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Suriname, a country located on the northern coast of South America, is one of the smallest countries in South America, yet its population is one of the most ethnically diverse in the region. Its economy is dependent on its extensive supply of natural resources, most notably bauxite, of which it is one of the top producers in the world. With the economy already teetering, the outbreak of the COVID-19 pandemic caused a sharp contraction in activity in 2020.
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Due to restrictions and other impacts of the pandemic, economic growth in 2020 was estimated at a staggering -15.9%. This represented declines of 10% in the gold industry, 27.7% in distributive trades, 23.8% in construction, and 15% in transport activities.
The labour market reflected these contractions with a 2.3% fall in the unemployment rate from 2019 to 2020. Specifically, households reported 47% of lost income was attributed to business closure, 26% due to job loss and 14% due to rental income loss.
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By the end of 2020, the country’s debt to GDP was 148.24%, and government defaulted on its public debt. To help cope with the crisis, the country negotiated an Extended Fund Facility with the IMF worth USD 690 million (about 15% of GDP) over 36 months.
Although the agreement in principle was obtained in April 2021, the IMF did not give its final approval until December 2021, after Suriname adopted a floating exchange rate regime in June 2021. This caused the national currency to depreciate sharply, and inflation soared, leading to the impoverishment of households, whose consumption (60% of GDP in 2019) was affected.
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As tax and monetary reforms are implemented, inflation should decline, but consumption will remain constrained in 2022, while the climate of uncertainty persists. Given the vaccination rate (40% in December 2021), the population remains highly exposed to health risks, and the government is maintaining drastic distancing measures.