A Country at the Crossroads
Interview with Mr Desire Delano BOUTERSE,
President of the Republic of Suriname
After celebrating its 40th anniversary as an independent nation in 2015, Suriname is working hard to accelerate is economic development strategy. The smallest country in South America is nonetheless bolstered by sizable assets: a wealth of natural resources and a strategic geo-economic position in the Caribbean region. Two years into his second term in office, President Desire Delano Bouterse tells our readers what he is doing to leverage Suriname’s assets, promote its regional integration and forge a wider array of partnerships on the global stage, starting with strengthening ties with France.
The Diplomatic Letter: Mr. President, on 16 July 2015 you were re-elected to serve as Suriname’s Chief of State. What are your top priorities for your second term in office? In 2015 the people of Suriname celebrated the 40th anniversary of the nation’s independence. Could you tell our readers how your country’s history and unique assets are helping foster its future development?
Mr Desire Delano BOUTERSE: It is evident that many nations in the world are already confronted with the impact of the new global forces of change.
The digital age, which is technologically driven, creates both new opportunities, as well as new threats on a global, regional and individual country level.
With reference to the negative impacts of Climate Change, Suriname has been classified as one of the top ten high-risk countries due to its low coastal sea line. Incidentally, some 80% of its inhabitants and almost 90% of food- and agricultural activities are located along the country’s narrow coastal line.
Historically the economic structure of Suriname is characterized as a mono-commodity exporting economy, which is dominated by the mining sector (bauxite, alumina, crude-oil and gold).
Suriname is typically also a multi-ethnic, multi-cultural and multi-religious society.
Based on the current economic-social and political structure major long-term priorities and objectives are:
- To gradually increase a more sustainable structure of economic diversification of both domestic production capacity and exports in tandem with a broadening of the industrialization process (including import substitution), with a view to strengthen the economic resilience against future external economic and financial shocks including fluctuations of world commodity prices for the major export items.
- To maintain an acceptable and sustainable level of social security and social protection for the lower-income groups of society.
- To improve the economic infrastructure (transport roads, bridges, harbour facilities communication etc.) to better accommodate and facilitate both domestic investments and foreign direct investments (FDI).
- To resume real GDP growth rates and employment creation at a sustainable level while securing environmental sustainability.
- To generate the required level of skilled labour through a substantial improvement of the quality of higher education and professional training.
- To maintain prudent and sound macro-economic policies as a pre-requisite for price- and exchange rate stabilization.
- To reduce income inequality and broaden the tax base as well as the introduction of a more progressive tax system.
- To improve civil security and strengthen the judicial system and the protection of human rights with the focus on the rights of women and children.
T.D.L.: The Surinamese economy posted strong growth in the 2000s thanks to its abundant agricultural and natural resources, which include petroleum, bauxite, gold and other minerals. How has the drop in the price of raw materials affected your country’s economy? Is the government investing in these areas with specific objectives in mind, for instance in the mining sector?
D.D.B.: Suriname has relied throughout its history on oil and mining sector exports. That is not going to change anytime soon, as Suriname is unusually competitive in these sectors. Our oil company has some of the lowest lifting costs on the continent and the recently opened Merian mine boosts among the lowest all-in sustaining cost globally. The government should not be in the driver seat in terms of investing in these sectors. Instead, it should be the private sector. There are vast untapped resources in the country and we invite the international community to explore the possibilities in these sectors in Suriname.
The fall in commodity prices has precipitated a decline in economic activity and a loss in reserves. We had to adjust accordingly and prepared an adjustment and reform plan in 2015, which we began to put in place in August of 2015. The fiscal imbalance has been largely corrected, reserves are increasing again and cover 3 months of imports, and the country enjoys now again a current account surplus. While the adjustment has been swift and to a large part completed, we are not stopping here. We began a long-term reform effort to modernize the financial system and the public administration with a view to limit the vulnerability of the country to commodity price shocks, reduce the cost of doing business, and set the basis for a more vibrant and diversified growth through a simplification and modernization of the competition and business laws for the private sector.
T.D.L.: You have been working hard to create new economic growth drivers, to spur sustainable development in Suriname. Which activity sectors—along with agriculture, tourism and service industries—could be bolstered to help diversify the Surinamese economy? Does this strategy include taking measures to improve education and professional training in your country? What is being done to make Suriname more attractive for foreign investors?
D.D.B.: The Government has furthermore launched some new initiatives in order to stimulate investments in the non-mining sector, with a focus on the agro-industrial projects such as, amongst others, cocoa, palm oil, tropical fruits and vegetables. Special attention will be given to the development of the tourism industry, the service sector, housing, infrastructure, fisheries, energy production and distribution. These non-mining sectors are expected to become the new drivers of economic growth and sustainable development, in a more diversified Surinamese economy.
Needless to say that additional investment in human capital is a prerequisite to increase both the quantity and the quality of the local labour force in support of the on-going industrialization process.
