PARAMARIBO, Suriname, Wednesday May 18, 2016 – Suriname is getting help to cope with its financial challenges from the Caribbean Development Bank (CDB).
The CDB has approved a US$50 million Policy-Based Loan to urgently address the country’s fiscal imbalances, through support for energy sector reforms.
Suriname has already begun implementing a series of institutional, policy and legislative reforms to stabilize the economy, primarily to address the challenge of a weak operational, policy and regulatory environment in the energy sector. CDB’s loan assists the Government of Suriname with its adjustment programme.
“The CDB recognizes the urgent need for significant reform within Suriname’s energy sector, which has tremendous potential to transform the economy,” said Dr. Justin Ram, Director of Economics at the CDB. “This Policy-Based Loan signals a collaborative effort to build a sustainable and efficient power sector in Suriname, which can provide an enabling environment to improve competitiveness and improve the prospects for private sector led growth.”
The CDB’s support complements the Inter-American Development Bank’s (IADB) ongoing contribution to the institutional and operational strengthening of Suriname’s energy sector. The loan is being provided to Suriname on the basis of a shared policy matrix with IADB under the existing programme between the Government of Suriname and IADB.
The reduction in global commodity prices caused a reduction in Suriname’s economic growth, which is highly dependent on the extractive sector. By the end of 2015, the country’s international reserves had declined to crisis levels—less than two months of import cover. The level of debt more than doubled to 43.3 percent of the Gross Domestic Product, compared to 2011.
The Bank’s Policy-Based Loan forms part of wider financial support for the Government of Suriname from multilateral financial institutions. Donor financial resources will: close the financing gap which emerged following a sustained downturn in commodity prices; provide the fiscal space needed to support spending in critical social programmes and capital investments; and allow time for the implementation of reforms that are expected to restore balance and lay the foundation for reinvigorating growth.