⚖️ Subsidies, oil, and controversy shake Suriname

Happy Monday! 

In this week's newsletter, we follow the developments in the rise of cost-of-living in Suriname and its impact on society, the future of Suriname as a potential oil and gas state, and further contention with the VAT system and its herald Kalaykhan

Following the recent fuel hikes, the government is further laying out its plans to phase out subsidies leading to a higher cost of living.

• The government is phasing out subsidies for electricity, gas, and fuel, in an attempt to reduce expenses.

• The price of diesel will rise by SRD 10 per liter while the price of electricity will rise by SRD 260 per connection.

• The government has already started reducing the fuel subsidy, causing prices to rise sharply.

• An implementation of a social program will accommodate vulnerable groups. This will concern an increase of SRD 1,800 per month for families earning less than SRD 6,000 per month. However, the program has been criticized for its lack of control and oversight on where the received money can be spent (i.e. individuals can choose to use that money for alcohol or sports betting).

• The reduction of subsidies is also connected to the IMF program. According to the IMF, the subsidies are unsustainable for the state finances, as the subsidies for fuel and electricity amount to SRD 2 billion per year. The government is exploring alternative methods for subsidizing, such as providing some economically vulnerable families with a gas cylinder 4 times a year at a lower price. At the same time, commercial users pay the total price.

This strained political relationships as the Vice-President and convicted drug trafficker, Ronnie Brunswijk, has spoken out against these cost-of-living increases.

• VP Ronnie Brunswijk stated in a widely circulated video that the current situation in the country is unsustainable and that the government's measures to reduce subsidies are hurting the people.

• Brunswijk is pushing for changes in government policy and believes the IMF should consider Surinamese people in its analysis take.

• Furthermore, he believes the National Assembly should hold the government to account for its actions and ensure that any income generated does not come at the expense of the people.

Unions have also started to organize and prepare to strike against the developments from the government.

• Unions affiliated with trade union center C-47 and the Federation of Organizations of Teachers in Suriname (FOLS) are taking action.

• A committee has been set up by C-47 to determine the action model and strategy, with consideration being given to closing businesses and protesting in the streets.

• The unions demand the reversal of the government's revenue-enhancing measures, particularly the increase in diesel, and want alternative methods of increasing government revenue to be implemented.

• The government's measures to reduce expenditure and increase revenue, such as phasing out subsidies on electricity, gas, and fuel, are causing prices of goods to rise and as a result, put added pressure on the working class.

• The unions claim that the crisis is being paid for entirely by the working class and the further increase in fuel must not continue.

• The Federation of Organizations of Teachers in Suriname (FOLS) wants the government to provide more than SRD 1,800 in purchasing power enhancement arguing for increases of up to SRD 6,000.

• Union leaders have expressed grievances about the government's measures to reduce expenditure and increase income, and are calling for joint action against the government.

• The President has had a meeting with Ravaksur (The council of trade union federations) regarding their grievances and is further discussing any remedies to the situation at hand. 

• President Santokhi has decided to not travel to Guyana and the Bahamas due to societal unrest.

• A large strike is expected on the 17th of February.

Oil and gas giant TotalEnergies and APA delivered bittersweet news this week.

• APA Corporation has increased its oil reserves by approximately 200 million barrels of oil.

• The company has announced that it has successfully carried out drilling and flow tests in the Sapakara South-2 (SPS-2) appraisal well.

• TotalEnergies, the operator of Block 58 where the oil reserves were discovered, announced yesterday that it will not be making a decision on oil production this year.

• The drilling activities will continue, with two assessment wells to be drilled at the Krabdagu discovery, located approximately 17 kilometers east of Sapakara. Krabdagu-3 is expected to start drilling with a second rig in February.

• The development of the oil fields in Block 58 requires an investment of over $10 billion.

• The Final Investment Decision (FID) for Block 58 has been postponed multiple times and will not happen this year.

• However, TotalEnergies CEO Patrick Pouyanne said the company may start new oil projects in Brazil and Angola this year.

• The Supervisory Board of Staatsolie has discussed developments in the oil and gas industry with the President of Suriname, Chan Santokhi.

Another great point of controversy continues to be the newly implemented VAT tax and the legal position of Mr. Kalaykhan.

• Ismaël Kalaykhan's position at the Surinamese tax authority is causing concern and the Bond Personeel Dienst der Belastingen (BPDB) wants clarification.

• Stanley Raghoebarsing, Minister of Finance and Planning, sees Kalaykhan as a valuable hard worker and is resolute that he continues in his role.

• However, the Tax Office trade union wants clarity and an urgent meeting with the minister to clean up the negative image of the Tax and Customs Administration.

• Raghoebarsing says that if any errors have been made, they will be corrected, but Kalaykhan will be maintained in his position unless there is evidence of bad faith.

• Furthermore, a clarification was requested in the National Assembly last week about Kalaykhan's position, but the government is yet to respond.

• Raghoebarsing will have a conversation with Kalaykhan to determine his duties.

Critics have responded to statements by the Minister and want answers from Kalaykhan himself as well as the President.

• Kalaykhan was referred to as the "Director" of the Tax and Customs Administration of Suriname by the government of President Chandrikapersad Santokhi since August 1, 2020, but he is not authorized to perform acts on behalf of the administration.

• His appointment was not permanent due to conflict with conditions set by the IDB(International Development Bank) for a loan of 40 million US dollars.

• He was appointed as a consultant instead and paid from the loan of the IDB.

• The government was aware that the appointment was improper but remained silent about it.

• In controversial fashion, Kalaykhan had to reveal his true position as a manager in a recent lawsuit fearing perjury.

• In even more controversial fashion, he holds Dutch nationality and did not exchange his passport for a Surinamese one.

• Kalaykhan was recruited by then-Minister of Finance and Planning Armand Achaibersing, who is now a minister and a former colleague from the insurance industry.

• Kalaykhan handed over the directorship to his life partner Patricia Groman, which is a conflict of interest, and is involved in the course of affairs within the company.