T.D.L.: You have launched proactive reforms to counter Suriname’s growing public deficit, pinpointing fiscal consolidation as a key ingredient in this process. Could you lay out the broad lines of this policy for us? How do you plan to use the US$478 loan the International Monetary Fund (IMF) granted your country in May 2016?
D.D.B.: The reform efforts are not so much oriented to eliminate the public deficit, as that has largely been achieved. The deficit in 2015 amounted to 8.8% of GDP and we have curtailed that deficit to a projected level of below 4% of GDP in 2016. In 2017, the gradual elimination of electricity subsidies, the substantive improvements in the profitability of the gold and oil sectors, and a return to economic growth will reduce the deficit to 1-2% of GDP, while the introduction of a Value-Added Tax in 2018 will add another 2.5% of GDP in revenue.
More important than the quantitative efforts are the reforms aimed at reducing the cost of doing business as a government and increasing efficiency and transparency and accountability, such as the passage of a new Public Finance Management law, a revision of the Debt Act, passage of a Procurement Law, the full implementation of our real-time computerized Integrated Financial Management and Information System, or the centralization and harmonization of our public sector procurement system.
Looking ahead, we also want to minimize the impact that commodity price fluctuations have on the public finances. For this reason, we have presented to Parliament a draft law for a Sovereign Wealth Fund (SWF) that is primarily aimed at limiting the volatility of commodity-related revenue on the government. Looking forward, the SWF will absorb the windfall revenue from commodity export increases but also absorb most of the shock of eventual declines in revenue. The government finances should receive a stable 4.5% of GDP in revenue from oil and mining in the future. A further revenue-stabilizing reform is the shift from an income-based taxation regime to a consumption-based taxation regime. Consumption is a much more stable tax base, particularly in a commodity-based economy like Suriname. The first step will be a revenue-positive Value-Added Tax in 2018, which will be followed by a simplification of the direct tax regime, for which we are receiving technical assistance from the Netherlands.
The funds that the IMF is providing are exclusively to be used to bolster international reserves. The IMF does not lend to governments, but lends to central banks and we have very strict limits on the ability of the central bank to finance the government. More important than the financial support of the IMF are the extensive technical assistance packages that accompany the IMF Standby Arrangement. As the cornerstone of our program is the extensive and complex administrative and legal reform effort, we welcome the IMF’s technical expertise, which has helped us to bring world-class experts to the country.
T.D.L.: During your first term in office, before the Surinamese economy began slowing, you launched a program to improve road infrastructures, starting with the roads in Paramaribo. Will you continue to push forward with this program? A bridge linking Suriname and Guyana is in the works. What other projects could be undertaken to upgrade your country’s port, airport and logistic systems and enhance regional integration?
D.D.B.: Various infrastructural projects have already been started during the first term while others presently are in an initial state. These projects, which concern the building of bridges roads, maintaining of waterways as well as rehabilitation of existing infrastructure, will not only enhance regional integration but also improve local connectivity and the living conditions of the Surinamese people in general.
The bridge linking Suriname and Guyana is part of the IIRSA policy to connect the South American countries through road, water and telecommunication means.
The project proposal is a Suriname-Guyana joint proposal that has been sent for financing to the Chinese Government. It is expected that in the coming year concrete steps will be taken.
To further enhance trade activities in Suriname, dragging of the Suriname and Nickerie River is of eminent importance. This project is currently in study to be carried out in a not to distance future. It is worth mentioning in the past few years the Port of Paramaribo has been awarded and recognized as one of the most efficient and effective harbors in the region.
The feasibility study for maximizing the use of the Surinamese airport, with a view to its geographical interesting position, is in a final stage. Negotiations for further realization of this project are underway. There is a need for the enhancement of telecommunication facilities to improve regional trade, cooperation and connectivity.
T.D.L.: Suriname held the rotating presidency of the Union of South American Nations (UNASUR) for the 2013-2014 term. Looking back, did carrying out those duties have a positive impact on your country? Did it heighten Suriname’s international profile?
D.D.B.: As an active member of the Union of South American Nations (UNASUR) Suriname held the rotating Presidency of this important regional integration instrument during a period when in South America the perception of unity was more or less in decline. Various Governments had diverse visions with regard to a great variety of issues, which made the very thought of Union seem vague. This situation gave Suriname the option to creatively look into ways of bringing back the original spirit of cooperation as was meant by the founders of the Union back in 2008. The Heads of States Meeting, which took place in Paramaribo in August 2013, offered the most adequate occasion for cementing the old existing bounds in an atmosphere of friendship and solidarity. Executing the Presidency for a period of more 14 months has given to Suriname a great and invaluable experience and brought about tighter bounds of friendship and understanding opening new possibilities for all parties concerned.
We are very proud, taking into consideration of being the smallest country on the South American continent having a different history, unique and diverse in cultural heritage, we managed in re-joining, re-uniting and re-inspiring the through atmosphere of unity. Since the joining of Suriname in the UNASUR block, the country that gained its Independence in1975 was fairly unknown, and became an integrated part of the South American continent, linking the various aspects of youth, people exchange and commerce to the continent.
