World Bank Document

Report No. 1257a-SUR FILE COP Economic Position and Prospects of Surinam

Noveinber 24, 1976 Public Disclosure Authorized Country Programs Department II Latin America and Caribbean Regional Office

FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the World Bank

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be.disclosed without World Bank authorization. CURRE;NCY EQUIVALENTS

Gurrency Units Surinam Guilder

Exchange Rate Prior to December 27. 1971.

U3$1.000 - Suir. f. 1.886 Sur. f. L.0o0 Us$0.530

Exchrance Rate from Decepiber 27. 1271 to Prosent,

USM1.000 - 3ur. P. 1.789 Sur. !. 1.000 - US$0.559 FOR OFFICIAL USE ONLY

PREFACE

This report is based on the findings of an economic mission which visited Surinam in February 1976. The mission comprised Messrs. George R. Gebhart (Chief), J. Peter Wogart (Economist), Mahmood A. Ayub (Economist), E.P. Riezebos (Agricultural Economist), and Miss Ada Jacqueline de Korver (Secretary).

A previous report of November 2, 1972 (Basic Report on the Economy of Surinam, No. CA-21a) contains a detailed analysis of the development prospects of Surinam. The present report updates the analysis of the overall economic situation presented in the report of 1972.

This document ha a r tricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosd without World Bank authorization.

TABLE OF CONTENTS

Page No.

MAP

COUNTRY DATA

TABLES IN TEXT

SUMMARY AND CONCLUSION ...... i- vi

I. INTRODUCTION ...... 1

II. ECONOMIC STRUCTURE AND RECENT ECONOMIC DEVELOPMENTS 3

A. Structural Changes ...... 3 B. Manpower Resources ...... 7 C. Economic Developments 1960-75 ...... 8 D. Public Sector Savings and Investment ...... 15 E. Balance of Payments ...... 17

III. SECTOR ISSUES AND PROSPECTS ...... 18

A. Agriculture ...... 18 B. Mining ...... 28 C. Industry and Construction ...... 33 D. Energy ...... 35 E. Transportation ...... 36 F. The Social Sector ...... 38 G. Tourism ...... 41

IV. DEVELOPMENT STRATEGY AND INVESTMENT REQUIREMENTS ..... 42

A. Growth Constraints ...... 46 B. Development Plan 1976-1985 ...... 48 C. Growth Prospects ...... 51

V. FINANCING OF DEVELOPMENT ...... 58

A. The Private Sector ...... 58 B. The Public Sector ...... 62

VI. THE EXTERNAL SECTOR ...... 77

Table of Contents of Statistical Appendix

Statistical Appendix

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Page 1 of 2 pages

COUNTRY DATA - SURINAM

AREA POPULATION DENSITY 163,800 km2 0.38 million (mid-1975) 2.3 per km2 Rate of Growth: 3.5% (from 1951 to 1971) -1.1% (from 1972 to 1975)

POPI:LAT'ON CHARACTERISTICS 1965 1972 HEALTH (1975) Crude Birth Rate (per 1,000) 38.20 37.51 Population per physician 1850 Crude Death Rate (per 1,000) 7.00 6.15 Population per hospital bed 170 Infant Mortality (per 1,000 live births) 34.51 21.20

INCOME DISTRIBUTION (1962) NUTRITION (1974) % of national income, highest quintile 60.0 Calorie intake as % of requirements 95 lowest quintile 10.0 Per capita protein intake (grams/day) 60

ACCESS TO PIPED WATER (1974) EDUCATION (1974) 7.of population 75% Adult literacy rate % 80 Primary school enrollment % 92

GNP PER CAPITA in 1974:1' US$1067

GROSS NATIONAL PRODUCT IN 1974 ANNUAL RATE OF GROWTH (%, constant prices)

US$ Mln. % 1960-65 1965-70 1970-74

GNP at Market Prices 464.7 100.0 4.4 4.3 3.0 Gross Domestic Investment 130.2 28.0 13.3 -9.5 10.4 Gross National Saving 106.8 23.0 5.2 4.2 12.8 Current Account Balance -22.4 -4.8 Exports of Goods, NFS 264.7 57.0 4.5 13.5 3.5 Imports of Goods, NFS 274.3 59.0 10.0 2.6 3.7

CUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1974

Value Added Active Labor Force V. A. Per Worker USS Mln. % Mln. % US$ %

Agriculture and forestry 40.8 9.2 0.027 26.2 1,511 35.2 Mining 167.7 37.9 0.007 6.8 23,957 558.2 Government 91.1 20.6 0.033 32.0 2,761 64.3 Other 142.5 32.3 0.036 35.0 3,958 92.2 Total/Average 442.1 100.0 0.103 100.0 4,292 100.0

CENTRAL GOVERNMENT FINANCE

1970 1975 1970 1975 (Sur f Millions) (% of GDP) V

Current Receipts 137.1 294.4 24.9 33.3 Current Expenditure 123.8 249.8 22.5 28.3 Current Surplus 13.3 44.6 2.4 5.0 Capital Expenditure 47.0 109.9 8.5 12.4

1/ The Per Capita GNP estimate is at 1974 market prices, calculated by the same conversion technique as the 1975 World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered.

