The Surinamese Government has again asked its creditors to defer payment. This is the second time that the government of Chan Santokhi has asked for a postponement, the past period has proved too short to get the state treasury in order.
The loans to be repaid include the so-called Oppenheimer bonds. Due to financial mismanagement by former President Bouterse, the country has built up a public debt of more than 2.5 billion euros. That corresponds to more than 80% of gross domestic product. The interest on the bond loans, about 22 million euros, can not be paid by Suriname.
Heavy conditions to the loans
That the government now again asks for the suspension of payment, does not come as a surprise, says TCCEIT correspondent Nina Jurna. “The loans have been agreed on under such severe conditions that the debt grows every time it is paid late. It is difficult for Santokhi to meet these conditions, and that is what he wants to negotiate now. In addition, Suriname runs the chance to fall further in rating if there is no redemption. The government now hopes for a so-called stand still, so that the repayment will be suspended for a longer period of time and intensive negotiations with creditors.”
If the creditors approve the request, there will be a deferral for the payment of interest and repayment amounts that should be paid in 2020 and 2021. In a statement from the Ministry of Finance and Planning, the government writes to expect that creditors will agree to deferral of payment.
“ If it succeeds, it will provide more financial breathing space and will bring pressure from the government,” says Jurna. And that is urgently needed, because the financial situation in Surinam is becoming increasingly difficult. The country is struggling with inflation, government subsidies on petrol have recently been cut and food is becoming more expensive.
Not yet reached
Meanwhile, the government of Santokhi is trying to get help from the International Monetary Fund (IMF). The French financial consultancy company Lazard has been appointed to negotiate debts and assist with the application for the IMF programme.
But this takes time and for the time being, the end of the financial problems in Surinam does not seem to be in sight, says Jurna. “The low point seems not yet reached, because it is not excluded that there will be another austerity round. And there is still nothing clear about the IMFs conditions for any assistance to Suriname.”
Oil as a perspective
Upon taking office as President of Surinam, Santokhi warned that the country will first get heavier before it gets better. This has implications for the daily lives of many Surinamese people and some regret voting for the new president. However, long-term prospects seem hopeful when the oil wells found earlier can actually be exploited.
“ It is expected that this will not yield anything until five years from now, but the hope is that the oil will have a presumption effect on international investors,” says Jurna. “The question remains whether Santokhi can retain the confidence of the Surinamese people, while heavy sacrifices must be made.”