Jan 2024 Interview with President Chandrikapersad Santokhi of Suriname
Prisma Reports (PR): On July 16 2020, after the ceremony where you were sworn in as the new president of Suriname, you announced that you had a plan and a strong will to influence the future of your country. What have you been able to achieve in your first three years as president?
Chandrikapersad Santokhi (CS): Even before I took office, I presented a rebuilding vision for my country during my campaign that was very ambitious. To be ambitious is very important for politicians, but it has to be based on the availability of all the relevant data and information. When you’re in the opposition party, which was my position before becoming president, you’re not always given access to all of the data. So our initial plan was based on the data available to us, on economic finance figures and on the country’s debt information. However, once we were in a position see all the facts and figures, we saw that it’s not only one crisis facing the country: you had the financial crisis, the economic crisis, the debt crisis, the COVID crisis, the climate change crisis and now the impact of the Ukraine war as well. Based on that, we adapted to the situation we inherited and we designed a new strategy.
Our new strategy was comprised of three parts. The first one was to get the crises under control — that’s the recovery phase. The second stage was to bring stability and the third stage was to bring economic growth. That was our starting position as a new administration in July 2020. In October of the same year, we were confronted with the first issue regarding payment of debts, particularly to commercial creditors, which we were not in a position to pay back. Based on our collection and analysis of all the data, we then recognized that we had a very serious debt crisis of $4 billion that included complicated, complex, bilateral debt; international debt; commercial debt; and also local debt with the local business community. All these debts were based on formal agreements with the government and you have to abide by these agreements. Suriname has no historical record of breaching an agreement or a deal with another government, another institution or another entity.
The first decision I took was that we should follow the path of international law and also look to orderly settlements. We went to part of the negotiations. There, we lacked expertise, so we hired a French company, Lazard, to assist us. Then we looked at where stood as a country in terms of our income and expenditure parameters. One thing was quite certain: we could not continue with the country’s previous policy of borrowing money and spending it on consumption. That was stopped immediately. The second thing was to look at ways to decrease expenditure and for mechanisms to increase our income.
As a new administration, we made it quite clear that we were willing to engage in negotiations with creditors to get our debt settlements restructured under one condition: we needed to include the International Monetary Fund. We started negotiations with the IMF after October 2020 and finally reached an agreement with it in December 2021. Our intention was to begin restructuring the economy but, given our position as a country, we had a capacity problem, we had weak institutions and a weak administration.
We started by giving priority to getting our domestic financial situation under control, based on the format of the IMF, to bring balance to our budget and our economy. Therefore, we undertook a lot of measures to increase our income in the fiscal sphere, in taxes, and to expand our income to more sectors. Additionally, we lowered expenditure by steadily phasing out the country’s subsidy policy and by introducing a strategy for reducing expenditure.
All these measures impacted the community. The toughest issue was when we took over the exchange rate. Formerly, it was at 7.50 Surinamese dollars to 1 U.S. dollar in theory, but in practice it was between 15 and 20 to 1 on the black market. We had to make the tough decision to go with a floating exchange rate based on supply and demand, and we saw the exchange rate going down from 20 to 25 to 40 Surinamese dollars to 1 U.S. dollar. The Surinamese community felt that in their lifestyles, in rising prices and costs of living, and pressure on the government increased. We had some demonstrations and some very tough moments of unrest.
One thing was clear though: that’s the only path we have to follow to bring a bright future for the people. That is what my strategy was: to include the international institutions, to include all friendly nations and to go onto the international stage to bring forward the message of Suriname and to establish the trust and confidence that our people and the country needed. Based on international partnership, based on good faith in negotiating with all creditors, but also showing political willingness that we, as the new administration, will abide by the law in relation to agreements with all creditors.