2/ GDP at current market prices.

not available not applicable Page 2 of 2 pages

COUNTRY DATA - SURINAM

1VNEY, CREDIT AND PRICES 1970 1971 1972 1973 1974 (Million sur f. outstanding end period)

Money and Quasi Money 146.3 166.1 187.7 228.8 245.4 Bank Credit to Public Sector 0.5 4.6 -2.5 21.9 13.9 Bank Credit to Private Sector 92.3 106.5 118.5 125.0 154.4

(Percentages or Index Numbers).

Money and Quasi Money as % of GDP 26.6 27.6 29.3 32.1 27.8 General Price Index (April 1968-March 1969 100) 104.4 105.5 108.0 122.0 142.6 Annual percentage changes in: General Price Index . 1.1 2.4 13.0 16.9 Bank Credit to Public Sector . 820.0 -84.0 2450.0 -36.6 Bank Credit to Private Sector . 15.4 11.3 5.5 23.5

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970-74)

1965 1970 1974 US$ Mln. X (Millions US$) Bauxite 49.9 27.5 Export of Goods, NFS 72.9 158.0 264.7 Alumina 77.7 42.8 Imports of Goods, NFS 109.1 146.6 274.3 Aluminum 27.9 15.4 Resource Gap (deficit =-) -36.1 15.4 - Rice 7.6 4.2 All other commodities 18.3 10.1 Interest Payments (net) - - - Total 181.4 100.0 Workers' Remittances - 0.8 1.1 Other Factor Payments (net) -15.1 -40.9 -21.6 Net Transfers - 9.6 7.7 EXTERNAL DEBT. DECEMBER 31. 1975 Balance on Current Account -51.2 -15.1 -22.4 US$ Mln. Direct Foreign Investment 35.0 -4.6 -0.6 Net MLT Borrowing Public Debt, incl. guaranteed 6.7 Disbursements 12.2 12.1 10.6 Non-Guaranteed Private Debt - Amortization 3.8 0.6 0.9 Total Outstanding & Disbursed 6.7 Subtotal 8.4 11.5 9.7 Capital Grants 5.5 12.7 19.8 Other Capital (net) 5.3 2.1 -0.5 DEBT SERVICE RATIO for 1975 Other items n.e.i. - - - Increase in Reserves (+) +3.0 +6.6 +6.0 %

Gross Reserves (end year) 49.4 83.0 Public Debt, incl. guaranteed 2.7 Net Reserves (end year) 46.2 80.3 Non-Guaranteed Private Debt - Total outstanding & Disbursed 2.7

RATE OF EXCHANGE IBRD/IDA LENDING, (latest month) (Million US$):

Through December 1971 IBRD IDA USSl.00 - Sur f. 1.885 Sur f. 1.00 = US$0.531 Outstanding & Disbursed Undisbursed Since January 1972 Outstanding incl. Undisbursed

US$1.00 a Sur f. 1.789 Sur f. 1.00 = US$0.559

1/ Ratio of Debt Service to Exports of Goods and Non-factor Services.

not available not applicable LIST OF TABLES IN TIIE TEXT

Page No.

Table t: Sector Origin of GDP at Factor Cost 4

Table 2: Sector Distributior of the Labor Force 6

Table 3: Annual Percentage Change in Real GDP by Sector, 11 1971-75

Table 4: Expenditure on Gross Domestic Product, 1970-75 13

Table ': Cross Domestic Investment and its Financing, 1970-75 14

Table 6: Central Government Operations, 1970-75 16

Table 7: Balance of Payments, 1970-75 19

Table 8: Energy Sales in the Paramaribo Network , 1968-75 37

Table 9: Some Demographic Statistics for Surinam, 1965-72 38

Table 10: Public Capital Development Expenditures 43

Table 11: Surinam: Proposed Investments under the 10-Year Development Plan 1976-85, by Economic Sector and by Concentration Area 50

Table 12: Manpower Projections, 1975-85 53

Table 13: Projected expenditure on Gross Domestic Product, 1976-85 55

Table 14: Projected Gross Domestic Investment and its Finance, 1976-85 (High Growth Alternative) 56

Table 15: Projected Annual Percentage Change in Real GDP by Sector, 1976-8i; (Low Growth Alternative) 57

Table 16: Projected Expenditure on Gross Domestic Product, 1976-85 (Low Growth Alternative) 59

Table 17: Projected Gross Domestic Investment and its Financing, 1976-85 (Low Growth Alternative) 60

Table 18: Central Covernment Current Expenditures - Economic Classification 1970, 1975 65

Table 19: Central Government Current Expenditures, 1970-75 Functional Classification 66 i,lS OF TABLES 1, THIl TEXT (Cont'd)

Page No.

