IMF Reaches Staff-Level Agreement with Republic of Suriname on Three-Year Program of $ 690 Million Under Extended Financing Facility
April 29, 2021
End-of-mission press releases include statements from staff teams that communicate preliminary findings after a country visit. The views expressed in this statement are those of the staff of the IMF and do not necessarily represent the views of the Executive Board of the IMF. Based on the preliminary findings of this mission, staff will prepare a report which, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.
- The program aims to lay the foundations for a strong, resilient and inclusive economic recovery by protecting the poor, reducing inflation, restoring debt sustainability and investing in the future.
- The government’s program supported by the IMF’s Extended Financing Facility includes an increase in budgetary resources provided to the most vulnerable members of society, a substantial reduction in the budget deficit, an immediate move to a flexible exchange rate, the adoption of ” a healthy monetary regime to reduce inflation, the replenishment of international reserves and a series of institutional reforms to strengthen policy-making and improve governance.
Washington DC: In response to a request from the government of Suriname, an International Monetary Fund (IMF) mission led by Ali Alichi has held virtual meetings in recent months to discuss IMF financial support for the authorities’ economic reform program. At the end of the virtual mission, Mr. Alichi made the following statement:
“I am pleased to report that IMF staff have completed policy discussions with the authorities and have reached agreement on a new medium-term program that could be financed with IMF resources in the amount of $ 472.8 SDR million (approximately $ 690 million) under the 36-month Extended Financial Facility (EFF) over 2021-2024. If approved by the IMF Executive Board, SDR 39.4 million (about US $ 57.5 million) would be immediately available. Staff expects the IMF Executive Board to consider approving the deal in the coming weeks, after the authorities have fully implemented a set of important policies, called prior actions, and received financing assurances required. Debt relief from Suriname’s official bilateral partners and additional funding from multilateral partners will be needed to ensure debt sustainability and close the financing gaps. This will need to be complemented by progress towards restructuring the commercial debt that will result in sufficient creditors’ participation to restore debt sustainability and close financing gaps.
“The Surinamese government faced a difficult situation when it took office with high inflation, low international reserves, a large budget deficit and significant budget and balance of payments financing needs. The already dire economic situation has been further exacerbated by challenges arising from the Covid-19 pandemic and terms of trade volatility.
“The local economic program of the Government of Suriname is focused on protecting and improving well-targeted support programs for the poor and most vulnerable and on the availability of health spending to decisively tackle the pandemic. To protect international reserves and increase Suriname’s ability to adjust to external shocks, the authorities committed to pursuing a flexible exchange rate, realigning the official exchange rate so as to eliminate the current parallel market premium and guarantee that monetary policy is effective in lowering the exchange rate. currently high inflation rates. At the same time, the program aims for a significant reduction in the budget deficit as well as a major restructuring of the public debt to restore the country to a sustainable debt position.
“Suriname’s economic reform program contains important measures to improve the country’s institutional capacity in policy making, including the modernization of monetary and fiscal policy frameworks. A major effort will be made to improve governance, strengthen the framework for combating money laundering and combating corruption. The government’s plan also prioritizes obtaining a clearer picture of the financial condition of the banking system and its return to solid capitalization, liquidity and profitability.
“The authorities anticipate that their broad political efforts, through an inclusive consultative process with key stakeholders, combined with financial support from the IMF, will help catalyze financial support from other international financial institutions as well as debt relief from other international financial institutions. creditors. This in turn will translate into a path of sustainable economic development with strong growth and job creation, poverty reduction and improved standard of living for all citizens of Suriname.
“The IMF team would like to thank our Suriname government counterparts and technical teams for their frank discussions and we stand ready to support Suriname and its people.”