📊 Suriname close to coming out of default status

while internal controversies stir over land rights and concessions

De Brief
October 30, 2023

The government of the Republic of Suriname has invited holders of two Oppenheimer bonds to exchange them for a new bond and a Value Recovery Instrument (VRI) tied to future oil royalties from Block 58.
The two existing Eurobonds have a combined value of US$912 million with high interest rates of 9.25% and 12.875%.
These two bonds will be swapped for a new fixed income instrument with a nominal value of US$660 million, a 10-year term, and a coupon rate of 7.95%.
The new bond will pay 4.95% interest in cash for the first two years, with the remaining 3% being capitalized. It also involves a 29% reduction in the original face value and accrued arrears interest.
The VRI is contingent on the government receiving royalties from Block 58, allowing creditors to claim 30% of annual oil royalties after the government's initial $100 million share.
The proposed exchange aims to remove the "default" status with bondholders, alleviate short-to-medium-term debt service burdens, accelerate the reduction of the national debt, and potentially compensate bondholders for their losses through oil-related income.

Mennonites are seeking to settle in Suriname and have acquired over 400 hectares of land near Witagron in the Sipaliwini district, with a reported investment of around US$600,000 in Mennonite immigration.
Discussions are ongoing with Indigenous people and Tribals about acquiring more land, with the eventual requirement estimated to be more than 100,000 hectares.
Environmental organizations, including Amazon Conservation Team Suriname, Conservation International Suriname, and others, held a press conference to express concerns about the environmental and social consequences of Mennonite settlement due to limited government information.
The organizations are worried about the impact on the environment, forests, and the land rights of Indigenous and Tribal peoples. They seek thorough studies and strict policies before the Mennonites' settlement begins.
Indigenous people and Tribals in the region lack land titles, raising concerns about potential displacement to accommodate Mennonite expansion.

The Government of Suriname responded with the following

Mennonites settling in Suriname plan to engage in large-scale agriculture and invest independently, not relying on the government.
After two years of deliberation, the government has given the Mennonites a trial period of three years and 50 families, but it has clarified that it will not provide them with land.
Minister Albert Ramdin notes that Mennonites have a positive track record in terms of productivity and export potential.
Land rights issues for Indigenous and tribal peoples remain unresolved, which may pose complications.
The Mennonites are negotiating with local communities in the west and the Brokopondo area for land, and the government will facilitate them where possible. The continuation of the project will depend on the land acquired. Deforestation is not permitted as it would jeopardize Suriname's 'carbon negative' status, and the government is committed to stopping deforestation by around 2030.

The construction of the National Assembly's meeting complex in Suriname, which was previously announced to be temporarily halted, continues despite government statements to the contrary.
Opposition assembly members visited the construction site on Henck Arronstraat and found construction activities in full swing.
The government's communication has been criticized for misleading the public, and there are concerns about the government's credibility.
The contract for the project was signed by the Ministry of Public Works, and any decision to stop construction must be communicated through that ministry.
The government claims that the continuation of construction, despite promises to halt it, is due to a technical problem related to the pouring of the foundation.
The Minister of Education, Science, and Culture, Henry Ori, mentioned that his colleague from Public Works, Riad Nurmohamed, is addressing the technical issue and providing further instructions to the architect and contractor.

The community of Kabalebo resort is upset over the secret concession of more than 300 hectares for river sand exploitation to Goldline Mining NV in the Corentijn River.
District commissioners of Kabalebo and Nickerie were unaware of this concession.
The district commissioner of Kabalebo, Josta Lewis, held an emergency meeting with the community and decided to request the concession's revocation by President Chan Santokhi.
Concerns are raised that gold mining is taking place under the guise of river sand extraction, using scalians (dredging machines).
Activities are taking place about 31 km from Apoera, causing concern for the local population.
There are claims that traditional authorities of Kabalebo granted permission for river sand extraction, although the community was unaware.
Goldline Mining NV has received two concessions, one for 300 hectares in the Corentijn River and another for 360 hectares on the road to Apoera.
There is skepticism regarding the stated purpose of the concessions, as they were originally issued for sand, gravel, and natural stone, but a skalian is being used, which is typically for gold mining.