Table 2(0: Central Government Revenues, 1970-75 67

Table 2L: Central Government Operations: Actual 1974; Estimated 1975; Projected 1978, 1980, 1985 69

Table 22: Central Government Operations: Projects 1980, 1985 (Low Growth Alternative) 70

Table 23: Financing Central Government Capital Expenditures: 1975-80, 1985 (High Growth Alternative) 74

Table 24: Financing Central Government Capital Expenditures: 1985-80, 1985 (Low Growth Alternative) 75

Table 25: Projected External Capital Requirements - High Growth Alternative 76

Table 26: Projected External Capital Requirements - Low Growth Alternative 78

Table 27: Balance of Payments, 1960-85 81 SUMMARY AND CONCLUSIONS

Economic Structure and Resource Endowment

i. Surinam, one of the newest independent countries, presents an unusual and interesting case of economic development. Unlike most developing countries, Surinam's economic problems do not stem from a scarcity of capital. Indeed, with the promise of substantial Dutch development assistance for the next ten to fifteen years, it must be considered a comparatively capital abundant country. Equally unusual is the fact that the population has actually decreased in absolute numbers over the past two years due to heavy emigration (to Holland) so that the population at the end of 1975 was substantially less than that of 1973 and even slightly below that of 1970. The resulting reduction in its already small manpower base exacerbated the country's labor scarcity in many skill categories. On the other hand, there is a relatively abundant supply of unskilled labor compared with the number of job opportunities available in the country. The country has a good natural resource base, good hydroelectric power potential, a reasonably adequate system of transport and large tracts of unused but potentially usable forestry and agricultural land. The major constraint to the achievement of high and sustained rates of growth in the future appears to be the lack of skilled manpower, especially at administrative, managerial and middle and higher technical levels.

ii. Although unique in many respects, Surinam's economy has several features in common with that of other developing countries, particularly with its Caribbean neighbors. The economy is heavily dependent on one product, bauxite (and its derivatives) which, in 1975, accounted for about 38% of GDP, 40% of tax revenues, 85% of export receipts and provided financing for over 75% of imports net of those associated with the mining sector itself. As in the case of other Caribbean countries the economy is notably open, exports and imports being 50% and 55% of GDP respectively. These two factors make the Surinamese economy highly susceptible to fluctuations in world demand. Also as in many other developing countries, wide economic disparity exists between the urban and rural sectors, including the distribution of essential social services.

Recent Economic Developments

iii. The rate of growth of the Surinamese economy has fluctuated considerably over the last 15 years. It grew rapidly during the mid-sixties as a result of an investment and output boom in the bauxite processing sector, financed largely by external funds. Following slower growth in investment and output in the late 1960s, the economy stagnated, unemployment increased rapidly and emigration to Holland accelerated. The economic situation deteriorated further in the early 1970s, as the country moved towards independence. Investment, foreign and domestic, was dormant due to political un- certainties in Surinam and reduced competitiveness of local products in world markets. Fluctuating international demand and increasing production difficulties at the mines afflicted the important bauxite industry, and agricultural output suffered from price policy disincentives, lack of investment and labor - ii - shortages. The effects of the oil crisis induced world recession leading to weak international demand for aluminum and a decline in international investment caused real GDP to fall sharply in 1974 and 1975. The unemployment rate rose steadily during the period 1970-75, despite the overall decline in the population. Public finances deteriorated appreciably, with only the bauxite levy saving the Government from a sizeable current deficit in 1975. On the other hand, the balance of payments held up reasonably well, and domestic savings rates remained fairly constant at high levels despite unprecedented rates of inflation. Dutch aid financed most of the public sector investment program and also rendered budgetary assistance on increasingly frequent occasions as the public finances deteriorated. Government intervention in the economy became increasingly more frequent during this period, also, largely in an effort to alleviate the adverse social effects of the deteriorating economic situation rather than providing growth stimulus through direct fiscal action. To some extent the Government's intervention may have created uncertainty among private investors, thereby contributing to the decline of investment.

