“Suriname determines its own path”
The government has used firm language after the International Monetary Fund (IMF) released a devastating report after its regular Article IV consultation rounds. The International Monetary Fund is projecting an economic contraction of 9 percent this year in struggling Suriname. The visiting IMF team says that without major policy adjustments, Suriname “risks deepening instability” with sharp exchange rate depreciation and accelerating inflation. It says international reserves are “critically low.” The economy of Suriname has reportedly been in a freefall amid collapsing global commodity prices and the local currency’s resulting slide against the U.S. dollar. The IMF is calling for tight controls on public wage costs, higher fuel taxes and a phasing out of power subsidies. It says a value-added tax should also be put in place by 2018. Suriname’s Finance Ministry responded to the IMF reports by pointing out that “we appreciate the advice and assistance of the IMF team but that we wish to emphasize that the authorities see the glass as half full rather than half empty.” “We will stay on the road to recovery and Suriname will determine its own choices,” said the Finance Ministry which also elaborated on efforts that are being made to get the economy on its feet again. The IMF expects some relief in the crisis in 2017 but does not expect any economic growth in 2017. The IMF also expressed grave concern regarding Suriname inflation rate of 77%. The government acknowledged that the crisis is putting heavy pressure on the people. “The most recent figures from the General Statistics Bureau (ABS) indicate that the economy has shrunk with 2.7% in 2015. A further decline is expected for 2016. The high inflation is being felt by the nation,” said Finance Minister Gillmore Hoefdraad in the statement.
The IMF pointed out that several measures that had been taken as part of the Stabilization and Recovery Plan 2016-2017 have either been parked or cancelled in the past couple of months. Guaranteeing the recovery and stability of the economy requires decisive reforms,” said the IMF in its reports. The IMF added, that the decisive reforms are yet to take place. But the government has a different opinion. “The government supports the most vulnerable groups with its social policy. Tax cuts and purchasing power boost provide some compensation to wage earners. In order to keep the inflation from increasing, the government decided to gradually cut back on subsidy for electricity and fuels.
At the same time the government took strong austerity measures with regards to non-essential goods and services to help balance the budget better. The budget deficit was reduced from 8.5% of the GDP in 2015 to far below 6% in 2016 (which is below the projected deficit of the IMF program). This also improved the external trade balance. The government’s austerity measures led to a drastic reduction in imports,” said Minister Hoefdraad. “A conditional cash transfer program which boosts self activation and the fight against poverty will be rolled out in 2017. The government plans on introducing Value Added Tax (VAT) in 2018 in order to in increase its income.