Suriname faces budget deficit after closure of alumina refinery; to get $40m support from IDB

A media report says Suriname is to receive a $40m investment loan from Inter-American Development Bank (IDB) which will help increase tax revenue and improve its public spending.

The South American country, the smallest on the continent has been facing budget deficit due to the fall in commodity prices and a halt in alumina production, which used to be the prime export of Suriname.

Alcoa Corporation, which was the owner of the Suralco alumina refinery and bauxite mines in Suriname, announced full closure of operation of the facilities in January 2017. The operations were on halt since November 2015 amid bauxite supply scarcity and unfavourable market conditions. The Government of the Republic of Suriname and Alcoa continued to develop definitive agreements concerning Suralco’s remaining activities in the country and the future of the bauxite industry in Suriname. However, the closure was a blow to the economy of the country which was dependent on the alumina industry for its revenue.

Suriname reported a budget deficit of 5.7% in 2016 and with the loan support; the country expects to lower the deficit to 2.5% in 2018.

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The IDB loan will support Suriname’s efforts to fix its budget deficit and fiscal sustainability by helping the Ministry of Finance to collect taxes efficiently. The government also expects to improve the budget planning and monitoring process and the quality of public investments with this fund.