The International Monetary Fund (IMF) Wednesday said that Suriname will be able to receive US$53 million after its executive board successfully completed the second review of the Extended Fund Facility (EFF) that the Dutch-speaking Caribbean Community (CARICOM) country has with the Fund.
It said as a result, the total disbursement so far is US$159 million and that the executive board had also approved Suriname’s request for waivers of non-observance of performance criteria based on the corrective measures undertaken by the authorities.
The IMF executive board also approved the country’s request for rephasing of purchases under the arrangement, including the requested reduction of the total access under the arrangement to an amount of US$516.4 million.
The IMF approved Suriname’s 36-month EFF arrangement on December 22, 2021, for SDR 472.8 million (One SDR=US$0.02 cents).
The objective of the programme is to support the authorities’ economic recovery plan to restore fiscal and debt sustainability, protect the vulnerable by expanding social protection, upgrade the monetary and exchange rate policy framework, strengthen the financial system, and advance the anti-corruption and governance agenda.
IMF deputy managing director, Kenji Okamura, said the shock of higher commodity and food prices in the second half of 2022, slowed the nascent economic recovery and eroded performance under the programme.
He said fiscal slippages put pressure on the exchange rate and inflation, which have imposed a heavy burden on society, especially the most vulnerable
“The authorities have made concerted efforts to bring their economic recovery program back on track and stabilise the economy, foremost by restoring fiscal discipline. The approved 2023 budget is appropriately conservative, underpinned by concrete measures on both expenditure and revenue side.
“The elimination of costly and distortive fuel subsidies, together with planned phasing out of electricity subsidies and broadening of the VAT base will provide the fiscal space for expanding social assistance programs and growth-enhancing investment,” said Okamura.
He said the Suriname government has also reached important milestones in debt restructuring negotiations with private and official bilateral creditors.
“The recent agreements are in line with the program parameters and will support Suriname’s efforts to restore debt sustainability. The authorities’ commitments to transparently achieve a debt resolution, consistent with the program parameters and equitable burden sharing among all remaining creditors in a timely fashion, are welcome,” said Okamura.
The IMF official said that flexible, market-determined exchange rate remains essential to address Suriname’s external imbalances and ensure the long-term adequacy of international reserves.
He said to this end, Suriname has committed to refrain from direct foreign exchange interventions, except to address disorderly market conditions, while allowing for limited indirect foreign exchange sales to essentials goods importers to mitigate disruptive foreign exchange shortages.
“To reduce stubbornly high inflation, the Central Bank of Suriname should continue to look at measures to absorb liquidity under its reserve money targeting framework and improve the effectiveness of the monetary transmission mechanism. Continued progress is also needed to address banking system vulnerabilities.”
Okamura said structural reforms to strengthen institutions, governance, and data quality remain key priorities with continued capacity-building support by the Fund and Suriname’s other development partners.
He said Paramaribo should continue taking measures to strengthen central bank governance and the anti-corruption and AML/CFT frameworks.
“Maintaining the restored policy discipline and reform momentum will be essential for the success of the authorities’ economic recovery programme,” Okamura added.