Sector Issues and Prospects iv. Production of the agricultural sector, one of the mainstays of the economy, increased moderately in the two decades prior to 1970, but stagnated thereafter. Sectoral growth in the earlier period was concentrated on a few products, rice, poultry, citrus, and bananas. Most of the growth occurred in a few large-scale capital-intensive enterprises, the outstanding example being the highly mechanized rice operation (Wageningen) in northwestern Surinam. However, present government strategy for the agricultural sector is based on development of smallholders. Thus, the development of giant conventional farms, as well as the neglect of smallholders who produce the vast majority of agricultural output in Surinam, runs counter to the Government's policy objective for the agricultural sector to absorb a large proportion of the unemployed. Investment requirements for setting up family-sized farm units are quite high, but investment capital is not considered a major constraint given the large amount of Dutch aid available. Rather, the manpower constraint is likely to be more binding. The Government has some 40 agricultural projects envisioned for execution over the next several years, including several large rice-growing projects, a few livestock projects, a second oil palm project, and several projects to improve existing cultivated lands. Since most of these projects have long gestation periods, agricultural output is expected to grow only moderately, at least until the early 1980s. Questions as to investment priorities, the most appropriate location for further agricultural expansion, pricing of agricultural products, etc., need to be given greater attention. Good prospects exist for exploiting the forest in Surinam also, although the large variety of species, limited concentration and inaccessibility of stands are major obstacles to be overcome. Recently, fishing, especially shrimp fishing, has expanded rapidly and seems to have good potential for future growth. v. The mining sector is very important in the Surinamese economy. Bauxite and its derivatives (alumina and aluminum) form the principal products of the sector, but the country also has potentially rich deposits of iron ore, - iii - copper, chromium, manganese and gold. Local processing of bauxite did start in 1965, and the production of alumina and aluminum is now substantial, bringing in sizable export revenues. Due to its highly capital-intensive nature, employment creation by the industry has been quite limited. Future prospects for mining look good. A major project is under way to exploit the bauxite deposits in the Bakhuis Mountains in western Surinam and there exists a good possibility that gold will be extracted from once abandoned mines if the high international prices of recent months persist. Also, iron ore could be mined and processed along with the bauxite resources in the Bakhuis Mountain area, subject to full feasibility study. A newly formed government-owned company, GRASSALCO (N.W. Grasshopper Aluminum Company), will own 51% interest in future joint ventures in exploiting the country's mineral resources. An alumina refining installation and an aluminum smelter are also planned for the western Surinam area, with the former now schedLtled on line by 1983 and the latter by the second half of 1985. Full economic feasibility of these investments has yet to be established. vi. The manufacturing and construction sector grew rapidly in the years prior to 1968 due to liberal incentives granted by the Government and the general economic stimulus provided by investment in the mining sector. Since the internal market is small, and there are formidable obstacles to exports, most manufacturing firms are of modest size with only one or two firms for a given product line. Sectoral output was lower in 1974-75 than in 1967-68. The decline in activity may be attributed to the world-wide recession as well as internal political and economic uncertainty. Future prospects depend upon the rate of recovery of the world economy and the renewal of confidence of local and foreign investors. vii. The impact of the oil crisis was weaker in Surinam than in most developing countries due to its lesser dependence on oil for energy. Power could be in short supply in the late 1970s since demand is catching up with supply. The Devis Falls Dam (part of the Kabalebo Project) should provide added power at about that time. Surinam's hydroelectric power potential appears exceptionally good and careful planning and execution of investments in power facilities should permit a steady expansion of power supplies in the future. viii. By the standards of many developing countries, Surinam has relatively good health conditions and a fairly adequate general level of education. Still a growing shortage of physicians and health personnel exists. Despite large expenditures on education in recent years, problems persist in the educational system. Teaching needs to be upgraded, and the curriculum is too heavily biased towards the arts and pure sciences. Hlost importantly, public needs for vocational, administrative and technical training are not adequately provided for. A serious shortage of housing exists today, and the Government has announced plans to accelerate the construction of low- and middle-income housing. Housing finance seems adequate, and some subsidies will apparently be available to very low-income families. - iv -

Development Strategy and Program

ix. The Government's development strategy takes cognizance of the main features of the economy, and is somewhat different from that pursued over the past few years. The policy has shifted from one of "let the private sector do it" to one involving much greater government acceptance of the responsibi- litv for economic growth. Emphasis is still on development of the country's natural resources with foreign participation, but with greater participation by the Government. Two additional objectives of the development strategy are the removal of regional disparities through spatial dispersal of economic activity and the reduction of the reliance on just one sector, through product diversification. The new strategy does not deal adequately with the high level of unemployment and the severe shortage of skilled manpower, since the emphasis seems heavily weighted in favor of capital-intensive sectors and technologies. Because of the skills constraint, the public sector investment program appears overly ambitious. Also, the strategy does not define adequately the future role of the private sector in the economy, so that uncertainty amongst investors is likely to persist. x. A Development Plan, covering the period 1976-85, was drawn up by a joint Surinamese-Dutch Commission. Total planned investment amounts to US$2.5 billion (in 1975 prices) to be implemented over a 10-15 year period. The keystone of this Plan is the massive Kabalebo Project in western Surinam, which includes two large dams with ancillary waterworks, bauxite mining and processing, agricultural developments and large-scale industrial investments in addition to the bauxite processing facilities. Full implementation of the investment program is likely to take much longer than foreseen in the Devel- opment Plan. Planning itself is badly in need of improvement, as is budgeting and budget control. xi. The task facing Surinam in the short run is to restore economic growth and reduce unemployment, while over the longer run the job is to lessen external dependence and strengthen the economic structure for self-reliant growth after the Dutch aid has ended. Prospects for the short run depend squarely on the speed with which the Government's investment program can be executed and on the rate of recovery of the world economy. Long-term prospects will depend on the ability to increase domestic savings, especially public sector saving, to a level which would ensure independent, self- generating and self-sustaining growth.

