Discount Rate

The discount rate, i.e. the rate at which the Central Bank of Suriname (Bank) lends to the commercial banks and government, shows little variation over time, specifically in the early years of the existence of the Bank. The rate has little association with the domestic interest rates and was an inactive instrument throughout most of the time, given that the commercial banks did not need to borrow from the Bank. The rate mostly applies to the government. According to the Bank Act 1956, the Bank has the obligation to provide the government with short-term financing up to 10 percent of the budgeted revenues for a specific fiscal year. The Bank is permitted to grant only collateralized loans.

The following table summarizes the prevailing discount rates since 1957. 

The sharp increase in the discount rate in 1998, followed by a peak of 18% in 1999 was associated with the high inflation that plagued the Surinamese economy. The discount rate has been lowered since 2002 as macroeconomic conditions improved. In the context of a tighter monetary policy stance, the discount rate was raised by one percentage point in September 2013.

Treasury Bills Rate

In the second half of 2000, the government started issuing treasury bills to finance its deficits. This operation was intended to reduce the reliance of the government on Central Bank financing. The treasury bills are largely held by commercial banks. Institutional investors, including pension funds and insurance companies, hold on average 20 - 25% of the treasury bills. Treasury bills are currently issued with a maturity of 6 and 12 months. 

The treasury bills rate has been lowered gradually from a peak of 18% in 2000 to 8% in 2012 as inflation fell accordingly. The following table summarizes the prevailing rates from 2000. Up till now the rate has been maintained at 8%. 

Domestic Interest Rates

Commercial banks are free in setting their interest rates. The Central Bank of Suriname uses the commercial banks credit as an intermediate target of monetary policy, and has no direct interference with the commercial banks’ interest rate policy. Residents of Suriname are allowed to hold foreign currency deposits. Commercial banks also extend credit in foreign currency.