded in curbing inflation and reducing its debt-to-GDP ratio significantly from 148% to 88%. The government has also taken initiatives on state-owned enterprises and anti-money laundering efforts, with plans for a more sustainable revenue model from oil resources, ensuring future generations benefit.
Despite these advancements, the burden of reform remains heavy on many citizens, with 17.5% living in poverty. Raghoebarsing underscored the need to maintain public trust and support, indicating that any successor program would aim to alleviate the strains experienced by the populace. “When we go for a successor program, it’ll definitely be a much more relaxed one,” he said, emphasizing the importance of changing the current narrative to avoid reform fatigue.
Suriname is currently negotiating with the IMF for a successor program after its previous deal ended in March. The new arrangement must gain public buy-in, especially in light of upcoming elections. As oil production looms, the economic outlook is cautiously optimistic, though challenges persist, including public concerns regarding past reforms and poverty levels.
Original Source: financialpost.com