Major Constraints xii. The most important constraint on future economic growth will probably be the lack of skilled manpower. While supporting quantitative data are not available, it appears that skilled workers comprised a high proportion of the massive emigration to Holland of recent years. Since the skilled manpower base was small to begin with, this loss was particularly serious and prejudicial to future development. The ambitious public (and private) sector investment program for the next several years is expected to require large amounts of scarce administrative, managerial and technical skills. Account should be taken of this constraint in future development plans. The present investment program should be carefully revised with a view to placing greater emphasis upon projects which are less intensive in skilled labor and management resources. Moreover, serious consideration should be given to turnkey projects executed by foreign firms whenever appropriate. xiii. Although the bauxite levy has substantially improved the public finances, care should be exercised to keep current expenditures from increasing too rapidly, as they tended to do in 1974 and 1975. Although gross national savings has always been fairly high in Surinam and large amounts of Dutch assistance are available, additional investment capital will be needed, especially in the public sector if the Government's development projects are to be carried out as planned. xiv. Based primarily upon alternative assumptions of the seriousness of the manpower constraint, two growth projections were prepared, a high growth projection of roughly 7-8% increase in GDP and a low growth projection with roughly 4-5% growth. A significant reduction in the unemployment rate could be attained, provided that emphasis in the development plan is shifted to more labor intensive sectors and technologies. Both the agricultural and industrial sectors would seem to merit more emphasis in this regard. In any event, the projections indicate the effect that the skilled manpower constraint is likely to have on growth.

Financing of Development xv. Provided the Government exercises control over the growth of current expenditures, maintains a modicum of internal price stability, and takes steps to improve the investment climate in the private sector, the investment requirements of Surinarn's 10-15 year development program should be within the financial capability of the economy. In fact, it appears unlikely that the country will be able to absorb the external credit made available by The Netherlands within even the 15-year time frame, especially since the proportion of any project financed with Dutch funds will be limited. Public sector savings together with the Dutch aid and that from other external sources should cover a high proportion of the investment needs of the development program. Private domestic saving should be sufficient to finance private investment as well as make a contribution to public sector investment. Dutch aid totalling US$1.3 billion, including some funds remaining from previous assistance programs, will be available over the next 10-15 years. It is important to note, however, that this aid is expressed in 1975 prices and exchange rates and, therefore, is subject to erosion through inflation or exchange rate changes. Moreover, the Dutch have only agreed to participate in Surinam's development program over the relevant time period, which means that these funds are not immediately available to Surinam for investment purposes, but, in fact, the required amounts must be approved annually by the Dutch Parliament. Also, for all but the smaller projects, the Dutch aid apparently can only be used in conjunction with assistance from other sources of financing. As of the date of Surinam's independence, all loans to the country from The Netherlands were cancelled. - vi -

The Dutch assistance alone, excluding the debt cancellation, but including the funds available from previous assistance programs, amounts to approximately US$300 per capita and US$185 per capita annually in nominal terms assuming 10-year and 15-year equal annual disbursement patterns respectively. These amounts will, of course, be substantially eroded by inflation over the years, which provides a strong inducement for accelerating the public investment program.

The External Sector xvi. Developments in the external account of Surinam have been generally favorable over the past several years and are expected to continue that way. Exports and capital inflows, both private and public, have offset rising imports and factor income payments, and have enabled the level of international reserves to rise. Projections indicate that future increases in exports should be sufficient to cover imports and other external obligations in the foreseeable future, thanks to the export orientation of future investment programs and the expected heavy inflows of capital assistance. xvii. Using the high growth rate assumption, the current account deficit of the balance of payments over the period 1976-85 is projected to average US$110-120 million annually in current prices. With imports expected to grow rapidly until 1980 and then tapering off after most of the larger investment projects are realized, the average current account deficit is expected to be higher in the period 1976-80 than in the period 1980-85. This deficit should reach between US$130 million and US$160 million in 1980 and amount to around US$90 million in 1985. Furthermore, amortization payments on existing and future debt should average about US$8 million annually in current prices. As a consequence, the gross external capital required to cover both the current account deficit and requisite amortization payments would have to average about US$125 million annually. An additional US$25 million annually would be desirable to maintain the present level of import coverage of foreign exchange reserves. xviii. The above external capital requirements can be met along the following lines. Capital grants from the Netherlands should bring in about US$90 million annually, and gross disbursements on medium- and long-term loans should contribute about another US$40 million annually. The balance of about US$20 million should easily be covered by net direct foreign investment and short-term capital inflows. Since most of the capital inflows in the future will be grants or concessional loans, debt-servicing problems should not arise provided the economy is managed soundly. Despite the bright prospects for the external sector of Surinam, it seems vitally important that proper policies be taken to assure growing public sector savings throughout the period, in anticipation of the time when such large amounts of Dutch aid will no longer be available. The relatively large public investment program projected for the next 10-15 years will also require considerable external technical assistance, especially in new areas of large scale capital project development in which the Surinamese have little experience. I. INTRODUCTION

