Suriname - Economic development



In wholesale, retail, and foreign trade, the government has been highly interventionist. Quota restrictions or outright bans on many imported items considered nonessential or in competition with local products have been announced. The government forced price rollbacks on domestic items and imposed price controls on essential imports, resulting in some shortages.

Although the government has been Socialist in principle since 1981, it refrained from nationalizing key industries, although it did increase its participation in them. The Action Program announced by the government in 1982 called for the encouragement of small-scale industry, establishment of industrial parks, development of rural electrification and water supply projects, liberalization of land distribution, and worker participation in management of government enterprises.

In 1975, the Netherlands promised Suriname $110 million annually in grants and loans, for a period of 10–15 years. This aid program and $1.5 million in aid authorized by the United States in September 1982 were suspended following the killings of prominent Surinamese in December 1982. In 1983, Brazil and Suriname reached agreement on a trade and aid package, reportedly underwritten by the United States. By 1986, Suriname had signed trade agreements with several countries, among them the Netherlands.

As of 1994, Suriname was undergoing a comprehensive structural adjustment program (SAP). This program, recommended by the EC (now EU), was designed to establish the conditions for sustained growth of output and employment with relative stability of prices, a viable balance of payments, and protection of the low-income population. However, only minimal progress toward restructuring was initially accomplished. Enacting the full SAP in its proper sequence was hoped to improve the prospects for the Surinamese economy and living conditions into the new millennium. However, the SAP was abandoned in 1996 in favor of a National Reconstruction Plan.

In 2000, the Netherlands announced their aid package would be disbursed by sectoral priorities, as opposed to individual projects. The government was not in favor of this approach, but began to cooperate. Suriname's economic situation deteriorated from 1996 to 2001. Inflation grew from 0.5% at the end of 1996 to 113% at the end of 1999, in part due to loose governmental fiscal policies, and a soaring parallel market for foreign exchange. This, along with an unstable exchange rate, and falling real incomes, led to a political crisis. The new government elected in 2000 devalued the official exchange rate by 88%, raised tariffs on water and electricity, and eliminated the subsidy on gasoline. The inflation rate had fallen to 22% in 2002, and a new law was enacted, placing a 60% ceiling on the ratio of total government debt to gross domestic product (GDP). The large fiscal deficit had been eliminated, the exchange rate was stabilized, and investor and donor confidence was reviving. As of 2003, however, the government had no comprehensive plans to privatize the 110 state-owned enterprises, to initiate an investment law, nor to stimulate economic growth.

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