Over the past several months there has been considerable interest in Suriname, a small former Dutch colony located in the northeastern part of South America, primarily driven by a major oil discovery. Like Guyana next door, it appears that Suriname has substantial offshore oil reserves, which could do much to increase the country’s national wealth, improve day-to-day life for 560,000 Surinamers, and reduce the country’s increasingly heavy debt burden. Also like Guyana, Suriname faces the challenges of how to manage that newfound wealth. This, in turn, raises the issue of the need for good governance.
Suriname’s track record in good governance is mixed, at best. Suriname has a troubled history that includes the political ructions rooted in the military coup in 1980; the December 1982 executions of 15 opposition members—for which current President Dési Bouterse has been recently convicted and sentenced to 20 years in prison; the past conflict in the country’s interior between the government and the Jungle Commando (1986-1991); and President Bouterse’s sentencing by a Dutch court in 2000 for cocaine trafficking.
Efforts are being made to improve transparency and disclosure, however, including a 2017 anti-corruption law that established new preventive powers and protections for whistleblowers. Over recent years the government has also worked with the Inter-American Development Bank (IDB) and the International Monetary Fund (IMF) on new laws to improve governance. Nonetheless, Suriname continues to have problems in this area.
Suriname’s struggle with good governance is reflected in its financial system. In a December 12 Article IV Consultation report, the IMF said that the country’s stabilization in 2019 represented “an opportunity to address the central challenges facing the economy, including a weak fiscal position and rising public debt, monetary and financial supervision frameworks that need to be enhanced, a low degree of economic diversification, and other structural impediments to growth.”
The IMF also recognized “that important vulnerabilities remain in the financial sector. A comprehensive crisis management system is needed to give the central bank the power to intervene in banks’ governance and operation when necessary, as well as improve bank resolution.”
But the most noteworthy finding in the IMF report relates to the country’s “monetary and financial supervision frameworks that need to be enhanced.” In early February, it was revealed that $100 million in private citizens’ savings had disappeared from the Central Bank of Suriname (CBvS). Following the revelation, in a confusing and disturbing attempt to restore calm, Vice President Ashwin Adhin explained that the money was used to buy, among other undisclosed items, potatoes and onions. The Vice President later informed that this had been done without the commercial banks’ knowledge.
The problem worsened as it became evident that Suriname’s banks were also left in the dark on the use of the money. According to the Surinamese Bankers Association, in 2019, its members had been instructed by the Central Bank to deposit 50 percent of the foreign currency they held as savings for their customers at the CBvS. In a statement, the Bankers Association wrote: “This is unacceptable and against the directives that CBvS itself had drafted. The banks are upset…that the CBvS misled them for months, with incorrect and incomplete information by the then Governor [Robert van Trikt].”
Van Trikt had been in the job for less than a year, having replaced Glenn Gersie who was fired for reportedly refusing to finance government spending ahead of the May 2020 elections. He claims that everything he did was done on behalf of or in consultation with the Minister of Finance, Gillmore Hoefdraad.
In the aftermath of the incident, Governor Van Trikt was fired and is now under criminal investigation. The Central Bank promised that the missing money would be returned, and that in the future, it would not be able to make transactions without the knowledge of the Bankers Association. With elections scheduled in May, the missing $100 million rapidly became a political issue. The opposition Progressive Reform Party (VHP) called on the government for clarity. The VHP also accused the government of using part of the money to pay some of the debt the government had incurred over the past years.
Following this chain of scandals, there was little to no interest in filling the governor’s seat. In an interview, President Bouterse said that suitable candidates within and outside of Suriname were considered, but nobody was willing to accept the position. Even after it appeared the Central Bank had found its new head, with former banker Sigmund Proeve accepting the role, he later refused after objections from the banking community. The Central Bank still lacks a governor and the country’s financial situation is at risk of further deterioration.
Complicating matters is the state of Suriname’s economy. There are deepening concerns over the heavy burden of the country’s debt, with China being its major sovereign creditor. The fiscal situation is problematic, with the IMF estimating an overall fiscal balance of -8.6 percent of GDP for 2019, and forecasting -8.9 percent in 2020. The global slowdown that appears to be in motion early this year related to the spread of the coronavirus could further complicate matters for a Surinamese economy that is already struggling. The scandal at the Central Bank and the inability to replace Van Trikt has further eroded confidence in a government that increasingly appears adrift on the policy side.
The opaque nature of government actions is not helping the situation. Suriname newspaper De Ware Tijd’s Armand Snijders touched on this after attending a press conference with the country’s president: “If you have nothing to hide, the answer to the questions about the used cash reserves could be given within a minute: Who gave permission to use that money and who put his signature so that the money could be used? But that answer did not come, so that society still has the conviction that there is much more going on and that Bouterse and his team were fully aware of this.”
Suriname has a lot of work to do on developing better governance, especially at its Central Bank. It is important that Suriname gets this right. If there are indeed large reserves of oil offshore—and with Suriname a part of what Trinidadian energy expert Anthony Bryan calls an emerging southern Caribbean oil complex from Barbados down to Trinidad, Venezuela and to the “Three Guianas,”—there is a pressing need to have a competent and well respected Central Bank. Without that, Suriname faces the potential for slower investment; foreign investors may be put off by Central Bank scandals, the lack of a trustworthy supervisor for the financial system and the loss of public trust. It is time to make improvements in governance in Suriname.
