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PARAMARIBO, Suriname, May 28 2016 – Suriname has landed a $478 million loan from the International Monetary Fund to boost an economic reform programme amid a drop in commodity prices, becoming the second South American country to seek such a bailout in nearly a decade.
The IMF said it will immediately disburse $81 million as part of a two-year deal announced Friday that has been met with protests.
Suriname is the first country in South America since 2007 to seek help from the IMF through what’s known as a stand-by-arrangement, in which loans are conditioned on a government adopting policies aimed at stabilizing its finances and economy. The last country to do so was Peru.
The reform is designed to strengthen Suriname’s finances following a drop in prices for its principal exports including gold and oil. The country’s main alumina refinery also shut down last year.
The IMF said Suriname faces what it called substantial fiscal deficits and a rundown of international reserves.
“Implementing the structural reform agenda is essential to ensure a prosperous future for Suriname,” the IMF said in a statement.
Suriname plans to create a value-added tax and eliminate electricity subsidies as part of the reform, which also seeks to increase private-sector growth and attract more foreign investment.
IMF officials said the drop in revenues from the sale of gold, oil and alumina caused Suriname’s fiscal deficit to reach nearly 9 percent of GDP last year, compared with a small surplus in 2011.
Commodity prices fueled a region-wide boom in the past decade, but analysts say their collapse could cause more policy makers to swallow their pride and return to the IMF, which is widely mistrusted in the region for its role in Argentina’s 2011 financial collapse.
Possible candidates are OPEC members Ecuador and Venezuela, which have seen their economies shrink as investment and oil purchases from a slowing China have fallen. Brazil, the region’s largest economy, is also fighting recession as prices for its grain and iron ore exports have collapsed. (AP)
