Suriname has experienced high growth rates in the past; yet the country has been plagued by boom and bust cycles, which have mainly stemmed from volatility in the income from mining. The economy is very dependent on exports of bauxite and oil, and more recently, gold in addition. As international prices for these commodities have gone up and down, so did the revenue for the country. The first impact has always been delivered on the government finances, and deficits emerged.

Another factor causing fiscal deficits has been poor macroeconomic management. Monetary financing of the deficits was not halted on time or only insufficiently. An ensuing large monetary overhang (too much money creation) had started to put pressure on domestic prices and the exchange rate. As elections drew near in 2010, the previous government also embarked on more spending, including the granting of government salary increases and stepping up outlays on goods and materials.
On the parallel markets the exchange rate shot up, and the band with the official rate started to widen drastically.

The new government took resolute measures in early 2011 to correct and stabilize the economy. It corrected the exchange rate misalignment and put in place a fiscal and monetary plan. On the fiscal front, careful spending had to be maintained to head in the direction of a smallest deficit possible given the circumstances. On the monetary front, the required reserves ratio on foreign deposits at the banks was raised from 35% to 45%. This was needed to limit room for (consumptive) lending by banks, as well as to discourage further dollarization.
Talks were initiated by the government with groups in society explaining that such measures had been needed, but even more so, support and a strong commitment from them would be indispensable for markets to return to stability. The government met with support from various groups which understood the situation and also favored to work together to better the economy.

Simultaneously, the government brought the external debt house in order and in better standing. External payment arrears on the current and capital accounts were cleared up. The government also repaid in full a long-due foreign debt, thus in return receiving a waiver of penalty payment.

The fiscal and monetary and other non-inflationary measures started to take effect after mid-2011, as measured by year-to-year monthly inflation rates (comparing the price level of a year ago). Whereas the inflation rate had stood at 22.6% in April of 2011, it had come down to 15.3% in December 2011. At end December 2012 inflation of 4.4% was measured.

Eventually, the fiscal record was improved.
The deficit in 2010 of close to 2.5% of GDP was reduced to 1.9% of GDP in 2011. Spending on goods and services declined further in 2012, whereas capital spending showed a slight increase. Early 2013 the government granted a salary increase with a retroactive term into 2012. The 2012 government finance figures are yet to be finalized, although it is expected that an increase of the deficit may have occurred.
The government looks back at these developments noting it has received a positive appraisal both from the home front and from abroad. Domestic partners include the business community, trade unions and professional groups. In particular the call for restraint on spending and on wage increases, to which these groups by and large responded, had assisted to bring back the macroeconomic conditions to stability.

Moreover, the reports for Suriname of international organizations have been favorable. Lastly, Suriname has received 4 rating upgrades in the span of two years.

The government is continuing policies which will foster macroeconomic stability and growth. It is committed to low inflation, to building fiscal surpluses, and to maintaining external payments in prudent and safe conditions.
It is aware that macroeconomic policies have to be supplemented by structural reform policies and that the social agenda has to be forwarded rapidly, yet conscientiously and methodological.

The Central Bank of Suriname will be implementing an array of policy reforms. It will introduce new monetary policy instruments, connected to the reform of the T-bills market, such as an interbank deposit and lending facility. It is also implementing programs in the area of financial system stability and soundness of financial institutions, such as improving the legal frameworks, strengthened on-site supervision, and developing macro prudential indicators. In these efforts to stimulate a modern and efficient local banking and financial services sector, the mother bank is advocating the strict adherence to international best practices of transparency, accountability, and safety.

Together with the Ministry of Finance, it is setting up a long-term stabilization and savings mechanism for the managing of income from mining and other non-renewable resources. These policies are explained in the attached link.

The Central Bank is also supporting other structural policies of the government, which focus on stimulating private entrepreneurship, as well as strengthening the social sectors.