Suriname benefitted from the strong tailwinds of increased revenues from commodity prices during the last decade. In fact, projected economic growth for the medium term is 4.5%, which is one of the highest rates in the Caribbean region. H.E. Subhas Chandra Mungra believes that Suriname’s economic strength in the region will bolster CARICOM’s economic integration in a globalized world.
Suriname will attend the next meeting of the Union of South American Nations (UNASUR) on natural resources for development of the region, commencing today in Caracas from May 27th-30th. These are the statements made by H.E. the Ambassador about the issues raised.
Suriname has become a pacesetter in economic growth in the region, please discuss.
The first thing the new government did, was the execution of a homemade comprehensive macro-economic adjustment program including a 20% devaluation in January 2011, accompanied by tight fiscal and monetary policy with a view to curtail aggregate demand.
This macro-economic stabilization program has resulted in a unified foreign exchange market, price stability and a more balanced budget. The program was cushioned with target transfers to vulnerable social groups. Once the economic fundamentals were in place, both public investment in infrastructure and private investment in the mining sector (gold, oil and bauxite) increased substantially.
Like other nations in Latin America and the Caribbean, Suriname benefitted from the strong tailwinds of increased revenues from commodity prices during the last decade
President Desi Delano Bouterse successfully secured political instability based on a multi ethnic coalition of political parties.
Projected economic growth for the medium term is 4.5%, which is one of the highest growth rates in the Caribbean region, while the country maintains the lowest public debt of less than 20% as a percentage of G.D.P. in the region.
However some 95 % of total export revenues are derived from three minerals resources, gold, oil and alumina. Thus the export sector is highly, volatile to global price fluctuations. The government is conscious of this vulnerability and is in the process of establishing a Sovereign Health Fund to secure sustainable economic growth through export diversification. In this regard, the government is focusing on facilitating investment in the agriculture-, manufacturing and tourism sector, while increasing public investment in infrastructure and education.
Worth mentioning is the establishment of a state of the art gold refinery, one of its kind in the Caribbean, which will generate substantial additional foreign currency for the country.
As mentioned earlier the attractiveness for foreign investors is related to the stable political climate and the commitment of the government to pursue sound macro-economic policies in the medium term.
Also Suriname consists of a relative skilled and disciplined labor force, while labor union tends to choose for job creation instead of confrontation with private sector companies. The same can be said for the government employees’ unions. The government furthermore established the SBC (Suriname Business Center) to facilitate F.I.D’s as well as domestic private sector entrepreneurs.
I agree with professor Ramphal’s statement to use Suriname’s economic strength in the region to boaster CARICOM economic integration in a globalized world and to breathe new life into Caribbean partnership and Solidarity.
Please highlight some of the measures taken by the Reform and the Development Plan
The Government of Suriname (GOS) Development Plan 2012-2016 is primarily focused in improving the business and investment climate for FDI and the private domestic sector, diversification of the production- and export structure, while simultaneously maintaining macro-economic stabilization for the medium term.
In comparison with previous development plans the new GOS development plan is no more donor-driven, but based on the exploitation of our overabundant natural resources in both the mining and non-mining sector of the economy in a responsible, more efficient and transparent way and in bringing about a historic economic transformation that is more inclusive, and environmental sustainable. Through this transformation process the continuing political independence will be put on a more solid economic base of self-reliance. The new GOS development plan 2012-2016 also recognizes the importance of partnership in development through a tripartite dialogue structure consisting of private sector, labor unions and government representatives.
Other focus points of the GOS development plan are depending on regional and international cooperation on both a bilateral and multilateral level; gender equality, advancing the M.D.G’s fostering human rights, increasing civil security and higher education levels.
Special attention is placed on the diversification of the unilateral export structure via increased public and private investment in the tourist sector, agriculture, manufacturing and the service sector through the creation of specific fiscal and other incentives such as a one-stop window for investors, the replacement of the old license system through a liberal system.
GOS target of $9.6 bln for the 5 year plan seems ambitious given exsisting supply constraints, but already major investments are being implemented, among which a $760 mln investment to expand the State-Oil refinery capacity, $600 mln to increase the production of thermal energy by the State Oil Company to a level of 35 mw.
The expansion of the existing IAM-Gold mine ($600 mln) as well as the establishment of a new gold mine in the Easter part of the country a joint venture of Newmont and (GOS $1268 mln).
The development of a new bauxite mine in the Nassau Mountain to supply bauxite are to the Suralco (Suriname Alcoa Company) alumina refinery ($150-$200 mln). Naturally the GOS Development Plan serves as a compass for the overall direction the GOS envisage for future economic development and a framework to monitor and measure progress.
With regard to infrastructure development as a pre-condition to support and accomplish fast economic growth, the main harbor facility was expanded ($30 mln) to accommodate larger ships, in cooperation with China a new high-speed road will be constructed from the city to the international airport. New connecting bridges and roads are constructed to facilitate transport of goods and persons etc.
The ongoing renovation of the international airport will improve passenger and airlines accommodations and new regional airlines connections have been established. Investment in the telecommunication sector has improved internet connectivity both within as between Suriname and the rest of the world.
New investments are under way to increase energy production (including renewable energy sources) and to improve energy distribution.
The US State Department considers Suriname “a valued U.S. partner working to advance key priorities of both countries.” Please shed light on US-Suriname relations.
Historically diplomatic and economic ties has gradually increased and improved in the last four decades. Suriname was a major supplier of bauxite to the USA to be converted into alumina for airplanes during the first and second World Wars. A subsidiary of the Pittsburg of based Alcoa Company of America, namely the Sur Aluminum Company (Suralco) has been operating bauxite mines and a 175 MW hydro dam annex alumina refinery for the last 80 years in Suriname. This was the leading company in the lending sector of the economy and responsible for some 88% of total export revenue during that period.
As of today the USA is our largest trading partner with some 25% of the country’s total export revenues.
New trade and investment opportunities will arise one’s Suriname is eligible to benefit from the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBTA). The expansion of the oil and gold industries also create new opportunities for US private entrepreneurs. The abundant availability of arable land and fresh water supply, a relative skilled labor force and in comparison with other nations in the region a safe business environment and civil security, political stability and an improved physical and communication infrastructure as well as improved connectivity whit other countries in the region, all are contributing to a more enabling investment climate for potential US investors.