Suriname Economy  

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SURINAME

The economy is dominated by the mining industry, with exports of alumina, gold, and oil accounting for about 85% of exports and 25% of government revenues, making the economy highly vulnerable to mineral price volatility. In 2000, the government of Ronald VENETIAAN, returned to office and inherited an economy with inflation of over 100% and a growing fiscal deficit. He quickly implemented an austerity program, raised taxes, attempted to control spending, and tamed inflation. Economic growth reached about 6% in 2007 and 2008, owing to sizeable foreign investment in mining and oil. Suriname has received aid for projects in the bauxite and gold mining sectors from Netherlands, Belgium, and the European Development Fund. The economy contracted in 2009, however, as investment waned and the country earned less from its commodity exports when global prices for most commodities fell. As trade picks up, Suriname's economic outlook for 2010 has improved, but the government's budget is likely to remain strained, with increased social spending in this election year. Suriname's economic prospects for the medium term will depend on continued commitment to responsible monetary and fiscal policies and to the introduction of structural reforms to liberalize markets and promote competition.

GDP (purchasing power parity):

$4.182 billion (2009 est.)

country comparison to the world: 165
$4.277 billion (2008 est.)
$4.034 billion (2007 est.)
note: data are in 2009 US dollars

GDP (official exchange rate):

$3.147 billion (2009 est.)

GDP - real growth rate:

-2.2% (2009 est.)

country comparison to the world: 147
6% (2008 est.)
5.5% (2007 est.)

GDP - per capita (PPP):

$8,800 (2009 est.)

country comparison to the world: 114
$9,000 (2008 est.)
$8,600 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 10.8%
industry: 24.4%
services: 64.8% (2005 est.)

Labor force:

165,600 (2007)

country comparison to the world: 177

Labor force - by occupation:

agriculture: 8%
industry: 14%
services: 78% (2004)

Unemployment rate:

9.5% (2004)

country comparison to the world: 109

Population below poverty line:

70% (2002 est.)

Household income or consumption by percentage share:

lowest 10%: NA%
highest 10%: NA%

Budget:

revenues: $392.6 million
expenditures: $425.9 million (2004)

Inflation rate (consumer prices):

6.4% (2007 est.)

country comparison to the world: 159

Commercial bank prime lending rate:

12.23% (31 December 2008)

country comparison to the world: 90
9.71% (31 December 2007)

Stock of money:

$484.7 million (31 December 2008)

country comparison to the world: 101
$416.6 million (31 December 2007)

Stock of quasi money:

$1.018 billion (31 December 2008)

country comparison to the world: 100
$824.4 million (31 December 2007)

Stock of domestic credit:

$793.1 million (31 December 2008)

country comparison to the world: 116
$651 million (31 December 2007)

Market value of publicly traded shares:

$NA

Agriculture - products:

paddy rice, bananas, palm kernels, coconuts, plantains, peanuts; beef, chickens; shrimp; forest products

Industries:

bauxite and gold mining, alumina production; oil, lumbering, food processing, fishing

Industrial production growth rate:

6.5% (1994 est.)

country comparison to the world: 15

Electricity - production:

1.605 billion kWh (2007 est.)

country comparison to the world: 139

Electricity - consumption:

1.467 billion kWh (2007 est.)

country comparison to the world: 139

Electricity - exports:

0 kWh (2008 est.)

Electricity - imports:

0 kWh (2008 est.)

Oil - production:

15,280 bbl/day (2008 est.)

country comparison to the world: 79

Oil - consumption:

14,000 bbl/day (2008 est.)

country comparison to the world: 142

Oil - exports:

4,308 bbl/day (2007 est.)

country comparison to the world: 109

Oil - imports:

6,296 bbl/day (2007 est.)

country comparison to the world: 151

Oil - proved reserves:

79.6 million bbl (1 January 2009 est.)

country comparison to the world: 73

Natural gas - production:

0 cu m (2008 est.)

country comparison to the world: 156

Natural gas - consumption:

0 cu m (2008 est.)

country comparison to the world: 143

Natural gas - exports:

0 cu m (2008 est.)

country comparison to the world: 141

Natural gas - imports:

0 cu m (2008 est.)

country comparison to the world: 103

Natural gas - proved reserves:

0 cu m (1 January 2009 est.)

country comparison to the world: 149

Current account balance:

$24 million (2007 est.)

country comparison to the world: 55

Exports:

$1.391 billion (2006 est.)

country comparison to the world: 137

Exports - commodities:

alumina, gold, crude oil, lumber, shrimp and fish, rice, bananas

Exports - partners:

Canada 36.1%, Belgium 12.5%, Norway 12.4%, UAE 8.9%, US 7.7% (2008)

Imports:

$1.297 billion (2006 est.)

country comparison to the world: 163

Imports - commodities:

capital equipment, petroleum, foodstuffs, cotton, consumer goods

Imports - partners:

US 31.1%, Netherlands 15.5%, Trinidad and Tobago 14.1%, China 7.7%, Japan 6.4% (2008)

Reserves of foreign exchange and gold:

$263.3 million (2006)

country comparison to the world: 124

Debt - external:

$504.3 million (2005 est.)

country comparison to the world: 157

Exchange rates:

Surinamese dollars (SRD) per US dollar - 2.745 (2007), 2.745 (2006), 2.7317 (2005), 2.7336 (2004), 2.6013 (2003)

note: in January 2004, the government replaced the guilder with the Surinamese dollar, tied to a US dollar-dominated currency basket




Main Crops:
Paddy rice, bananas, palm kernels, coconuts, plantains, peanuts; beef, chickens; forest products; shrimp.

Natural Resources:
Lead, Zinc, Tin, Copper, Iron, Petroleum.

