The government of Suriname is switching from a fixed exchange rate against the US dollar to a floating one, Maurice Roemer of the Central Bank of Suriname announced on Saturday. With this, the country wants to make a new attempt to stabilize the Surinamese currency.
A stable currency is important for both businesses and citizens because it makes planning and budgeting easier. From Monday, the exchange rate may float between 14.29 and 16.30 Surinamese dollar (Srd) for an American dollar. Five months ago, a few months after the new government led by Chan Santokhi and Ronnie Brunswijk took office, the rate was also increased from Srd 7.52 to almost doubling from Srd 14.29.
By opting for a floating course, Suriname is going against the IMF’s proposal. The international financial institution prefers to see Suriname leave the course free to let the market do its work. However, Finance Minister Armand Achaibersing is convinced that the model that has now been chosen will also yield the desired result. Suriname and the IMF have already been negotiating for several months about financial support of 750 million US dollars for Suriname.
New measure is to keep hard currency in the country
To keep the course really stable, the government is taking a few more measures. For example, exporters are obliged to pay their income in US dollars or euros to a local bank in Suriname. The advantage of this is that more foreign currency remains in Suriname. This decreases the demand for currency so that the Srd rate can remain more stable. Also, the companies must convert 30 percent of their currency into Srd.
The third measure is that companies may only pay for their purchases with US dollars or euros on the account at the local banks in Suriname. This measure must also ensure that more dollars and euros remain in Suriname, so that the exchange rate can remain stable or even become lower.
In time, the country hopes to reap the benefits of the oil and gas discoveries off the coast. After Russia, Suriname was the place where most new stocks were tapped in 2020. According to the scientific agency US Geological Survey (USGS), there are about 13 billion barrels of oil in the ground in the so-called Guyana-Suriname basin. Large oil and gas companies such as ExxonMobil, Petronas and Total are active in the area. Shell also reported to the area at the end of last year.