Country welcomes new growth perspective
SURINAME'S CENTRAL BANK PRESIDENT, ANDRÉ E. TELTING BELIEVES THE KEY TO FUTURE GROWTH IS TO ATTRACT INVESTMENT THROUGH MACROECONOMIC STABILITY AND A REVITALIZED BANKING SECTOR

Creating a favorable climate for foreign investment and growth, primarily through a balanced budget and currency exchange stability: that’s the goal that the president of the Central Bank of Suriname, André E. Telting, has set for himself, as he outlines in the interview below.

Q. You resumed the position of central bank president less than a year ago with one top priority: to reduce the government deficit. Where do you stand on this major issue and what remains to be done?

A. There was more than one major issue, of course. Reducing the deficit was one issue, stabilizing the exchange rate was another very, very important issue, I should say the most important issue. And of course both were meant to bring down our inflation rate. On September 15th of last year, when I reassumed this position, we got started right away on the budget deficit, in very close co-operation with the finance minister. One month later, in October, the government launched a program to reduce the deficit. It was implemented immediately and its effects have already become apparent in the past few months. We are trying to keep the deficit at 3% of GDP.

Q. And the exchange rate is now fluctuating within a margin recommended by the International Monetary Fund?

A. Yes. The IMF recommends a margin of only 2%. When in October we saw the exchange rate going as high as 3,000 Suriname guilders for one dollar, that was a huge difference with the official rate. So we applied currency bands at that time to bring down the exchange rate. It was a risk but it worked. It brought down the parallel exchange rate, and since the end of March and the beginning of April this year the two rates have coincided. Only yesterday did we see a small gap opening, but it’s all part of the business, we have to see how it moves. Maybe we should follow the increased parallel market rate. Suriname does not have a fixed exchange rate. We can move whenever we deem it necessary.

Q. The IMF mission which was here in January gave very high marks to your administration, yet they felt the measures taken are not extensive enough. What is it you have to do now to keep moving forward?

A. First of all, we are now in the process of dealing with the labor unions with regard to wage increases. This is a very difficult issue. So first of all we have to settle the wage issue, then we will know exactly what measures we will have to take to bring the government deficit within the 3% margin. That won’t be easy, maybe it will take more than one year, perhaps it will be two or three years before we can reach this goal. But we will go on moving. First of all we are in the process of presenting a new draft law on the state debt. We want to make new legislation to prevent the government debt from exceeding safe limits. Aside from this we have been dealing with the Dutch government and our guaranteed fund which we have there, and we want to take out a loan to restructure our government debt. In particular, we want to convert some of our domestic debt into long-term foreign debt.

Q. The IMF predicts 2% economic growth this year. What is your prediction?

A. Well, we’ve been discussing this with the IMF, and that is the least we can do, and I truly believe that we’ll do better than that. You know, the really important thing is that there is growth, because the last two years we have seen no growth, growth was negative, the economy was contracting.

Q. Now to boost this economic growth, everybody seems to agree that what is most important is to expand the productive sector. The banks obviously have a leading role to play in this. What do you expect from them, what can you do to push the banks to change their attitude and be easier on loans?

A. First of all, the IMF recommended that we abandon the system of credit ceilings which we used to work with in the banks and go with this new system of reserve requirements. We think this will trigger the banks to compete more and to be more attractive to investors. Because of what we are going to do, after we have stabilized the exchange rate and lowered inflation, we are sure to lower interest rates, because they are currently too high.