Economist warns Suriname on spendthrift ways

(De Ware Tijd) PARAMARIBO — The Bouterse administration should face the facts: there is no more money. Refusing to face reality and maintaining a stubborn attitude will eventually result in devaluation of the national currency with price hikes in its wake. Professor of economics at the Anton de Kom University and former banker in Aruba, Anthony Caram, issues the umpteenth warning.
‘The government won’t be able to realize its ambitious programs, unless it resorts to borrowing from local banks,’ Caram said on Wednesday night at a lecture hosted by the Lions Club Paramaribo in response to the latest IMF report on the economic situation of the country. Economizing is the only avenue open to the government because the Central Bank has depleted its foreign currency reserves, so it will not be able to affect the exchange rates. On the other hand, banks are already in a bind because of the restrictive measures by the Central Bank.
Caram argues that the government has been in an increasingly expanding spendthrift since it took office, while the revenues side suffers mainly because of the poor tax management.
The first blows came when the government’s planning were not in line with its cash reserves because revenues from the gold industry took a dive. Internationally the price of gold had plummeted sharply leaving wreckage in its wake for the Surinamese economy. As a result the government sacrificed former Minister of Finance, Adeliene Wijnerman. The prospects for this year are again grim because the prices of oil and gold are not reviving.
Caram predicts hard times for the government until 2016. The professor advises to cut expenditures by SRD 2.5 billion and to forsake plans that would cause further shoot up of the expenditures. Currently 42 percent of the government’s investments are financed by loans so it would not be wise to continue borrowing money. If the government does not heed the warning signals, it might face increase of the national debt.
As a result the exchange rate for foreign currency and the prices of goods and services would soar. Waddie Sowma, of the Economist Association (VES) says he has indications the monetary authorities are aware of the necessity to economize, but in reality the new budget does not include those intentions. The economist expects the government to continue down the doubtful road in view of the elections, so the results will be evident.