Summary: KEY ISSUES Context: The fiscal and external positions further deteriorated in 2013, reflecting declining commodity export prices and substantial fiscal relaxation, and international reserves declined to 3½ months of imports. However, strong fiscal tightening is being undertaken in 2014, and higher bank reserve requirements in late 2013 are also helping to curb demand pressures. More consolidation will be needed over the medium term to entrench fiscal sustainability and safeguard external stability. In line with FSAP recommendations, efforts to strengthen the monetary policy framework and financial sector resilience are ongoing. Structural competitiveness is being reinforced. Focus of the consultation: The consultation focused on measures to strengthen fiscal sustainability and external stability, as well as policies to enhance financial sector resilience, structural competitiveness and inclusive growth. Policy recommendations: • Both revenue and expenditure measures will be needed to support fiscal consolidation efforts. Successful consolidation will also require establishing an appropriate fiscal framework and a clear fiscal anchor consistent with sustainability. • Further credit tightening will be needed if fiscal adjustment proves insufficient to secure macro stability. Also, FSAP recommendations to strengthen bank capital and the financial sector regulatory framework should be rigorously implemented to enhance financial sector stability. • Improving the business environment and labor market flexibility would enhance structural competitiveness and inclusive growth. Past surveillance: During the 2013 Article IV consultation, Executive Directors noted that Suriname’s heavy reliance on commodity exports has exposed fiscal and external vulnerabilities, and they stressed the need to build up buffers, promote fiscal sustainability, strengthen the financial sector, and enhance competitiveness. However, the fiscal position deteriorated further in 2013, and progress in strengthening monetary and financial sector policies and public financial management slowed. There are however signs of renewed policy momentum in 2014.

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