Suriname and China sign US$476mn debt restructuring agreement
Suriname and China have finalised a landmark agreement to restructure US$476mn in debt, marking a crucial step towards stabilising the South American country’s fragile economy.
The deal, signed after four years of negotiation, was announced by Suriname’s Finance and Planning Minister Stanley Raghoebarsing in the National Assembly. It comes as many analysts were questioning whether the countries could reach and agreement, particularly with Suriname in an IMF programme.
Raghoebarsing confirmed that the debt restructuring agreement with China includes payments to the Chinese state-owned Exim Bank, which will be rescheduled in two phases. Suriname owed Exim Bank an estimated US$476mn, including US$140mn in arrears. The deal also covers US$68mn owed to the Industrial and Commercial Bank of China (ICBC), which will be repaid in a single tranche.
Malty Dwarkasing, General Administrator of the Debt Management Office, explained that the agreement eases Suriname’s financial burden by spreading repayments over a longer period.
“This phase addresses arrears accumulated through 2021 as well as interest payments and repayments scheduled from 2022 to 2024,” said Dwarkasing. The first payment under the new terms is expected this year, following final contract approvals scheduled for late November.
The debt restructuring was facilitated by high-level diplomacy. Raghoebarsing credited President Chandrikapersad Santokhi’s visit to China earlier this year for catalysing the agreement. During that visit, Santokhi and Chinese President Xi Jinping signed a preliminary framework on debt reorganisation.
“This rescheduling would not have been possible if President Santokhi had not personally gone to China,” Raghoebarsing said. While the full details of the repayment schedule remain undisclosed, the agreement is seen as a significant milestone in Suriname’s efforts to restore economic stability.
Suriname’s debt burden relief comes amid an economic crisis, even as the country holds vast but untapped oil reserves. Despite these challenges, there have been promising developments, including TotalEnergies’ recent US$10.5bn investment decision in Suriname’s offshore oil fields, with production expected by 2028.
Experts, however, caution that effective management of future oil revenues will be critical. “Oil revenues could transform Suriname’s economic outlook,” said Karel Eckhorst, a member of the IMF negotiation team. He added that the debt restructuring should pave the way for new investments and strengthen international confidence in Suriname’s financial management.
In addition to oil, Suriname is also exploring opportunities in other sectors. Chinese mining company Chinalco is considering a US$426mn investment in Suriname’s bauxite industry, further cementing economic ties between the two nations.
During a production sharing contract signing with PetroChina in October, Foreign Affairs Minister Albert Ramdin highlighted the importance of Chinese investments, noting that Chinese enterprises are already active in Suriname’s oil and gas, mining, and retail sectors. “We are open to more Chinese involvement,” said Ramdin.
“We must continue to spread Chinese culture, strengthen friendship, and contribute to Suriname’s development,” said China’s Consul to Suriname, Liu Zhenhua.
While the agreement provides immediate financial relief, it does not eliminate Suriname’s economic challenges. Analysts warn that reliance on external investments, including Chinese funding, requires careful oversight to avoid long-term dependency.
Dwarkasing noted the importance of building confidence in international markets through responsible debt management. “This restructuring is a step in the right direction, but Suriname must now focus on leveraging its resources effectively,” he said.
Suriname’s government has also initiated restructurings with other international creditors, including agreements with Oppenheimer, the Paris Club, and India, as part of a broader economic strategy.
The debt restructuring agreement with China is a pivotal moment for Suriname, offering a path to financial recovery while strengthening bilateral ties with one of the world’s largest economies. With promising oil projects and diversified international support, Suriname stands at a crossroads. Effective management of its resources and partnerships will determine whether this debt restructuring truly marks the beginning of an economic turnaround.
Source: Caribbean Insight (Dec 2024)