Join the conversation:

Strong economic growth no safeguard for Suriname in ratings game

Strong economic growth no safeguard for Suriname in ratings game

Posted by PanamericanWorld on February 24, 2014

US-based credit rating agency Moody’s has downgraded the outlook of Suriname’s ‘Ba3’ government bond rating from ‘positive’ to ‘stable’. Though Suriname has been riding a wave of rapid economic growth (a yearly average of 4.1% since 2009), rising public debt and the government’s deteriorating fiscal performance have persuaded the agency to take action. The ratings agency’s lack of confidence in the face of brisk economic growth underscores how fragile the emerging economies of the Caribbean are, or at least how fragile they are perceived to be.

Indeed, Suriname’s debt, while still comparatively low, has increased from 15.6% of GDP in 2009 to 25.9% in 2013, with Government’s intention to finance the acquisition of equity stakes in two mining companies expected to put additional upward pressure on the national debt, which will rise to 28% in 2014, according to Moody’s calculations. It appears that Suriname is also falling victim to a lack of diversity in the economy, particularly when it comes to exports. Moody’s pointed to falling commodities prices as another strong driver behind the outlook change. Gold, alumina and hydrocarbons, which make up 80% of Suriname’s exports and account for 30% of Government revenues, have all experienced stagnation in international markets.

Meanwhile, Moody’s affirmed Suriname’s foreign-currency long-term and short-term commodity ceilings (Ba1/NP), foreign-currency long-term and short-term deposit ceilings (B1/NP), and local-currency country and deposit ceilings (Ba1).

GLOBAL NEWS MATTERS

Facebook comments



Monthly newsletter featuring articles hand picked by our country managers from the best content across PanamericanWorld.



Monthly newsletter featuring articles hand picked by our country managers from the best content across the Caribbean Region on PanamericanWorld.

PANAMERICANWORLD COUNTRIES