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Financial Institution Risk Assessment: Suriname

A High-Risk Environment for Corporate Payments and Business Operations

Suriname, a small country in South America, faces significant challenges in its political and economic landscape, making it a high-risk environment for corporate payments and business operations. The country’s economy is heavily reliant on mineral resources, including gold, oil, and aluminum, which exposes it to fluctuations in global commodity prices.

  • According to Coface, Suriname’s country risk rating stands at D, indicating a very high level of risk due to its difficult business environment.
  • Corporate default probability is extremely high, making it challenging for companies to collect debts and operate efficiently.

The business climate in Suriname is rated as C, characterized by: + Limited access to credit + An inefficient justice system + A lack of skilled labor + Poorly managed state-owned enterprises + Unsustainable public debt

Despite these challenges, Suriname has some strengths that could attract foreign investors: + Its mineral resources, including gold and oil, offer significant potential for growth. + Membership in the Caribbean Community (CARICOM) provides access to regional markets.

The COVID-19 pandemic has had a devastating impact on Suriname’s economy, leading to a sharp contraction in activity in 2020. The country is still recovering from the crisis, with modest growth expected in 2022.

  • Inflation remains a significant concern, driven by the depreciation of the national currency and the impact of the pandemic on household consumption.
  • Foreign investment is expected to remain buoyant, with new hydrocarbon discoveries and exploration projects set to generate significant investments in 2022. However, gold remains the country’s leading export resource, accounting for over 75% of total exports.

Debt Restructuring

Suriname defaulted on its public debt in late 2020, prompting negotiations with international creditors to restructure its debt.

  • The government has proposed a nominal debt haircut of 70% on certain bonds and is working with the International Monetary Fund (IMF) to implement fiscal consolidation measures.
  • To address the crisis, Suriname will receive financial support from the IMF and the Inter-American Development Bank.

Political Landscape

Suriname’s political landscape is marked by ethnic divisions, with the Vooruitstrevende Hervormings Partij (VHP) winning a majority in the May 2020 parliamentary elections. The VHP’s victory reflected voter fatigue with the Nationale Democratische Partij (NDP), which was marred by economic mismanagement and corruption.

The new government faces significant challenges in implementing necessary reforms to restore Suriname’s financial health, including carrying out unpopular measures such as tax increases and pension reform.