However, we also needed to explain that we were not in a position to pay them immediately and we wanted to reach a settlement to pay them back. Suriname has a bright future with more income, let us talk as two partners and let us reach an agreement. That’s the agreement we have reached with the Paris Club, with India and with commercial creditors. China is still pending; it will take some weeks to reach an agreement on that and to reach agreements with local creditors.
Over the last three years, our international reserves, which were -$140 million, are now +$1 billion. Our import coverage, which was zero weeks, is now 7 months. Our economic growth rate, which was -8%, is projected to reach +2.3% in 2023 by the IMF. Our deficit to budget was 19% and now, with our 2024 budget, it’s 4% — one point above the international norm. Regarding our debt to gross domestic product ratio, when we took over it was 165% and now it has gone back down to 120%. We’ll lower it further. The toughest challenge is inflation, as we have suffered from a lot of import inflation. When we took over it was 65%, now it’s 40% and it’s projected to reach 30% next year; slowly it will continue to go down.
That means tough measures with tremendous impacts on the community. Therefore, we initiated a lot of social programs, protecting vulnerable groups, introducing allowances, salary increases and added purchase power. That is the strategy we have initiated to protect the people.
Where do we stand now? We have dealt in a very responsible manner with the recovery stage. We have recovered. We are now reaching the mid-point of the stability stage of our strategy and it’s time to give back to the community, to bring relief. We’ll do that by inviting investors to the country. They can see that we’re moving toward stability, that our exchange rate is back to stability and they can see a positive report from the IMF. They can also see also how the new leadership is expressing itself in the discovery of oil and gas, how we want to manage it in a sustainable, environmentally friendly manner, based on international standards. In addition, they can see our efforts toward sustainable development by making savings in our sovereign wealth fund for the next generation, for the diversification of our economy and for green energy.
We also want to have more investment in food security, because that is the other challenge that we have as a country. We are now seeing a lot of investors in our food security program. For example, in the coconut industry there is Pomeroon, a Canadian company registered on Wall Street. There are Brazilian companies investing in soya and corn, and Chinese companies with high tech investing in agricultural produce to increase production, quality and disease resistance. We’re also asking for investments in other areas, such as mining — because Suriname doesn’t only have gold, we have other types of minerals — in housing and in carbon credits, which is a very challenging area. This is where we stand. It’s now time for more investment at the micro level.
PR: The latest appraisal drilling of Suriname’s hydrocarbon fields confirms that Block 58 presents prospects of an oil boom, similar to that experienced by Guyana. APA Corporation, TotalEnergies’s partner in Block 58, has recently reported that more than 700 million barrels of oil resources have been identified and that it is also pursuing the establishment of a liquefied natural gas platform in offshore Suriname. TotalEnergies had delayed its billion-dollar investment in Block 58, considering that there was too high gas-to-oil-rate ratio. However, it relaunched the project in September 2023. What is the current situation?
CS: These figures are based on official information provided by TotalEnergies, APA and our own state oil company Staatsolie. I personally went to APA’s well to see all the drilling and exploration activities, which are high tech and highly sophisticated. There are a lot of drilling activities going on and there are so many blocks, but Block 58 has most of the discoveries in oil and gas. Based on the information I’ve seen and the timeline for production, there will be a production capacity of 200,000 barrels per day and there will be a $9 billion investment.
It’s a very sophisticated business, and I understand that it takes time. We, as governments, like to see activities taking place over the term of an administration, but this is an investment that exceeds government terms and, therefore, we need, as a nation, a common position. It doesn’t matter which political party you represent, this is something of national interest that we as a country should prepare ourselves for by investing in the private sector to encourage local content, but also, as a government, by expressing our intention of how to make use of this huge income. Within 20 years, it could bring in $20 billion, which is a lot of money, and the government should put a protective mechanism in place for saving it for future generations.
Secondly, we can use our income from oil and gas for the diversification of our economy and the green transition in production and agriculture. That needs nationwide agreement rather than just being based on a political party’s vision. We also need strong legislation on corruption and money laundering and we strengthened this recently. We approved a presidential decree for the mandatory reporting of all the assets of all politicians. Moreover, we are amending our legislation to have proper protection for our oil and gas.
