Standard & Poor’s TV broadcast explains why they upgraded Suriname’s outlook to positive.

Source: Standard & Poor’s TV Broadcast on YouTube

Standard & Poor's Ratings Services announced on Thursday April 25th 2013 that it has revised Suriname's credit rating outlook upward from stable to positive.

The rating agency also affirmed Suriname's (April 2012) BB-minus foreign and local currency sovereign credit rating. Standard & Poor’s argued that "the outlook revision reflects the expectation that large investments in the mining and oil sectors could lead to higher growth prospects as well as higher levels of exports and government revenues."

The positive outlook also includes the expectation of strengthened fiscal policy and the creation of a sovereign wealth fund.

The Central Bank underwrites the positive outlook for Suriname, especially given the government’s assurances for macroeconomic stability through strengthened fiscal and monetary management. The Bank notes that even though inflation has continued to decelerate, there is a need to continue defending a strong pace of international reserves accumulation. This can be best achieved by sound financial policies, which will ultimately free up healthy credits from the banking sector, stimulate job creation, and boost private sector growth. The growth potential of the economy is estimated at 4-5% during the next years.

Although the outlook is a positive rating for Suriname’s economic performance, a sustained fall in international commodity prices would lower export earnings and government revenues considerably. Therefore, the Central Bank believes that the introduction of a sovereign wealth fund will be instrumental to ensure stability and to save for future generations, especially with the benefits of large increases in revenues from the recent mining contracts.

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