Major Industries: Bauxite and gold mining, alumina and aluminum production, lumbering, food processing, fishing.
NATIONAL GNP

The backbone of Suriname's economy is the export of alumina and small amounts of aluminum produced from bauxite mined in the country. In 1999, the aluminum smelter was closed.However, alumina exports accounted for 72% of Suriname's estimated export earnings of $496.6 million in 2001. Suriname's bauxite deposits have been among the world's richest.

In 1984, SURALCO, a subsidiary of the Aluminum Company of America (ALCOA), formed a joint venture with the Royal Dutch Shell-owned Billiton Company, which did not process the bauxite it mined in Suriname. Under this agreement, both companies share risks and profits.

Inexpensive power costs are Suriname's big advantage in the energy-intensive alumina and aluminum business. In the 1960s, ALCOA built a $150-million dam for the production of hydroelectric energy at Afobaka (south of Brokopondo), which created a 1,560-sq. km. (600-sq. mi.) lake, one of the largest artificial lakes in the world.

The major mining sites at Moengo and Lelydorp are maturing, and it is now estimated that their reserves will be depleted by 2006. Other proven reserves exist in the east, west, and north of the country sufficient to last until 2045. However, distance and topography make their immediate development costly. In October 2002, Alcoa and BHP Billiton signed a letter of intent as the basis for new joint ventures between the two companies, in which Alcoa will take part for 55% in all bauxite mining activities in West Suriname. The government and the companies are looking into cost-effective ways to develop the new mines. The preeminence of bauxite and ALCOA's continued presence in Surinameare key elements in the U.S.-Suriname economic relationship.

A member of CARICOM, Suriname also exports rice, shrimp, timber, bananas, fruits, and vegetables. Gold mining is unregulated by the government, and this important part of the informal economy (estimated at as much as 100% of GDP) must be brought into the realm of tax and environmental authorities. Suriname has attracted the attention of international companies in gold exploration and exploitation as well as those interested in extensive development of a tropical hardwoods industry and possible diamond mining. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists both in Suriname and abroad. Oil is a promising sector; current output is 12,000 barrels a day, and regional geology suggests additional potential. Staatsolie, the state-owned oil company, is actively seeking international joint venture partners.

At independence, Suriname signed an agreement with the Netherlands providing for about $1.5 billion in development assistance grants and loans over a 10- to 15-year period. Dutch assistance allocated to Suriname thus amounted to about $100 million per year, but was discontinued during periods of military rule. After the return to a democratically elected government in 1991, Dutch aid resumed. The Dutch relationship continues to be an important factor in the economy, with the Dutch insisting that Suriname undertake economic reforms and produce specific plans acceptable to the Dutch for projects on which aid funds could be spent. In 2000, however, the Dutch revised the structure of their aid package and signaled to the Surinamese authorities their decision to disburse aid by sectoral priorities as opposed to individual projects. Although the present government is not in favor of this approach, it has identified sectors and is now working on sectoral analyses to present to the Dutch.

From 1991 to 1992, Surinames economic situation showed some improvement, and measures taken in 1993 led to economic stabilization, a relatively stable exchange rate, low inflation, sustainable fiscal policies, and growth, However, Surinames economic situation has deteriorated since 1996, due in large part to loose fiscal policies of the Wijdenbosch government, which, in the face of lower Dutch development aid, financed its deficit through credit extended by the Central Bank. As a consequence, the parallel market for foreign exchange soared so that by the end of 1998, the premium of the parallel market rate over the official rate was 85%. Sincemore than90% of import transactions took place at the parallel rate, inflation took off, with 12-month inflation growing from 0.5% at the end of 1996 to 23% at the end of 1998 and 113% at the end of 1999. The government also instituted a regime of stringent economic controls over prices, the exchange rate, imports, and exports in an effort to contain the adverse effects of its economic policies. The cumulative impact of soaring inflation, an unstable exchange rate, and falling real incomes led to a political crisis.

Suriname elected a new government in May 2000, but until it was replaced, the Wijdenbosch government continued its loose fiscal and monetary policies. By the time it left office, the exchange rate in the parallel market had depreciated further, over 10% of GDP had been borrowed to finance the fiscal deficit, and there was a significant monetary overhang in the country. The new government dealt with these problems by devaluing the official exchange rate by 88%, eliminating all other exchange rates except the parallel market rate set by the banks and cambios, raising tariffs on water and electricity, and eliminating the subsidy on gasoline. The new administration also rationalized the extensive list of price controls to 12 basic food items. More important, the government ceased all financing from the Central Bank. It is attempting to broaden its economic base, establish better contacts with other nations and international financial institutions, and reduce its dependence on Dutch assistance. However, to date the government has yet to implement an investment law or to begin privatization of any of the 110 parastatal, nor has it given much indication that it has developed a comprehensive plan to grow the economy.

State-owned banana producer Surland closed its doors on April 5, 2002, after its inability to meet payroll expenses for the second month in a row; it is still unclear if Surland will survive its current crisis. Moreover, in January 2002, the current government renegotiated civil servant wages (a significant part of the work force and a significant portion of government expenditure), agreeing to raises as high as 100%. Pending implementation of these wage increases and concerned that the government may be unable to meet these increased expenses, the local currency weakened from Sf 2200 in January 2002 to nearly Sf 2500 in April 2002. On March 26, 2003, the Central Bank of Suriname (CBvS) adjusted the exchange rate of the U.S. dollar. This action resulted in further devaluation of the Surinamese guilder. The official exchange rate of the $U.S. is SF 2,650 for selling and SF 2,600 for purchasing. With the official exchange rate, the CBvS came closer to the exchange rate on the parallel market which sell the U.S. dollar for SF 3,250.