New investment code to boost private sector

Suriname’s economic performance this year offers ample reason for optimism. A recent report by the International Monetary Fund (IMF) forecasts 2% growth for 2001 with a declining inflation rate, in sharp contrast to the economic recession, accompanied by high inflation, in 1999 and 2000.
Although 2% growth may seem modest, it’s quite an achievement for the new government, given that last year’s decline was officially 8%, without taking into account the “informal economy”.

The president of the Central Bank of Suriname, André Telting, is convinced there will be further progress in the coming years, although he fully recognizes the dimensions of the challenges still to be met. “We see Suriname recovering economically, we see the exchange rate stabilizing, the macro-economic environment improving remarkably, and the government deficit reduced,” he says.
The debt is the main problem area identified in the IMF report, which notes that despite increased revenue from stricter new tax measures, the government will not be able on its own to raise enough to meet this year´s foreign debt payments, amounting to around US$50 million dollars.

Suriname will have to resort to its guarantee fund agreement with the Netherlands to meet this year’s obligations. The new government’s goal, however, is not only to cover current debt service, but also to catch up on the arrears it inherited from the previous government and thereby improve the country’s credit rating.
“We are doing our utmost to clear our arrears. We have no IMF loans, so that’s no problem, but we do owe some money to the European Development Bank,” says Mr. Telting. As minister of trade and industry, Jack Tjong Tjin Joe, confirms, “we stopped monetary inflation immediately when we first took office. Since then we have made an inventory of all the debts, all the outstanding loans, and are committed to paying them off.”

Another problem pointed out by the IMF is the strength of the informal economy, which is seen as holding back the expansion of the GDP. Mr. Telting recognizes that this is “a very difficult issue” that can only be solved through the formal economy “opening up perspectives for investors”.
One step toward encouraging entrepreneurs is the new Investment Code now being discussed in the Parliament and in consultation with trade union and business leaders, which Mr. Telting believes “will cover all the needs of local and global investors.”
Investment is the key to job creation, which in turn will enable the government to reduce its costly civil service payroll. The new investment code will be crucial in this respect, believes Mr. Tjong Tjin Joe. “If you want investors, you have to make the climate favorable for them. I see the new investment law as a passport to increased trade and production.”

The trade and industry minister concludes by noting that, “if private enterprise is the engine of growth, I think the public sector should facilitate the work of the private sector.” Suriname has no lack of potential, the minister points out. A country with such unexploited natural resources, he says, “should be like heaven on earth for investors.”