Suriname faces deep recession

Suriname is in deep recession, according to the International Monetary Fund, who is projecting an economic contraction of nine percent this year, following a 2.7 percent contraction in 2015.

An IMF team which visited the country recently said that without major adjustments the Dutch country “risks deepening instability” with sharp exchange rate depreciation and accelerating inflation. It said international reserves are “critically low.”

The IMF’s mission chief, Daniel Leigh, said at a press conference recently that income from the Merian gold mine, which officials opened earlier this month, will support economic activity and it is expected that the recession will ease in 2017. Inflation is projected to be 60 percent at the end of this year and is expected to decline next year.

The economy of Suriname has been in a freefall amid collapsing global commodity prices and the local currency’s resulting slide against the United States 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 (VAT) should also be put in place by 2018.

Leigh said that without a significant policy adjustment, Suriname risks deepening instability, with sharp exchange rate depreciation and accelerating inflation. There is limited financing to cover essential government spending — including public wages, pensions and social support to the most disadvantaged- and the risk of resorting to central bank financing of the budget exists.