There is a crisis and people have sacrificed a lot. There’s expectation from Suriname’s population about how they can gain from this oil discovery. I gave instructions to the CEO of Staatsolie to explore for me and securitize some part of the income to bring relief to the community, because our people have made sacrifices. That is not easy, because everyone is waiting for the final investment decision, which will be at the end of 2024.
Two things have changed dramatically in our economic position recently: our upcoming income from oil and gas, which was not included in our IMF program, and our income from carbon credits. Maybe, with a good dialogue, we can amend our IMF program so that there is more flexibility and more room for us in our budget to spend money on the community.
Once again, as a country, we are very responsible in designing policies that are based on sustainability and transparency. We should have close cooperation with the oil companies, we should continue to strengthen their confidence and trust in the stability of our laws and tax policy. We have an agreement there, we will respect the agreement and we will have dialogue.
Based on communication and dialogue, we will create a policy for investment, to attract investors and, in the direct and indirect spin-offs of oil and gas, to train people. Within my cabinet, there is a department for local content. The cabinet, in collaboration with the private sector, is promoting local content, putting all the necessary policies, legislation and incentives in place so that everyone can be a part of this.
It will also have a spin-off impact on tourism, real estate, infrastructure, port facilities and cargo facilities. That’s why the three presidents of Guyana, Brazil and Suriname had a meeting in 2022, where we agreed to sign agreements for regional development. There is a road between Brazil and Guyana, which should be developed in such a way that it can interconnect to a highway in Guyana and early this year we will start building a bridge between Suriname and Guyana. It will be a public-private operation based on a build-operate-transfer model. Suriname and Guyana can function as a hub for cargo from north Brazil in terms of our port facilities and we have also planned for an international airport in the west of the country, near to the oil and gas developments and to Guyana.
Those are the opportunities, but we have only 600,000 people in our country and it would involve a huge development. With investment in place, the biggest challenge is labor. So I instructed our Minister of Foreign Affairs to communicate to all friendly nations — based on our agreements, good regulations and international work standards — that we are open to hiring people and giving them the opportunity to deliver their contribution. At the moment, we have flights to Haiti for bringing in laborers in agriculture and other sectors. Since the last Caricom meeting, it has also been agreed that everyone in the region can move freely to all Caribbean countries in order to take up labor demand.
I’m seeing a lot of investors coming into the country already. The attraction of Suriname was there all the time: its diversity, ethnicity, culture, religion and biodiversity — we are 93% covered with forests and have the lowest deforestation rate at 0.5% — but our oil and gas has added value that will spin-off to other sectors.
As the government, I don’t think we have too much possibility of changing the timeline for the exploitation of Suriname’s oil and gas, but we can put all the mechanisms and policies in place for the sustainable development of that oil and gas. We are contributors to the rule of law and all investors are protected by a totally independent judiciary. That independence is protected by the constitution.
PR: Climate change is one of the most dramatic challenges impacting life in Caribbean countries. How is Suriname working toward the green transition?
CS: We are an oil-producing country. We have 40 years of experience in onshore oil production with Staatsolie. Now, for the first time, we will have offshore exploitation. However, there is a timeline designed by the world for the transition of energy to green sources. We are supporting that timeline and the transition. Currently, we are more than 50% green already. We have hydro energy from our dams and we have investments in a lot of solar energy projects in the western part of Suriname. In the interior, all the villages are covered with solar energy panels. For the first time, we recently gave approval to Staatsolie to start solar energy projects. There is also a biomass project ongoing that uses the remains of rice to produce energy.
We are prepared to make good use of our oil and gas based on international norms and environmentally friendly procedures. We are one of the three carbon-negative countries in the world, and science and technical experts are in charge of making calculations and assessments for me that, despite all the oil and gas investment and production, will keep us carbon negative. We have a responsibility to protect the planet.
