Gold is part of Suriname’s international reserves. A respectable part of our national income is derived from gold stemming from our own extraction activities. Suriname exports most of that gold. However, keeping a large portion of international reserve in the form of gold could be disadvantageous, because of the price fluctuations on the international markets. A sustained drop in the price of gold could result in large losses.

Another reason not to hold too much gold reserves is that it is an illiquid asset. It would cost the Central Bank if it wanted to sell gold quickly when there is a need to perform external payments. Internationally, a benchmark is to hold not more than 6% of international reserves as gold. Some countries maintain a much higher share, such as Kazakhstan with 21%.

The Central Bank of Suriname follows prudent policies with regard to the composition of the international reserves of the country. The main aim of these policies is to reduce risks and to provide sufficient liquidity. The Bank recently experienced volatile gold prices and decided to shift the composition of the reserves. It has sold slightly under one-fifth of the volume of gold since the beginning of this year. Given a continued decline in the gold price also, the total value of gold reserves declined from USD 122 million at end-2012 to USD 90 million by the end of May 2013. These developments have led to a total drop in the value share of gold in international reserves from 12% to 10%. The Central Bank anticipates to further decrease the share to below 10% in the coming period.

Investment Policy
Since 2010, the Central Bank has consistently worked towards a structured investment policy. This has resulted in a policy document, called “International Reserves Management and Investment Policy”. It calls for strict risk limits for all investment categories.

Also, a new investment structure has been set up, aiming to reduce the risks from the investments. An Investment Committee deliberates monthly on the investment portfolio. A front office executes new investments and manages the accounts. An independent middle office is in charge of auditing the transactions and executes various controls on the risk profiles. Suriname has received support from the World Bank in the form of a Reserve Advisory Management Program, RAMP. Under this program the CBvS will continue to professionalise the skills of its employees and to optimize their knowledge on investments.