Suriname - Economy



The bauxite and alumina industries traditionally set the pace for Suriname's economy, accounting for about 15% of GDP and 70% of exports. Two companies, Suriname Aluminum Co. (Suralco), a wholly-owned Alcoa subsidiary, and Billiton, owned by Royal Dutch/Shell, account for about one-third of government revenue and employ nearly 4,000 workers. Current mining areas will be depleted in ten years.

Although agriculture is the chief means of subsistence and second-largest employer after the government; plantation agriculture is the weakest sector of the economy, with the notable exception of rice growing. Suriname is self-sufficient in rice, and exports large amounts; however, Suriname is a net food importer. Imports account for more than 80% of consumption. Agricultural products accounted for only 10% of GDP in 1996, with rice, bananas, palm kernels, coconuts, plantains, and peanuts the principal crops.

In February 1987, guerrilla destruction of electricity pylons to the bauxite mines closed the industry while repairs were made. The collapse of world prices for bauxite in 1987 was another severe blow for the economy. Despite high expectations, the civilian government inaugurated in early 1988 proved unable to address the country's considerable economic problems and was overthrown by the military on 24 December 1990. A year later, civilian government, under the leadership of President Ronald Venetiaan, came back to power. Next to bauxite, foreign aid is the mainstay of the country's economy. Suriname was once a colony of the Netherlands, and thus the Dutch government continues to provide economic aid. When Suriname's economic and political problems escalated, the Netherlands suspended aid between 1982 and 1991, and in 1997. Aid was resumed, from both the Netherlands and the US, once reforms were initiated.

The new government inherited a formidable array of economic problems. In 1992, real GDP fell by 5% and average inflation accelerated to 44%, compared to 26% in 1991. Foreign exchange reserves had reached a record low, unemployment was high, and climate for foreign investment was bad. The government implemented a structural adjustment program (SAP), which included the legalization of the parallel foreign exchange market, reduced government spending, privatization of key sectors of the economy, and revision of the country's investment code. By 1994, the inflation rate had reached over 400%, but thereafter the SAP kicked in and reduced inflation to less than 1% in 1996. In 1997, relations with the Netherlands soured when Suriname ended the SAP and replaced it with an ambiguous National Reconstruction Plan, and the government failed to implement necessary austerity measures. Inflation reached almost 21% in 1999, and growth had slowed to 2%.

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