1 / 20

Commonwealth Seminar on Debt Negotiation and Debt Re-negotiation

7/31/2012. 2. Organization of the paper. 1.Introduction2.Debt portfolio development3. Macro Economic Development4. Legal and Institutional framework (old)5.Suriname's Debt strategy: general7.Suriname's Debt strategy: debt restructuring8.Suriname's Debt Strategy: legal and institutio

Antony
Download Presentation

Commonwealth Seminar on Debt Negotiation and Debt Re-negotiation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. 8/1/2012 1 Commonwealth Seminar on Debt Negotiation and Debt Re-negotiation Kingston, Jamaica Suriname’s experience Challenges for a strategic debt policy by J. H. Kolader Central Bank of Suriname

    2. 8/1/2012 2 Organization of the paper 1. Introduction 2. Debt portfolio development 3. Macro Economic Development 4. Legal and Institutional framework (old) 5. Suriname’s Debt strategy: general 7. Suriname’s Debt strategy: debt restructuring 8. Suriname’s Debt Strategy: legal and institutional framework 9. Conclusion

    3. 8/1/2012 3 Introduction National Economy and Debt. Foreign and domestic debt should be brought within the limits of the capacity of the economy; The economy should be managed in a way to absorb all debt commitments in the short-, medium and long term. Government should adopt a strategic debt policy Debt accumulation in Sur. : its origin; Lack of resources for timely payments – accumulation of arrears; Short term borrowing for long term projects; High interest rate borrowing for projects with low earning capacity; Principle behind Debt restructuring in Suriname A crucial aspect of debt is that it should be repaid. Debt restructuring aimed at bringing debt in line with repayment capacity of the economy. Improving credibility.

    4. 8/1/2012 4 Debt portfolio Development 1983 – 1987: foreign debt accumulation and monetary financing/ high inflation ; 1988 – 1993: growing of arrears, new com- mercial loans; 1994 – 1996: Successful rescheduling and repayment of arrears and loans; 1997 – 2000: heavy foreign and domestic borrowing; building of new arrears; high inflation; 2001 -2002: debt inventory; debt consolidation and arrears settlement; establishing legal framework;

    5. 8/1/2012 5 Debt portfolio Development (continued) 2002 – 2006 Arrears accumulation; establishing the Debt Office for debt management; successful debt re-negotiations and debt-restructuring; repayment of loans; 2006 Successful debt renegotiations; planning for settlements of arrears.

    6. 8/1/2012 6 Debt Portfolio Development (continued) government external debt

    7. 8/1/2012 7 Macro Economic Development

    8. 8/1/2012 8 Macro Economic Development (continued)

    9. 8/1/2012 9 Macro Economic Development (continued)

    10. 8/1/2012 10 Legal and institutional frame work (old) Before 2002: Debt ceiling: 150% of current approved budget revenues; No relations with economic growth Debt management: Ministry of Finance and Central Bank. Time consuming procedure often causing arrears.

    11. 8/1/2012 11 Suriname’s Debt strategy: general . The STRATEGIC POLICY WAS SET IN THE LAST QUARTER OF 2000 AND WAS URGED BY: HIGH INFLATION; A BUDGET OUT OF CONTROL; VOLATILE EXCHANGE RATES; DISTORTED MACROECONOMIC ENVIRONMENT; BLURRED PICTURE OF GOVERNMENT DEBT The objective of the Government was to address the poor state of the economy and in so doing, create the conditions to repay debt

    12. 8/1/2012 12 Suriname’s Debt strategy Actions taken (continued) Improvement of macroeconomic fundamentals; Inventory of government debt by a special Commission; Repayment of unfavorable commercial loans and rescheduling of domestic government debt during 2001-2002 Adoption of the Government Debt Act; Establishment of a Government Debt Office (Bureau voor de Staatsschuld, BSS)

    13. 8/1/2012 13 Suriname’s Debt strategy: debt restructuring/refinancing (2001) Huge arrears in foreign debt and a huge domestic debt with the central bank. Discussions with Dutch Government to mobilize the “Guarantee Fund” ;(part of development aid agreement of 1975 with Suriname) Loan at the international capital market through the Dutch Investment Company for Developing Countries, guaranteed by the Dutch Government, using the Guarantee Fund. Purpose: clearing arrears (incl. late interest) first of the multilateral loans and secondly of the most pressing bilateral loans and the domestic loans (debt with the central bank). Improving Credibility

    14. 8/1/2012 14 Suriname’s Debt strategic Policy New Legal and institutional frame work New Law for Government Debt; New debt ceiling Correlated to economic capability and capacity to repay and to budget. 60% of GDP Foreign debt: 45% of GDP Domestic Debt: 15% of GDP Debt includes all commitments: guarantees and un- disbursed loan commitments;

    15. 8/1/2012 15 Suriname’s Debt Strategic Policy Legal and institutional framework (continued) Only the Minister of Finance is authorized to contract loan obligations’ Loan agreements must be registered at the Bureau of the Auditor General Exceeding the ceiling needs approval of the National Assembly; Breaching intentionally is subjected to penalties (imprisonment and a fine of SRD 2 million).

    16. 8/1/2012 16 Suriname’s debt strategic policy Legal and institutional framework (continued) Establishing the National Debt Bureau. Charged with debt monitoring and management; Debt reporting and registration; Advising on contracting debt and debt payment; Placing of Government bonds Improvement in coordination in Debt Management.

    17. 8/1/2012 17 Suriname’s Debt strategic Policy New Legal and institutional frame Amendment of Bank Act; Increased independence of the Central Bank Increased capital of the Bank from SRD 3000,- to SRD 10 million. Advances to Government will be fully charged with interest; Governor is now subject to penalties (imprisonment and a fine of SRD 1 million or 2 million) if he should accommodate the Government beyond legal limits.

    18. 8/1/2012 18 Conclusion Proper financial management is at the basis of an acceptable debt policy; Negotiating and re-negotiation of loans should relate to budgetary capacity and to capacity of the economy; No over-borrowing as a consequence; New legislative and institutional frame work in Suriname aimed at bringing debt in line with economic basis; Instrument for proper debt management and; Instrument to avoid re-accumulation of debt;

    19. 8/1/2012 19 Conclusion Current condition of economy finally allows for focusing on improving the credit-worthiness of Suriname An effective approach to eliminate arrears through debt repayments and restructuring is being conducted.

    20. 8/1/2012 20 Debt Figures Before 2001: Debt to GDP : 95% Total Debt/GDP June. 2006: 47% Total Foreign Debt/ commitments: 29% of GDP Effective: 22.9% of GDP; Govt. guarantees: USD 0.922 million; Un-disbursed commitments: USD 110 million

More Related