T.D.L.: Do you think the South American integration process will continue to move forward, given the lingering economic problems in the region?
D.D.B.: Today we are on the crossroad in South America. We have experienced political changes in Brazil in Argentina and in many other South American countries. A process of change is going on and I believe that we have to wait and see how things will develop, as many of these so called problems also are deeply rooted in the world economic crisis which we all are presently facing. So, in our opinion we have to give it some time that world markets can restore giving the countries of our hemisphere the possibility to recover from the lingering economic problems.
T.D.L.: Suriname has been cooperating with Colombia in a special language program aimed at teaching Surinamese government officials to speak Spanish. How is this process coming along?
D.D.B.: Due to the fact that being the only Nation in the continent speaking the Dutch language, which in fact isolates Suriname in its international process, the choice for widening language skills, especially for Government Officials, is very obvious. Therefore in 2013 an Agreement was reach with the Columbian Government to start a special Spanish course in Paramaribo. In the meantime more than 500 Government Officials have been enlisted and have been learning Spanish so that today we can say that this was a very successful decision. The process with the Columbian Government is on going.
T.D.L.: Lying at the crossroads where South America and the Caribbean space come together, Suriname belongs to both Caricom and CELAC. What role would your country like to play in the forging of a shared destiny for Latin American countries? Taking into consideration your country’s involvement in the Petrocaribe integration initiative, what other economic partnership alternatives could be launched in the region?
D.D.B.: We are convinced that the geographical position of Suriname on the North East shoulder of the South American continent is to be seen as a natural bridge between the Caricom and the South American continent with its CELAC member states.
Our special relationship with these two integration mechanisms puts us in the position to open up new possibilities in trade, cultural exchange and many other fields that can be useful for sustainable development. Suriname as a member of Caricom is working closely together within the framework of Caricom in improving inter-regional trade between Caricom and Third parties.
Suriname is presently a member of Petro Caribe and it’s looking forward to enter into partnership with Mercosur, which will bring new possibilities for trade in a larger market.
T.D.L.: Suriname and France have been expanding their cross-border cooperation along the 325-mile border they share along the Maroni River. Given the high stakes of illegal immigration, especially with illegals pouring in from Haiti, is bilateral cooperation being strengthened in the security arena? Have the ties forged through the French Development Agency (AFD) sparked any concrete advances? Why do you think bilateral trade between our countries has remained so weak, despite these favorable conditions? What is your government doing to help boost it?
D.D.B.: Suriname borders French Guiana, that means as much as the French Republic. There is a borderline of 325-miles long, which Suriname is experiencing as an opportunity to enhance trade and development between the two countries. Suriname is convinced that connectivity will be really realized if finally the two sides can be bridged. This will considerably enhance trade and development on the two shores.
Present trade between Suriname and French Guiana is at a very low point due to the EU-regulations. To enhance trade relations between these territories it could be of great importance to establish a Suriname-French Chamber of Commerce in Paramaribo. This institute could be instrumental for all French Overseas Departments in the Region and could assist also the Surinamese exporters with the red tape of the EU. Further attention should be given to the French Departments finally joining the Caricom, a decision that would lift all export and-import barriers in the wider Caribbean.
With regard to what is called in your questionnaire “illegal immigration” and “drugs trafficking” it can be stated that the Department of Justice and Police is operating at high alert on all airports, roads and waterways, so that every illegal trafficking is being discovered and necessary measures are taken. Bilateral cooperation with regard to Security is being strengthened with all partners at all times.
With regard to border control it is believed that France in particular could play a heightened role in combatting cross border crime.
Ties with the AFD are gradually improving. Infrastructural works are being carried out and regular contact with this Agency is established.
T.D.L.: Your country has been looking beyond its traditional partners, widening its global outlook and reaching out to China and the countries of the Organization of Islamic Cooperation (OIC). What does Suriname hope to gain from this? The OIC has been funneling financial aid to your country since last year, to help turn around its economy. Has this assistance program spurred any noticeable achievements? Should we expect to see these ties strengthened in the years to come?
D.D.B.: An important part of the Surinamese population have roots in Africa,China, and India, Indonesia. They live in close harmony tohethegr with the original inhabitants of Ameriindian descents. After independence in 1975, Suriname has paid little attention to the possibilities of cooperation and exchange with these countries. The current government adopted an aggressive policy to South-South cooperation. One of the options to implement this goal was to join the OIC, the Organization of Islamic Cooperation. This organization already had decades of cooperation with countries where our ancestors came from.
Suriname formalized the partnership with the OIC in Jakarta, on December 9, 1996.
As a new member of the OIC, we have used the opportunity to reach out to the OIC organs relevant for our country and people and which were considered necessary for the development of our country and progress of our people.
Subsequently, Suriname became a shareholder of the Islamic Development Bank, a decision that will be useful for the development of our country. In the meantime an amount of US $ 1.8 billion has been conditionally allocated for the financing of development projects.