Flag of Suriname (224107)
Flag of Suriname Credit: Wikipedia

Of the many nations in the Caribbean Community facing economic problems, Suriname this week said that tough economic austerity measures that were imposed by government and the International Monetary Fund in the past year are beginning to help the country emerge from its worst crisis since military rule in the 1980s.

This information comes as a team from the fund is headed to Paramaribo, the Surinamese capital, for a key review meeting this week that could allow it to draw down a second budget support loan from the fund in the new year.

The administration of President Dési Bouterse has already cashed in a loan of $478 million from the multilateral agency while obeying orders to cut spending and review decades old subsidies on electricity rates and food items and as the government battled to stabilize the exchange rate, which has doubled in the past year to nearly eight Suriname dollars to one U.S. dollar

The devaluation of the currency has sent prices for basics skyrocketing, forcing the closure of a number of businesses, some of which have now set up shop across the border in Guyana as they try to ride out the recession.

The economy of this once prosperous Dutch-speaking mainland country in the bloc of 15 Caribbean Community nations tanked significantly in the past two years as prices for its main exports—gold, oil and bauxite—declined dramatically.

Gold has seen a slow but steady improvement, but oil remains unpredictable. The same is true for bauxite, which once accounted for 70 percent of the gross domestic product before US-owned Alcoa announced plans to pull out of Suriname after decades because of soft international prices.

Its banana export industry is also seeing hard times, but rice is healthier than other industries, largely because of a sweetheart deal between Suriname and Venezuela, as the two have worked out a barter arrangement offering prices higher than the international market in recent months.

“We are seeing light at the end of the tunnel,” declared Finance Minister Gillmore Hoefdraad. “We have some game changes in our economy. In the oil industry our refinery is coming on stream. We are able to save on our reserves, and in the area lf gold, we have a new gold mine coming on stream. So for us, there’s finally some breath that we can have.”

As an example of how bad the situation had become for the country of approximately 500,000 people, mining revenues in 2015 were just 10 percent of what the sector brought in six years ago.

“But what we are seeing developing in our economy also is that our fiscal deficit is coming under control and our current account has been improving especially, in the last quarter,” said Hoefdraad. “We think that within the two years we should be out of the trouble that we had been into.”

Authorities in the meantime are talking with the Islamic Development Bank about borrowing $1.8 billion to buy basic items and to help keep cash in state coffers.

The loan from the bank would run for approximately 10 years and the end would be equivalent to approximately 40 percent of GDP.