Suriname's debt restructures...

Happy Monday!

Suriname has reached an agreement with the IMF regarding its reform program. While the government has also found evidence of cyanide in Suriname’s reservoir leading to environmental scrutiny and uncertainty.

Suriname and the IMF have reached an agreement regarding its economic reform program.

• An IMF team and the Suriname government have reached a technical agreement with the International Monetary Fund (IMF) regarding the second review of its economic reform program.

• The agreement, which still needs approval from the IMF's executive board, would provide Suriname access to approximately US$ 53 million under a three-year Extended Fund Facility (EFF) arrangement.

• While there is still work to be done, the IMF team predicts that Suriname's recovery will continue with decreasing inflation and expects a growth rate of 2.3% in 2023, rising to around 3% the following year.

• However, the country's real GDP is expected to remain below pre-pandemic levels until 2028. Inflation is expected to decrease to 36% by the end of this year.

• While the IMF highlights the short-term risks regarding broad policy implementation due to capacity constraints and a challenging socio-political climate, as well as external dangers from deteriorating terms of trade. At the same time, long-term risks exist around the role of Suriname’s oil fields’ development.

• An essential step in Suriname’s recovery is its debt restructuring which is crucial for restoring debt sustainability. While agreements have been reached with Paris Club creditors, they are ongoing with China and India.

• The issue of domestic debt is also being addressed with the Central Bank of Suriname as the government is attempting to improve fiscal management to make this a problem of the past.

• There has been critique, however, of the government’s restructuring plan about the involvement of future oil revenues being involved in the repayment plan.

There has been outrage in the government coalition and the opposition about the evidence of cyanide in Suriname’s reservoir partly due to small-scale gold mining in the country.

• There is now irrefutable evidence that the water in Suriname’s reservoir has been contaminated with cyanide. While the extent of the harm to humans and the environment remains unclear as local communities wait on permission to use the water.

• The Ministry of Spatial Planning and Environment has conducted investigations after raised concerns that found that two out of three samples confirmed cyanide presence.

• Cyanide was being used by small-scale gold miners and has now been banned as they explore alternative systems.

• But the area of contamination and the scale of the impact on communities and the usability of the water remains unclear.

• The government will continue to tackle these issues in the future after adjourning in the parliament without addressing them.

• While there is work being done regarding water purification around the country, there have been cases of dead fish being found in district Wanica which was related to oxygen-depleted water, showing that there is clearly work to be done.

New electricity prices are set to come to ease the cost of living standards.

• Starting from June 1st, new electricity tariffs will be implemented in Suriname based on recommendations from the EBS Tariffs Committee.

• The government aims for transparency in the tariff adjustment, with certain groups paying slightly less and others paying slightly more. However, the exact cost price has not been disclosed.

• The tariffs committee was formed in response to protests against previous tariff adjustments. Prices were reviewed and there was engagement with stakeholders to produce a set of recommendations.

• The government accepted most of the committee's recommendations, except for the proposal to phase out a portion of the subsidy over 12 months. Instead, the government decided on a six-month phase-out period.

• Minister of Natural Resources Abiamofo hopes that this decision will bring calm to the discussion surrounding electricity tariffs. He emphasizes that the current tariffs are based on input from the government, business community, and labor movement.

• The price will be reevaluated periodically to consider factors like exchange rates and oil prices and the government plans to review the price every three months.