1. Surinam, a former Dutch colony situated between Guyana and French Guiana on the northeast coast of South America, presents an unusual and interesting case in economic development. Its uniqueness lies primarily in two factors. First, unlike most developing countries, it does not face an investment resource constraint. Besides having relatively high national savings ratios, the country is assured of exceptionally large external resource inflows for the next ten to fifteen years as a result of development aid commitments on the part of the Netherlands at the time of Surinam's independence. Relative to past levels of investment, the country has what must be considered exceptionally large supplies of capital. Second, Surinam has experienced a sharp decline in its population (and labor force) during the past couple of years due to heavy net emigration to the Netherlands so that the 1975 population (mid-year average) was 4.5% less than that of 1973. More important is the fact that these emigrants were largely the more educated and more highly skilled members of the population, which exacerbated the already serious shortage of skilled manpower resources. Alongside this shortage, there exists a surplus of unskilled labor, with an unemployment rate estimated at 16% for 1975. Although the flow of emigration was reduced substantially after independence, the scarcity of skilled labor has created an unusual development problem for the country. While Surinam is endowed with a good natural resource base, good hydroelectric power potential, relatively large tracts of unused but potentially usable forestry and agricultural land and reasonably adequate transportation systems, the unavailability of skilled human resources required to mobilize and manage the physical capital resources of the country is a major constraint on development.

2. Unique in certain respects, Surinam also has several features in common with other developing countries, especially with its Caribbean neighbors. The economy is heavily dependent upon the mining sector, i.e., bauxite (and its derivatives), which in 1975 accounted for nearly 38% of GDP, 40% of tax revenues and 85% of the country's exports. Its population is highly diverse ethnically and its history is one of colonialism with a plantation economy based on the exploitation of slave labor. Since the internal market is small, its production base is narrow and high cost due to its inability to achieve economies of scale. This renders the country highly dependent upon imports and not -ery competitive in external markets. Finally, as in many other developing countries, there is a wide disparity between the urban areas, mostly situated along the coast, and the rural areas in terms of income levels and the provision of essential social services such as health, education and housing.

3. The development problem facing Surinam, then, is one of maximizing the use of its scarce resource, skilled labor, while at the same time intro- during programs to expand the quantity of that scarce factor. Ascertaining the appropriate levels of capital intensity of investments, appropriate technologies, etc., will have a significant bearing on the manpower problem. Primary importance should be given to undertaking a comprehensive manpower survey with projections of manpower needs over the next several years. - 2 -

4. Surinam, formerly known as Dutch Guiana, covers an area of approximately 163,820 square kilometers in an area referred to as the "wild coast" by its early 16th century explorers. It was colonized in the mid-17th century by British settlers who established plantations along the coastal area for cotton, coffee and sugar production destined for export to England. In 1667, the Dutch conquered the colony and in the ensuing peace agreement were given permanent control over the area. Notwithstanding this agreement, Surinam changed hands between the Dutch and the British several times until it became permanently Dutch in 1816. Surinam was a fully dependent territory of the Netherlands until 1954 when the Tripartite Kingdom of the Netherlands was formed, composed of the Netherlands, Surinam and the Netherlands Antilles, with each member fully autonomous in internal affairs and ruled by its own constitution. The Kingdom Government in which all three members were represented handled external affairs. Surinam became fully independent on November 25, 1975. The Government of Surinam, presently led by Prime Minister Henck Arron, comprises an elected President, a Council of Ministers and a one-chamber Parliament consisting of 39 members who are elected partly by proportional and partly by district representation.

5. For over two centuries the plantation system thrived using cheap Negro slave labor imported from Africa until increased competition from other areas and the abolition of slavery in 1863 reduced its profitability. There- after, plantation owners successively contracted Chinese, Indian and Javanese laborers to work the plantations giving rise to the current ethnic diversity of the population. Of the country's 367,000 inhabitants (1975 est.), two- thirds in about equal numbers are Hindustanis and Creoles, 15% Indonesian, 10% Bushnegro, 3% Amerindian, 2% Chinese and 2% other, mostly of Dutch and other European descent. By the beginning of the 20th century nearly all of the plantations had been abandoned and economic activity began to concentrate on the mining of bauxite.

