The Suriname government has broken its silence over allegations that it has signed a multi-billion-dollar loan agreement with an Italian building and construction company last year amid criticism from opposition legislators.
The government of President Chandrikapersad “Chan” Santokhi is reported to have sought a loan agreement with the Italian company, MAEC 87 SRL, in the event that talks with the International Monetary Fund (IMF) did not materialize.
“This is completely far from the truth. The intention for this intended loan has never been realized, so financial transactions have never taken place. During that period, it concerned a possible loan option of two billion US dollars at an interest rate of 0.5%. However, this never came into effect,” said the Office of the President in a statement.
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In April last year, the IMF announced that it had entered into a US$690 million three-year program under the Fund’s Extended Fund Facility (EFF).
Last Friday, opposition legislator, Rabin Parmessa, told Parliament that the government is believed to have secretly entered into a two billion US dollar loan agreement with MAEC 87 SRL, against the rules of acquiring such loans by any government in the Dutch-speaking country.
He said a government guarantee of four billion US dollars has been provided for the loan, submitting to Parliament what he said is a memorandum of understanding between MAEC 87 SRL and the government, as well as the state guarantee.
The documents were allegedly signed by the Minister of Finance and Planning, Armand Achaibersing, and the Minister of Foreign Affairs, International Business and International Cooperation, Albert Ramdin.
According to the MOU, the loan would benefit a public limited company, Surfin NV, set up by the government, which would be used to carry out development projects.
Parmessar told Parliament that Surfin NV apparently does not exist because it does not appear in the register of the Chamber of Commerce and Industry.
According to the letter, the loan is a “private loan facility” for financing development projects to be carried out by Surfin NV in Suriname. The loan has an annual interest rate of 0.5 percent with a 20-year term. It has a grace period of five years.
For the loan, Surfin NV has opened a bank account with the Federal Reserve Bank of New York in New York.
But in a statement, the government claimed that the National Democratic Party (NDP) headed by former president, Desi Bouterse, presented a confidential MOU from January 2021, falsely giving the impression that it had taken out a two-billion-dollar loan and that the funds have since been transferred to private accounts.
The government said numerous unfavorable loans at high-interest rates were taken out by the previous government, referring to the Oppenheimer loans amounting to US$675 million with an interest rate of almost 13 percent.
It said as a result, Suriname had ended up in a situation of default, a situation in which creditors were informed that they could not repay. The high debt burden is the origin and fundamental reason the country is currently in a financial and economic crisis.
The creditors expressed a willingness to talk with the current government, but on condition that an IMF program is started.
The government said at that time, there was still no idea as to the outcome of the IMF option, adding “it was therefore important to have a backup solution should the IMF program fail.”
The statement added that in that context, President Santokhi appointed a committee of government ministers to explore options for debt restructuring, with the aim of bringing the interest rate level of nearly 13 per cent back to manageable proportions.
To this end, confidential talks and negotiations have been held with various national and international parties in a transparent manner involving the Central Bank of Suriname.
According to the government, the loan would be used to pay off part of the existing loans as well as to raise funds for the management of the assumed financial debt, poverty alleviation and stimulation of investment in the manufacturing sector.