On 4 August Suriname’s President Chandrikapersad Santokhi said that the country has accumulated debts in excess of US$3bn.
Analysis:
Santokhi took office on 13 July after Desi Bouterse relinquished power nearly a month early, his10-year tenure marked by allegations of cronyism and corruption on a grand scale, bequeathing his successor a legacy of debt compounded by the coronavirus (Covid-19) pandemic.
- On the same day Santokhi took office, the international ratings agencies Fitch and Standard & Poor’s (S&P) downgraded Suriname to 'selective default' when the country failed to pay the principal on a US$125m loan after its 10-day grace period expired on 10 July. Santokhi said Suriname was “on the brink of a financial abyss”, with the treasury “virtually empty”.
- Santokhi has now revealed the scale of the debt his government has inherited from Bouterse’s populist government, which he said was a “financial catastrophe”, equivalent to US$5,000 for every Surinamese citizen. Santokhi said it beggared belief that a government could rack up so much debt, which he said could not be explained by the financing of infrastructure works as these were paid for by funds from China. He accused the Bouterse administration of “inadequate management” of public finances, telling the media that it had spent more than US$60m employing 3,600 government officials, for instance, in the six months leading up to elections on 25 May.
- Depleted public finances will be further ravaged by Covid-19. Fitch predicts that the debt burden will surpass 100% of GDP by the end of the year from 80% in 2019, with S&P saying that Covid-19 will provide “unprecedented challenges”. Santokhi did not reveal precisely what his government intends to do but a painful period of austerity would seem to await Suriname.
Looking Ahead: Santokhi will need to preserve unity within a disparate political coalition to push through unpopular reforms to restore Suriname’s economic stability. His Vooruitstrevende Hervormingspartij (VHP) secured 20 of the 51 seats in the national assembly, necessitating the formation of a governing alliance with the Maroon nationalist Algemene Bevrijdings-en Ontwikkelingspartij (Abop), the centre-left Nationale Partij Suriname (NPS), and the Javanese Pertjajah Luhur (PL), to reach 33 seats.