Suriname’s Finance Minister met with the IMF to discuss a new program after a previous agreement expired. With elections approaching, the need for public support and tailored measures is emphasized. Expected oil revenues may influence economic growth, yet poverty remains a challenge.
Suriname’s Finance Minister, Stanley Raghoebarsing, recently disclosed that the government has engaged with the International Monetary Fund (IMF) to explore a successor program following the expiration of a previous $688 million agreement last March. This discussion takes place just ahead of the country’s forthcoming elections in May, where the new government’s stance on re-entering an IMF deal will be crucial.
Raghoebarsing made these comments during the IMF and World Bank’s spring meetings in Washington, D.C. He insisted that any new program from the IMF must be flexible and tailored to the unique needs of Suriname. Furthermore, he highlighted the importance of gaining the support of the populace for the proposed program. He believes that regardless of political shifts post-elections, there is a general acknowledgment among politicians about the significance of continuing the partnership with the IMF.
As Suriname stands on the brink of becoming a significant player in the energy sector, with its first oil production projected to commence in 2028, the proposed successor program is increasingly pertinent. The expected influx of $26 billion from oil revenues will be central to the country’s economic future and will likely influence public sentiment toward the new government’s decisions regarding international financial agreements.
The IMF has predicted a growth rate of 3.2% for Suriname’s economy in 2025, a slight increase from the 3% expected for 2024. However, Suriname faces economic hurdles, having aimed for a primary budget surplus of 2.7% of GDP last year, but only managed to secure a surplus of 0.3% of GDP, largely due to drought conditions affecting revenue.
Under a debt restructuring agreement completed in 2023, Suriname is using mechanisms allowing investors to be reimbursed with a portion of future oil revenue. This strategy, coupled with past reforms that led to a reduction in the debt-to-GDP ratio from 148% to 88% and significant economic measures to curb inflation, reflects a boost in investor confidence. Suriname’s sovereign bonds have performed comparatively well this year, yielding returns of around 3.1%.
Yet, the progress made has come with a cost. A considerable portion of Suriname’s population, approximately 17.5%, continues to live in poverty. Raghoebarsing remarked on the importance of public support in future reform agendas to avoid overwhelming citizens with the burden of economic adjustments. He noted, “When we go for a successor program, it will definitely be a much more relaxed one,” and stressed the necessity of changing the prevailing narrative about these reforms to mitigate what he termed as ‘reform fatigue.’
In summary, as Suriname approaches its May elections, discussions with the IMF regarding a new financial program are of high priority. The current government’s initiatives have led to significant fiscal reforms, yet the battle against poverty and public support remains a pressing concern. Future decisions on IMF collaboration will hinge on the new administration’s willingness to continue the momentum built and address citizens’ needs moving forward.
Original Source: financialpost.com
