(MENAFN- Caribbean News Global)
UNITED STATES / SURINAME – The Board of Directors of the International Monetary Fund (IMF) approved a 36-month agreement under the Fund’s Extended Facility (EFF) for Suriname in the amount equivalent to 472.8 million SDR (approximately US $ 688 million or 366.8% of quota). The Board’s decision allows for immediate disbursement equivalent to SDR 39.4 million (approximately $ 55.1 million).
The IMF financial deal will support the Suriname authorities’ internal economic plan aimed at restoring fiscal sustainability through discretionary fiscal consolidation of 10% of GDP over the period 2021-24, while protecting vulnerable people by expanding social safety net programs. The IMF-supported program will also help reduce public debt to sustainable levels, improve the monetary and exchange rate policy framework, stabilize the financial system and strengthen institutional capacities to fight corruption and money laundering. money and improve governance.
Following the board discussion, Kristalina Georgieva, Managing Director and President, made the following statement:
âSuriname faces systemic fiscal and external imbalances due to many years of economic mismanagement. These developments, combined with the COVID-19 pandemic, have caused large current budget and external deficits, unsustainable public debt, dwindling reserves, an economic slowdown and high inflation. In recent months, the authorities have launched a broad economic reform program to address Suriname’s challenges, including by starting to tighten fiscal policy.
âThe main objectives of the authorities’ program are to restore macroeconomic stability and confidence, and pave the way for economic recovery, while protecting the most vulnerable during the adjustment process. Fiscal consolidation is a clear and essential ingredient of the program in order to restore “fiscal and external stability.” The fiscal reforms designed by the authorities include the elimination of costly and poorly targeted electricity price subsidies and the introduction of a value-added tax, creating an efficient source of non-mining revenue. To help mitigate the negative impact on the most vulnerable, the authorities’ program emphasizes strengthening the social safety net. To ensure debt sustainability, the authorities negotiate debt relief from private and public creditors in accordance with program parameters.
âThe program aims to rebuild Suriname’s foreign exchange reserves. The authorities’ decision to switch to a market-determined exchange rate will strengthen the economy’s resilience to external shocks. This measure, together with the catalytic effect of the program on external financing, will resolve external imbalances and help to increase foreign exchange reserves to prudent levels.
âTo reduce inflation, the program includes measures to tighten liquidity conditions. The adoption of a reserve currency targeting framework and the deployment of open market operations will support the goal of lowering inflation to single digits. The Central Bank of Suriname is also faced with growing risks in the banking sector, particularly due to the fluctuation of the exchange rate.
âThe implementation of the structural reform program is essential to ensure a more prosperous future in Suriname. The reforms will improve the institutional capacity of macroeconomic policies, maintain financial sector stability, fight corruption and strengthen AML / CFT and governance. These reforms will be supported by technical assistance from development partners, including the IMF, the Inter-American Development Bank and the World Bank Group.
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