Suriname is South America's smallest independent country with a population of only 440,000 that is blessed with abundant natural resources available for generating foreign exchange revenue. Suriname, formerly called Dutch Guiana is located on the Caribbean coast of South America. Dutch is the official language but English is also widely spoken.
POLITICS: Suriname was a Dutch colony until gaining independence in 1975. President Ronald Venetiaan is in power since August 2000. Previous to Venetiaan's government, Suriname has had poor relations with the Netherlands thus losing valuable aid monies. President Venetiaan is working to re-establish good relations with the Netherlands and to secure new financial aid. During the 1980's, Suriname struggled under the rule of of a military dictatorship with a socialist economy as the nation has a history of political violence. In 1992, a peace treaty was signed between the government and several guerrilla groups.
ECONOMY: the new administration has cut subsidies and controlled spending, confidence rose and stabilized the economy. By year 2001, the Surinamese economy has had a remarkable recovery after two consecutive years of contraction as the new government implemented stabilization policies and balanced the budget. The overall Suriname economy for the most part is highly dependent upon the bauxite mining that accounts for 15 percent of GDP and 70 percent of export earnings. And just as important, the Netherlands has started to provide foreign aid assistance with monies flowing again. Suriname is a relatively small economy as this reflects in its wild currency swings and depreciations. Former previous Suriname government in the late 1990's under President Wijdenbosch has been alleged to have sold Suriname's gold holdings in the range of $75 million USD in complicated gold swaps and gold spot/forward sales. These transactions turned out to be very unprofitable. Suriname currently does not have the money available to buy back the gold which has further weakened the guilder's soundess.
GDP using purchasing power parity is at $1.5 billion USD (2000) with equivalent GDP/Capita at $3,500 USD. GDP growth rate 2002 at 1 percent, 2003 estimated at 2 percent, it should be reminded that GDP for year 2000 fell by 5.5 percent. Inflation for year 2000 at 77 percent, 2001 at 42.2 percent and 2002 came in at 33 percent moving up reflecting the devaluation in the guider. Year 2003 inflation is projected at 20 percent. Fiscal budget was in deficit at 13 percent of GDP in 2000, surprisingly, by 2002 the budget was almost balanced at only a 1.2 percent of GDP shortfall. Remittances are worth 5 to 7 percent of GDP. Current account deficit for 2002 is at 12 percent, 2003 at 10 percent after recording a massive deficit in 2000 at 17 percent and 1999 at 20 percent. Agriculture is at 13 percent of GDP or 20 percent of the work force. Suriname is a net energy importer even with domestic oil production. Unemployment is at 20 to 30 percent. Exports include aluminum, lumber, food products to trading partners United States, Norway and the Netherlands. Year 2000 external debt at $500 million USD
POSITIVES: low population density, high literacy rates. CONCERN: waste disposal, environmental damage from illegal mining & logging, drug trafficking as Suriname is an entrepot for markets in Europe.
BANKING SYSTEM: Central Bank of Suriname is not independent and is under the influence of the government. Gross official reserves as of September 2002 have climbed up to 3 months of import coverage or approximately $100 million USD in value. Year 2003 reserves estmated to fall modestly to 2.5 months import coverage. Domestic banks are now allowed to offer foreign currency deposit accounts. Credit cards are not widely accepted outside the hotels.
REGIONAL ANALYSIS: CARICOM, Guyana, Brazil, French Guiana
Suriname is a member of CARICOM 'Caribbean Community and Common Market'. Many areas of Latin America are also prone to high volatility in their respective currencies including Venezuela, Argentina. However, not related, the Suriname guilder seems to be insulated from its neighbours as it trades with only a handfull of nation's most of which are from wealthy Europe.
KNOWLEDGE: mining industry is important and a key component of future economic growth for Suriname. Canadian mining companies such as Cambior Inc. and Canarc Resource Company of whom is actively exploring for gold in the Benzdorp gold project which represent a sample of Suriname's very important mining industry in area's of gold, silver, copper, bauxite, etc. With that said, however, Suriname must diversify its economy away from capital intensive industries like mining. Suriname should look at eco-tourism as a source of foreign exchange revenue. In 1998, the government created the 1.6 million hectare central Suriname Nature Reserve representing 10 percent of the country which consists of pristine rain forests.
CURRENCY: ISO symbol, 'SRG', Surinamese guilders, guilder or florin. At time of review on March 14, 2003, the Surinamese guilder had an exchange value of 2,176.76 SRG to the US-dollar ('USD'). In September 2002, the Central Bank of Suriname imposed a trading band of 2,500 to 2,800 to the USD. This trading band was higher at 500 around the official rate after the government floated the guilder in January 1999 but quickly fixed the exchange rate when the black market rate plunged. Finally, it should be noted that much of Suriname's interior and jungle exists a society of lawlessness and many placer miners seeking a living in primitive gold mining. In these areas, gold dust is used as an informal currency.
CURRENCY HISTORY: previous to 2001, the guilder has had incidences of wild depreciations and currency collapses. More recently, from January 2002 to August 2002, the guilder fell by more than 35 percent hitting a low of 3,500 to the USD. In 1994, the guilder crashed by 70 percent with inflation at that time running at hyperinflation levels of 600 percent. Historical valuations for the guilder include year 1994 at 134 SRG to the USD, 1995 at 442, 1996 at 401, January 1998 at 401, year 1999 at 987, 2000 at 2,178 (official rate). Moreover in October 2000, in order to correct the massive current account deficit position, the new government in October 2000 devalued the official exchange rate of the guilder by 89 percent.
CURRENCY FORECAST: a history of several currency crashes, a government now committed to a massive public payroll increase may create budget difficulties. Suriname warrants a higher currency risk category reflecting the inherint risks affecting the guilder.
UPDATED: March 14, 2003