Resource Endowment

6. Surinam's resource endowment appears to be fairly good. Bauxite is currently mined from two large deposits in eastern Surinam, and sizable deposits have been discovered in the western part of the country. Exploita- tion of these latter deposits is currently under study. Iron ore, copper, nickel, chromium, and manganese deposits have also been located, and gold bearing ores are known to exist in central Surinam, near the city of Brokopondo. The exact nature, extent and economic value of these mineral deposits is still unknown and, with the exception of the gold tracings, no efforts are currently made to exploit them. Four major rivers and their tributaries which traverse the country from south to north harbor good hydroelectric power potential and supply water for irrigation purposes, besides being an excellent means of transportation. Several hydroelectric projects have been identified by the Government and construction is to begin on one of these, in connection with the so-called Kabalebo Project, in mid-1976.

7. A favorable climate and large areas of potentially cultivable land offer a wide range of agricultural and forestry possibilities of which only a small portion are currently being exploited. The average annual temperature is high, 27 0C for Paramaribo and environs, with little variation year round. Rainfall averages 2,000 mm annually and is fairly evenly spread throughout the year. All areas of the country receive plentiful rain, although occasional unpredictable droughts do occur, with the northeastern and southern sections receiving the most and the northwest section the least. While Surinam is outside the hurricane belt, the trade winds provide a constant offshore breeze bringing rains and moderating the high temperatures.

8. The territory of Surinam consists of three zones; the young coastal plain, the savannah belt and the tropical rain forest. The young coastal plain has some good soils that could be used for a variety of agricultural crops. Since this area is near sea level, it needs to be empoldered and irrigated to reduce the salinity of the soils. While over 200,000 ha are considered potentially suitable for agriculture in this area alone, at present only about 50,000 ha are under cultivation in the entire country, practically all in the coastal area. The tropical rain forest, which covers the southern 80% of the country, is in large part uninhabited and currently considered economically valueless because of its inaccessibility. In the savannah belt prospects for forestry development look especially good, aided by a recently completed penetration road across the country through the belt which opened up large forest areas, and possibly agricultural areas, to exploitation. About 1.3 million hectares of forest are now open and the extraction of wood could increase many fold in the next few years. There are several major obstacles facing the industry, however.

9. Nearly 70% of the population of Surinam lives in or around the capital city of Paramaribo and 20% lives in small cities and villages along the coast. The rest of the population consists of Bushnegroes and Amerindians living in tribal settlements in the interior. The population is relatively young; 46% are under 15 years of age and 5% over 65 years of age. Education for children up to 12 years of age has been compulsory for many years, and over 80% of the adult population is literate. An estimated 92% of primary school age children were enrolled in 1974.

II. ECONOMIC STRUCTURE AND RECENT ECONOMIC DEVELOPMENTS

A. STRUCTURAL CHANGES

10. The structure of the Surinamese economy is typical of that of many developing countries, with heavy concentration of GDP and employment in a few sectors and high dependence on the external sector. According to 1974 data, nearly 38% of GDP originated in the mining sector (bauxite mining and processing), the leading sector of the economy. Distributive trades and services and the public sector constituted around 21% of GDP each (Table 1). Output in the agricultural sector has decreased relative to most other sectors of the economy registering only about 8% of GDP in 1974 compared with an average of over 12% for the period 1958-60, and even higher percentages in earlier years. - 4 -

Table 1: SECTOR ORIGIN OF GDP AT FACTOR COST

(Percent)

Average 1958-6o 1968 1970 1972 1974

Agriculture and Fisheries 12.4 9.5 7.7 8.1 7.8 Forestry and Wood Processing 3.9 3.2 2.8 2.5 1.4

Mining and Bauxite Processing 31.1 30.6 33.1 32.7 37.9 Manufacturing and Construction 8.8 13.3 8.7 9.0 7.0

Housing 4.6 3.3 3.4 4.2 4.0

Government (19.2 19.8 20.6

Commerce, Banking, Insurance, 39.2 40.1 Transport and Other Services (25.1 23.7 21.3

Source: Table 2.4, Statistical Appendix and 1972 Bank Economic Report on Surinam. - 5 -

Other recent changes in the structure of the economy are also evident in Table 1. Value added in the dominant mining and minerals processing sector increased as a proportion of GDP from 28% to 34% in 1967 when the bauxite processing facilities came on line. Thereafter, it decreased slightly, averaging around 31% until 1974 when the new bauxite levy raised the value of production. Manufacturing and construction increased in proportion to GDP up until 1968 reaching 13% of GDP and decreased thereafter to approximately 8%. The reasons for this decrease are not altogether clear, but were probably related to the reduction in overall construction activity following the boom of the middle 1960s and a fall in investment activity in the sector. Another very noticeable trend has been the decline in relative importance of the forestry and wood processing sector, which occurred despite the sector's considerable potential. Technical difficulties relating to the lack of extensive stands of single species, the lack of penetration roads through most of the forestry belt, and marketing difficulties relating to the locational disadvantages of Surinam in the major world markets, have been primary obstacles for the industry. Recent completion of the forestry belt penetration road and the development of regional Caribbean markets have increased the potential of the industry.

