Suriname hopes that oil can revive the economy

• Nina Jurna

  correspondent South America

Suriname is rich in raw materials, gold, forests and fertile soil. According to the World Bank, the country could potentially be the 17th richest country in the world. There are a few multinationals in Suriname that are involved in gold mining, but it is also mostly the private owners of gold and timber concessions who get rich from the raw materials.

They often hold powerful positions in politics and hold top positions in business. They hardly pay taxes and so the raw materials hardly yield anything for the state treasury.

Economist Winston Ramautarsing is vice-chairman of the authoritative Association of Economists in Suriname (VES) and has been warning the government since they took office in 2020 that the economy is completely out of balance. This is clearly visible in Paramaribo.

Some people have big houses and expensive cars and live in luxury, but they are a small group. The majority of Surinamese, the workers and the salaried people, do pay taxes and are expected to tighten their belts.

Dissatisfaction with the economic crisis, high inflation of more than 50 percent, nepotism and mismanagement led to the big blowout of February 17, when a peaceful anti-government protest of thousands of people turned into chaos.

Parliament was stormed, looted and destroyed. It was a wake-up call for the government. A ‘marker’, as Finance Minister Raghoebarsing calls it, making it clear: this has to change.

Since President Santokhi took office in 2020, support has been sought from the IMF to get out of the biggest problems. Santokhi came to power and took over a national debt of more than 4 billion US dollars from his predecessor Bouterse.

The IMF provides Suriname with a loan, but requires cutbacks and an increase in income. The government’s reform plan also states that the proceeds from the gold and timber sector must be returned to the state treasury and that taxes must be collected.

Minister Raghoebarsing now wants to map out all sectors for this purpose and start working on income-increasing methods. Meanwhile, Santokhi has pinned hopes on money from the oil discoveries made off the coast. However, things are not going that fast yet, because the French oil group Total has repeatedly postponed the decision to actually invest in the oil.

It is suspected that around six billion barrels can be extracted, but it is not yet certain for Total whether it is profitable enough to invest billions. A decision is expected later this year.

President Santokhi hopes that investments will be made, because then Suriname could get out of trouble. But economists like Ramautarsing warn that the government shouldn’t focus so much on that oil. It would be better if Suriname focused on what it already has in terms of resources, such as raw materials. This can generate money for Suriname, provided it no longer disappears into the informal sector.

Still, the prospect of oil being pumped up is positive enough for investors, as evidenced by a port terminal currently being built near the Suriname River. Meanwhile, daily life for many Surinamese remains difficult, because the exchange rate of the Surinamese dollar is still weak and prices in the shops are rising.

Confidence in President Santokhi is low. He is now trying to restore that by starting a so-called national dialogue with various organisations, trade unions and civil society after the riots. But Ramautarsing doubts that Santokhi will succeed in turning the tide. Stabilizing the economy is much more important.

Earlier we made this video about the economic situation in Suriname: