April 18, 2016Michael Sutherland-Shaw
As the South American nation of Suriname struggles through a recession, the International Monetary Fund (IMF) have agreed to help the country with a US $478 million support package.
Thanks to a decline in the price of gold and oil as well as the closure of an aluminium refinery in late 2015, Suriname has faced “substantial external and fiscal deficits.”
According to Daniel Leigh, who led a IMF mission to the country, the Surinamese authorities have put forward a reform program to stabilize the economy and set the stage for its recovery.
“Fiscal consolidation is a clear and critical ingredient of the program, to restore fiscal and external current account stability. The authorities’ program also includes reforms to the exchange rate and monetary policy framework,” said Leigh in a statement.
The program builds on important steps the government has taken to curb public spending in recent months. Since August 2015, Suriname cut public spending from a budget deficit from 12.5% of gross domestic product to 3.5%, and also begun phasing out electricity tariff subsidies.
In addition, the program will introduce reforms to strengthen the fiscal policy framework, including a sovereign wealth fund, a procurement department and a modern treasury department.
Suriname will receive technical support from the IMF and the Inter-American Development Bank (IDB).
The program also eyes an improved business environment, and medium-term growth throughout the country. According to the IMF, it will seek to promote the economy’s diversification in addition to attracting foreign direct investment from organizations like the IMF, Caribbean Development Bank, the IDB and World Bank.
“This is a challenging program that will require great efforts from the Surinamese society as a whole. However, we believe that it can provide a durable and fully financed solution to the underlying problems facing the country and a path toward sustainable growth,” said Leigh.