(de Ware Tijd) PARAMARIBO – Suriname’s credit rating could be upgraded soon if all payments owed to foreign creditors are made and a smooth transition can be made to a ‘soft landing’ of the economy when external conditions are less favorable. This is the conclusion of credit rating agency Moody’s Investors Service in its most recent evaluation of Suriname’s economy. Moody’s warns, however, that the credit rating could be downgraded in case there is a “significant worsening” of the budget and external accounts due to authorities’ inability or unwillingness to take corrective measures in reaction to recent unfavorable shocks. President Desi Bouterse said recently in Parliament that Suriname is one of the fifteen countries of which the creditworthiness was upgraded in 2011 by international rating agencies. In its evaluation released last Friday, Moody’s states that it has not changed Suriname’s previous rating. The long-term rating for government loans in Surinamese currency is still ‘Ba3’, while that for foreign currency loans has remained ‘B1’. Those ratings are a reflection of Suriname’s low economic strength due its small-scale economy and low per capita gross national product.
The current rating is also a reflection of the low institutional strength when it comes to governance and legislation, as well as of “weak” transparency. The rating also takes into account the State’s reasonable financial strength, as the debt position has improved in recent years due to budget surpluses and payments of debts. The fact that there are still arrears in payments to bilateral creditors has also been considered in the rating. Low budget flexibility and “weak” access to financing point to a structural limitation of the State’s credit profile, Moody’s states further. In recent years, the foreign accounts have benefited considerably from the high prices of export products including gold, oil and bauxite, along with a strong inflow of direct foreign investments in the mining sector. Compared to other countries, however, the risk of economic shocks due to external factors is great because Suriname is very vulnerable to price fluctuations of its commodities, as well as due to political factors including government policies that have led to instability in the past.