Carbon credits are important. We are the first country to publish its carbon data. We have internationally transferred mitigation outcomes in place that should be certified with procedures signed by the United Nations Framework Convention on Climate Change (UNF triple C). Within the coming few months, we can start to trade our carbon credits on the international market.
Here again is the government’s philosophy in operation: design a strategy, get the income in, use part of this income for the protection of the environment, let part of this income go to the local community, which had protected our forests for many hundred years — give them part of the money for their own development but also use part of it to bring relief to our people.
Our carbon credit strategy is controlled by a team of ministers led by the president, plus a technical team and we are coordinating with the UNF triple C. We have received more than 16 offers already of different types, such as debts-for-nature swaps, green bonds, blue bonds and so many others. We are looking seriously at all the proposals and to get engagements with all parties to see what is in the best interest of my country. Based on that, we will have a deal and, for the first time, we will go on the market.
PR: Are U.S. companies actively investing in Suriname and what are the government’s views on attracting investors from the US?
CS: The first thing that is very important for attracting investors from the U.S. is the relationship between the U.S. administration and my administration. It’s perfect. We have very strong cooperation historically. The U.S. company Alcoa was involved with bauxite exploitation in Suriname for more than a hundred years, based on which there were a lot of spin-off activities from other U.S. companies. The relationship and cooperation — on a diplomatic level, on a technical level and on a people-to-people level — between the U.S. and Suriname are very good.
Secondly, we have agreements with the U.S. government. A few months ago, for example, we signed the Intelligence Cooperation Agreement on law enforcement and collecting intelligence information on terrorism financing and organized crime. We also invited the Drugs Enforcement Administration to have a base over here, we have joint training between the U.S. and Surinamese military, we have the Defence Cooperation Agreement, we have the Justice Cooperation Agreement — there are many illustrations.
There are a lot of U.S. companies present in our oil and gas sector: APA is US-based company and there are other U.S. companies involved in the other blocks. But given global challenges — including the availability of scarce oil and gas resources, which have been impacted by the Ukraine war — the world needs to find more sources and one of the growing areas of interest from U.S. investors is looking for new resources here. Brazil is also interested in the resources of Suriname, particularly Petrobras, as are Trinidad and Tobago and France. We have also talked with Guyana: if we have gas and they have gas, why can’t we exploit it jointly to reduce the cost of exploitation? And there is the possibility of using some of that gas as cheap energy for the new development of bauxite.
U.S. companies are also interested in investments in indirect spin-off growth sectors, such as infrastructure and logistics, in which Halliburton is already operating. During my last visit to the U.S., I had meetings with the financial sector, with the Council of the Americas and with all the investors in New York. Oil and gas will need the financial sector. We are also talking with American Airlines to bring them back for increased connectivity. In hospitality, Marriott is here and will shortly open a second hotel, Radisson will open one of their franchises and other franchises are coming, like Hard Rock Cafe at The International Mall. There will be spin-offs in the entertainment sector, in services and in connectivity as well.
There has been a lack of information about Suriname, but our oil and gas discoveries have increased awareness about the country. What we need to do, as the government, is to enact a policy to attract tourism. What I have done as president is to remove all the barriers to the movement of people to Suriname. Most countries’ citizens don’t need visas anymore, including ones from the U.S. I have also invited all the local airline companies to invest more in expanding their flight connections to the U.S. Currently, there are three private Surinamese companies investing in aircraft and airports, so we will have more aircraft for regional flights.
This will have an impact on real estate, because most international companies will come with their ex-pat employees and they will need somewhere to live, they will need good facilities and they will need food, which will impact its production here. It will also impact our insurance and healthcare systems. What we need to ensure is that the huge income that will come into Suriname from oil and gas is used bring prosperity to all Surinamese people, not just a small group of them.