“Su­ri­na­me de­ter­mi­nes its own path”

Times of Suriname - - ENGELS -

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.

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