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The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015. The euro was dropping against the dollar after early results of the Greece bailout referendum suggested the country rejected fresh austerity demands from EU-IMF creditors. AFP PHOTO/MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)

IMF reaches agreement with Suriname on a US$690-m, 3-year programme under the Extended Fund Facility

The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015. The euro was dropping against the dollar after early results of the Greece bailout referendum suggested the country rejected fresh austerity demands from EU-IMF creditors. AFP PHOTO/MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)

Editor’s note: In response to a request from the Government of Suriname, an International Monetary Fund (IMF) mission led by Ali Alichi held virtual meetings over the past several months to discuss IMF financial support for the authorities’ economic reform program. At the end of the virtual mission, Mr. Alichi issued the following statement:

Deputy division chief at the IMF’s Western Hemisphere Department and mission chief for Suriname Ali Alichi

“I am pleased to announce that the IMF staff completed policy discussions with the authorities and reached an agreement on a new medium-term program that could be supported by IMF resources of SDR 472.8 million (about US$ 690 million) under the Extended Fund Facility (EFF) with the duration of 36 months, over 2021-2024. If approved by the IMF Executive Board, SDR 39.4 million (about US$ 57.5 million) would be immediately available. Staff envisages that the IMF’s Executive Board would consider approval of this agreement in the coming weeks, after the complete implementation of a set of important policies by the authorities, referred to as prior actions, and receipt of the necessary financing assurances. Debt relief from Suriname’s official bilateral partners and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps. This will need to be complemented by progress toward a restructuring of commercial debt that will result in sufficient creditor participation to restore debt sustainability and close financing gaps.

“The Surinamese government faced a difficult situation when it assumed office with high inflation, low international reserves, a large fiscal deficit, and significant fiscal and BOP financing needs. The already-serious economic situation was further exacerbated by the challenges arising from the Covid-19 pandemic and volatility in the terms of trade.

“The Government of Suriname’ home-grown economic program is centered on protecting and enhancing well-targeted support programs for the poor and most vulnerable and to ensure health spending is available to decisively counter the pandemic. To protect international reserves and increase Suriname’s capacity to adjust to external shocks, the authorities are committed to pursuing a flexible exchange rate, to realign the official exchange so as to eliminate the current parallel market premium, and ensure monetary policy is effective in bringing down the current high rates of inflation. At the same time, the program aims at an important reduction in the fiscal deficit as well as a broad restructuring of public debt to restore the country to a sustainable debt position.

The Government of President Chandrikapersad Santokhi faced a difficult situation when it assumed office with high inflation, low international reserves, a large fiscal deficit, and significant fiscal and BOP financing needs. (File photo)

“Suriname’s economic reform program contains important steps to improve the country’s institutional capacity for policymaking, including modernizing both the monetary and fiscal policy frameworks. A significant effort will be made to improve governance, strengthen the framework to counter money laundering, and tackle corruption. The government’s plan also prioritizes garnering a clearer picture of the financial situation of the banking system and returning it to robust capitalization, liquidity, and profitability.

“The authorities anticipate that their expansive policy efforts, through an inclusive consultative process with key stakeholders, combined with IMF financial support, will help catalyze financial support from other international financial institutions as well as debt relief from creditors. This in turn will result in a sustained economic development path with strong growth and job creation, a reduction in poverty, and improved living standards for all of Suriname’s citizens.

“IMF staff team would like to thank our counterparts from the Surinamese government and technical teams for their candid discussions and we stand ready to support Suriname and its people.”