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GDP (2001): $833 million. (U.S.$)
Annual growth rate real GDP (2001): 1.9%.
Per capita GDP (2001): $1,672.
Natural resources: Bauxite, gold, oil, iron ore, other minerals; forests; hydroelectric potential; fish and shrimp.
Agriculture: Products--rice, bananas, timber, and citrus fruits.
Industry: Types--alumina, oil, fish, shrimp, gold, lumber.
Trade (2001): Exports--$479 million (USD): alumina, wood and wood products, rice, bananas, fish, and shrimp. Major markets--U.S. (about 25%), Norway, Netherlands, and other European countries. Imports--$501 million: capital equipment, petroleum, iron and steel products, agricultural products, and consumer goods. Major suppliers--U.S. (about 40%), Netherlands, EU (about 30%), and Caribbean (CARICOM) countries (20%).
Economy of Suriname
The backbone of Suriname's economy is the export of alumina and small amounts of aluminum produced from bauxite mined in the country. In 1999, the aluminum smelter was closed; however, alumina exports accounted for 72% of Suriname's estimated export earnings of $496.6 million in 2001. Suriname's bauxite deposits have been among the world's richest.
In 1984, SURALCO, a subsidiary of the Aluminum Company of America (ALCOA), formed a joint venture with the Royal Dutch Shell-owned Billiton Company, which did not process the bauxite it mined in Suriname. Under this agreement, both companies share risks and profits.
Inexpensive power costs are Suriname's big advantage in the energy-intensive alumina and aluminum business. In the 1960s, ALCOA built a $150-million dam for the production of hydroelectric energy at Afobaka (south of Brokopondo), which created a 1,560-sq. km. (600-sq. mi.) lake, one of the largest artificial lakes in the world.
The major mining sites at Moengo and Lelydorp are maturing, and it is now estimated that their reserves will be depleted by 2006. Other proven reserves exist in the east, west, and north of the country sufficient to last until 2045. However, distance and topography make their immediate development costly. In October 2002, Alcoa and BHP Billiton signed a letter of intent as the basis for new joint ventures between the two companies, in which Alcoa will take part for 55% in all bauxite mining activities in West Suriname. The government and the companies are looking into cost-effective ways to develop the new mines. The preeminence of bauxite and ALCOA's continued presence in Suriname is a key element in the U.S.-Suriname economic relationship.
A member of CARICOM, Suriname also exports rice, shrimp, timber, bananas, fruits, and vegetables. Gold mining is unregulated by the government, and this important part of the informal economy (estimated as much as 100% of GDP) must be brought into the realm of tax and environmental authorities. Suriname has attracted the attention of international companies in gold exploration and exploitation as well as those interested in extensive development of a tropical hardwoods industry and possible diamond mining. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists both in Suriname and abroad. Oil is a promising sector; current output is 12,000 barrels a day, and regional geology suggests additional potential. Staatsolie, the state-owned oil company, is actively seeking international joint venture partners.
At independence, Suriname signed an agreement with the Netherlands providing for about $1.5 billion in development assistance grants and loans over a 10- to 15-year period. Dutch assistance allocated to Suriname thus amounted to about $100 million per year, but was discontinued during periods of military rule. After the return to a democratically elected government in 1991, Dutch aid resumed. The Dutch relationship continues to be an important factor in the economy, with the Dutch insisting that Suriname undertake economic reforms and produce specific plans acceptable to the Dutch for projects on which aid funds could be spent. In 2000, however, the Dutch revised the structure of their aid package and signaled to the Surinamese authorities their decision to disburse aid by sectoral priorities as opposed to individual projects. Although the present government is not in favor of this approach, it has identified sectors and is now working on sectoral analyses to present to the Dutch.
After a short respite in 1991-96, when measures taken in 1993 led to economic stabilization, a relatively stable exchange rate, low inflation, sustainable fiscal policies, and growth, Suriname's economic situation deteriorated from 1996 to the present. This was due in large part to loose fiscal policies of the Wijdenbosch government, which, in the face of lower Dutch development aid, financed its deficit through credit extended by the Central Bank. As a consequence, the parallel market for foreign exchange soared so that by the end of 1998, the premium of the parallel market rate over the official rate was 85%. Since over 90% of import transactions took place at the parallel rate, inflation took off, with 12-month inflation growing from 0.5% at the end of 1996, to 23% at the end of 1998, and 113% at the end of 1999. The government also instituted a regime of stringent economic controls over prices, the exchange rate, imports, and exports, in an effort to contain the adverse efforts of its economic policies. The cumulative impact of soaring inflation, an unstable exchange rate, and falling real incomes led to a political crisis.
Suriname elected a new government in May 2000, but until it was replaced, the Wijdenbosch government continued its loose fiscal and monetary policies. By the time it left office, the exchange rate in the parallel market had depreciated further, over 10% of GDP had been borrowed to finance the fiscal deficit, and there was a significant monetary overhang in the country. The new government dealt with these problems by devaluing the official exchange rate by 88%, eliminating all other exchange rates except the parallel market rate set by the banks and cambios, raising tariffs on water and electricity, and eliminating the subsidy on gasoline. The new administration also rationalized the extensive list of price controls to 12 basic food items. More important, the government ceased all financing from the Central Bank. It is attempting to broaden its economic base, establish better contacts with other nations and international financial institutions, and reduce its dependence on Dutch assistance. However, do date the government has yet to implement an investment law or to begin privatization of any of the 110 parastatal, nor has it given much indication that it has developed a comprehensive plan to grow the economy.
State-owned banana producer Surland closed its doors on April 5, 2002, after its inability to meet payroll expenses for the second month in a row; it is still unclear if Surland will survive its current crisis. Moreover, in January 2002, the current government renegotiated civil servant wages (a significant part of the work force and a significant portion of government expenditure), agreeing to raises as high as 100%. Pending implementation of these wage increases and concerned that the government may be unable to meet these increased expenses, the local currency has weakened from Sf 2200 in January 2002 to nearly Sf 2500 in April 2002. On March 26, 2003, the Central Bank of Suriname (CBvS) adjusted the exchange rate of the U.S. dollar. This action resulted in further devaluation of the Surinamese guilder. The official exchange rate of the $U.S. is SF 2,650 for selling and SF 2,600 for purchasing. With the official exchange rate, the CBvS came closer to the exchange rate on the parallel market which sell the U.S. dollar for SF 3,250.