Government proposing a $236-million instrument to replace outstanding interest and arrears totaling some $786 million

The Dutch-dependent Caribbean island of Suriname has gone back to its creditors, as part of the country’s effort to stabilise government finances amid high inflation and the economic fallout of the coronavirus pandemic. 

This time around Suriname is requesting a 70 per cent cut on its debt to external commercial creditors and a 30 per cent cut on its debt to official creditors. Just over two months ago, Suriname sought and got a deferment on debt and instrument payment from creditors.

The creditors agreed to defer payments of principal and interest on their 2023 and 2026 bonds. Suriname has proposed a $236-million instrument maturing in 2029 to replace amounts outstanding, interest and arrears totaling some $786 million in marketable debt.

This comes one month after Suriname clinched a US$690-million financing deal with the International Monetary Fund (IMF), which is a key step in the small South American nation’s effort to restructure its debts. The multilateral funding agency will be providing US$690 million in financing to help Suriname restructure its debts.

Proposed 30% cut to official creditors

Suriname is requesting a 30 per cent average nominal cut on about $708 million currently owed to bilateral creditors and export credit agency-backed commercial lenders. In April they agreed to defer payments on $675 million in bonds but last month complained that Suriname did not allow them sufficient participation in the $690-million financing deal with the IMF.

However, in response, the bond holders threatened to reinstate the deferred payments. Finance Minister Armand Achaibersing is extending the olive branch, calling for cooperation from bond holders in helping the government to rein in the country’s debt.

According to Achaibersing, “to find a path of balanced and inclusive growth, public debt sustainability needs to be restored. We are committed to this as part of the IMF-supported programme”.

The IMF is slated to approve a three-year extended fund facility (EFF) programme for the Dutch dependency. According to the IMF, the EFF could be approved by its executive board in the coming weeks.

The IMF said “debt relief from Suriname’s official bilateral partners and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps”.

The IMF highlighted that financing Suriname’s debt gap will need to be complemented by progress toward a restructuring of commercial debts.

If approved by the IMF Executive Board, US$57.5 million would be immediately available to Suriname from the multilateral funding institution.