Caribbean & Central America - February 2019

Back in November, the International Monetary Fund (IMF) concluded its latest Article IV Consultation with Suriname with some firm recommendations on the need for fiscal rectitude. In a speech broadcast nationally on New Year’s Eve, President Desi Bouterse made it clear that he had other priorities, with just over a year left until the next general election.

The IMF reported that Suriname’s public debt had more than doubled since 2014, reaching 77% of GDP by end-2017. Inter alia, the IMF recommended that Suriname, “significantly reduce the fiscal deficit, including by implementing the value-added tax, curtailing electricity subsidies, and improving public financial management”.

The president’s response in his New Year’s speech was to say: “Although the government keeps its expenditure under control, government subsidies are maintained for, among other things, electricity, water, gas, the collection of household waste, and social-medical facilities. These billions of subsidies contribute substantially to the maintenance of the general quality of life, to the promotion of our health situation, to our living and working satisfaction and to the safeguarding of social cohesion among our people.”

The president also added in a hint of even further government largesse: “The moment has…come to increase the radius of action even more as a government.”

The Association of Surinamese Economists (VES) was quick to express its unhappiness with this. In a letter to all 51 members of parliament over the 2019 budget, the association said: “If the budget deficit for 2019 is granted… government debt will increase from about SR$19bn [(US$2.5bn)] to approximately SR$28bn, corresponding to approximately 130% of the gross domestic product.”

The VES also pointed out that the budgeted expenses of SR$15.3bn are more than double the budgeted revenues of SR$6.5bn, which means that the proposed budget deficit is a record high of SR$8.8bn.

The letter went on to say: “Let us learn from recent history and prevent a further economic relapse through responsible policy adjustment. In 2014 [the pre-election year] the government…denied the downturn and continued with irresponsible expenses. Only after the election in 2015, the government acknowledged the downturn, and by a far-too-late and…completely-inadequate policy adjustment [it] landed the country in deep recession in 2016. It is up to all 51 members of our highest state body to actively prevent this from happening again in the period 2019-2021.”

On 22 January, the opposition submitted a motion in the National Assembly calling for a reduction in the budget deficit. The motion was defeated by 26-10.

Another big question as the country moves closer to the May 2020 election is whether Bouterse will stand again. He is 74 and has been receiving medical treatment in Cuba, and it has been widely assumed that while he would spearhead the election campaign, he would not actually seek public office himself. Now he has hinted that he might be prepared to run again if that was what the public wanted. However, the x-factor remains the ongoing trial of those suspected of the 1982 ‘December murders’ of 15 opponents of the Bouterse-led military regime, a crime for which Bouterse himself is the prime suspect. The court martial is expected to conclude by mid-2019.