Suriname: IMF Publishes 4th Review Under EFF

• The International Monetary Fund (IMF) published its full report following the fourth review under the Extended Fund Facility (EFF) arrangement for Suriname. The document comes just under a month after the IMF Board approval that allowed for the disbursement of around $53Mn (accumulated $263Mn) and greenlit the program extension until March 2025. The review from the IMF was positive, highlighting the authorities’ commitment to fiscal discipline while undertaking an ambitious reform agenda.
• Program performance is reported to be strong following the fourth review, with all quantitative performance criteria (QPCs) and continuous performance criteria met. Authorities, however, missed the September floor on social assistance spending. Progress on meeting the structural benchmarks under the EFF continues, albeit with various delays.
• On the fiscal front, the IMF anticipates authorities to achieve a 1.6% of GDP primary surplus this year, despite weaker mining revenue. For 2024, it revised the primary balance target to 2.7% of GDP from 3.5% to support the recovery and also “attract and retain qualified civil servants”. The IMF anticipates a return to a 3.5% primary surplus in 2025, the final year of the program and an election year.
• Still, the report noted, “further fiscal consolidation beyond the program period may be needed to build buffers for the recapitalization of the CBvS (Central Bank) and commercial banks”. The IMF estimates the recapitalization needs at 10% of GDP, with 5% of GDP to the CBvS through annual injections and a one-time 5% of GDP recap for the commercial banks. This is now expected to take place sometime in 2024.
• Policy implementation challenges are the foremost risk, particularly if social discontent were to worsen. Other key downside risks to the near-term outlook include rising risks to the financial sector and weak capacity that could impact the implementation of the government’s reform program.
• The revised Debt Sustainability Analysis (DSA) shows a lower estimated debt balance for end-2023 at 87% of GDP compared to 107% following the third review. Half of this difference reflects the delay of the recap assumptions to 2024. Despite the lower figure, the downward debt trajectory is slightly more modest than earlier forecasts, with debt expected to reach 60% of GDP by 2032, assuming real GDP at 3% and primary surpluses of 3.5% of GDP over the period.

 (Sources: International Monetary Fund & Oppenheimer & Co. Inc.)