(Bloomberg) – Suriname’s new government is in talks with bondholders and multilateral lenders, seeking to refinance its dollar bonds to ease its debt servicing burden over the next two years.
President Jennifer Geerlings-Simons said in an interview she wants to find a way to push back debt payments until after the administration receives revenue from oil production in 2028, which may involve calling back the existing 2033 bond. She’s also considering a new program with the International Monetary Fund that would focus on strengthening institutions rather than austerity measures that she said harmed the economy in the past.
“We would like to refinance the debt so that we have a better deal and can start paying when we have the oil money,” Geerlings-Simons said Monday at the Council of the Americas in New York after a meeting with investors. “The way it is organized at the moment, not only the interest but also the servicing of the debt will start next year and it will be too much.”
The 72-year-old former parliamentary speaker will oversee the country’s first oil production as TotalEnergies SE prepares to tap reserves estimated at 760 million barrels. The $4.5 billion economy is forecast to grow 3.2% this year and slowly edge up to near 4% by 2027 before seeing a more than 10-fold surge once oil starts flowing.
But Suriname needs to bridge its financing gap before oil money starts flowing in. The government is expecting to end the year with a budget deficit equivalent to 8% of gross domestic product, partly due to high levels of spending before the May 25 presidential vote, Geerlings-Simons said. She wants to narrow the gap to below 4% next year through spending constraints and improved tax collection.
But Geerlings-Simons doesn’t want the Surinamese public to feel a pinch from her efforts to put the country’s finances in order. Sworn into office in July, the South American nation’s first female leader argued that the population suffered under cuts imposed by the government’s previous IMF deal. She said she’s talking with the fund to assess whether a new program for Suriname is feasible.
“The real economy suffered and you can’t structurally improve your financial situation without the real economy flourishing,” she said. “What we are doing now is taking everything into account so that what the people went through will not be for nothing.”
Suriname’s dollar bonds have handed investors a 14.3% return this year, outperforming most emerging-market sovereign peers in a Bloomberg index. Notes due in 2033 traded at 99.6 cents on the dollar Tuesday, according to indicative pricing data. The price of the so-called value-recovery instruments that pay investors a portion of revenue from oil after it starts flowing rose to 118 cents.
Geerlings-Simons said she wants to diversify the economy, targeting sectors like agriculture and tourism. She’s also talking with neighboring Guyana about working together on not only oil and gas development, but farming and fisheries.
The president is seeking to raise additional revenue by selling carbon credits in an effort to cash in on the forest that covers 93% of the country’s territory. The oil boom, meanwhile, is expected to create 6,000 jobs in the long term for Suriname, which is home to just over 630,000 people. Her government isn’t considering selling more of the oil-linked securities at the moment.
“We expect the real workforce increase will be in the oil spinoffs,” Geerlings-Simons said. “We’ll have more steady jobs in other sectors we’re improving.”