11. Finally another trend which deserves comment is the increasing role of the Government In the economy. Although the publlc sector's contribution to GDP has increased gradually in recent years, government participation in terms of controls and interventions has increased much more rapidly, especially in the past two years. Interventions have come primarily in the form of price controls on essential goods and services and import prohibitions or quotas to protect locally produced goods. Direct intervention in production through government ownership and public sector investment have become much more prevalent recently in response to growing stagnation in the private sector. This trend towards greater public sector involvement in the economy appears likely to continue in the future.

12. The sectoral distribution of the labor force contrasts considerably with the sectoral composition of GDP (Table 2). Nearly one-quarter of the labor force finds employment in the agricultural sector, where only 8% of GDP originates, while only 7% of the labor force is employed in the mining and mineral processing sector which generates over 35% of GDP. All of the other sectors of the economy employ a greater percentage of the labor force relative to their percentage contribution to GDP. Significant trends in the distribution of the labor force include a more than proportionate increase in the percentage employed in the public sector--which can be attributed to government makework programs--and the nearly constant percentage employed in the forestry and wood processing sectors, despite a considerable reduction in the sector's proportionate contribution to GDP and in the absolute output of the sector. Also, employment in the agricultural sector continued to decline in recent years as a proportion of the labor force, rising only slightly in absolute numbers. The Development Plan 1972-76 had forecast significant increases in employment for the sector during the Plan period, but these forecasts were frustrated when,many of the agricultural projects failed to materialize. -6-

13. A development of major consequence seems to have occurred in 1973. After remaining constant for a number of years, the participation ratio increased abruptly from approximately 26% to over 32%. No evidence was found to indicate that this change was a purely statistical phenomenon, i.e., redefinition, or whatever. Pending further study, a couple of explanations suggest themselves. Probably the most plausible one is related to the Govern- ment's makework programs which were initiated in 1973, publicly setting forth a policy of providing employment and incomes to all who wanted work. This most likely encouraged large numbers of housewives and labor market dropouts to enter the labor force seeking the promised jobs. Moreover, emlgration picked up considerably that year and it seems plausible that as the breadwinner left for Holland to seek new opportunities, the wife (and/or other family members) entered the labor force seeking to supplement the family income. In any event, available data show a 25% increase in the labor force in 1973, an increase in public sector employment of nearly 25% and a large increase in the number of unemployed. A small reduction in the partLcipation ratio has occurred since 1973.

Table 2: SECTOR DISTRIBUTION OF THE LABOR FORCE

(Percent)

1968 1970 1972 1974

Agriculture and Fisheries 26.2 24.9 25.8 22.3 Forestry and Wood Processing 3.6 3.4 3.9 3.7 Mining and Bauxite Processing 7.8 7.0 7.6 7.3 Manufacturing and Construction 10.9 10.2 10.5 9.5 Government 23.2 27.6 27.3 32.0 Other 28.3 26.9 24.9 25.2

TOTAL 100.0 100.0 100.0 100.0

Source: Table 1.5, Statistical Appendix.

14. Both exports and imports of goods and nonfactor services constitute relatively large proportions of GDP; an average of about 50% for the former and 56% for the latter in 1974 and 1975. The trend since the late 1960s has been for the ratLo of exports to GDP to fall and the ratio of imports to GDP to rise, resulting in a substantial deterioration in the resource balance over this period. Exports are highly concentrated productwLse, subjecting the economy to a high degree of dependence on the world market for one product, aluminum. About 85% of the country's merchandise exports consist of bauxite and bauxite derivatives. This percentage has fallen somewhat since the late -7-

1960s due to capacity constraints and general softness in international demand, especially in more recent years. No data are available for 1974/75 on the product composition of imports, but as late as 1973 imports were fairly well distributed over a wide range of goods: consumption goods, 31.3% (of which processed foods and beverages, 10.1%); fuels and lubricants, 12.8%; raw materials, 38.6%; and capital goods, 17.3%). Imports of food, fuels and lubricants have undoubtedly increased in importance in value terms at least since 1973.

B. Manpower Resources

15. Surinam's most consequential economic phenomenon in recent history has been an exceptionally high rate of net emigration to Holland, facilitated by the fact that Surinam was part of the Tripartite Kingdom of the Netherlands and therefore its citizens were also Dutch citizens. This movement was considered internal migration and no records were kept as to the numbers of people involved. Until another census is taken, all estimates of population size, ethnic and age composition, etc., must be conjectural. The heaviest emigration began after 1967 when economic stagnation reduced incomes and employment opportunities in Surinam, causing many Surinamese to seek greater economic opportunities and the higher social benefits available in Holland. As a result, Surinam's population growth was reduced to an average annual rate of about 2.3% for the period 1964-71 compared to an average annual rate of 4.3% in the 15 years prior to 1964. After 1971, political uncertainty surrounding the move towards independence gave rise to fears of social unrest and possible violence which, combined with continued economic stagnation, caused a sharp acceleration in the rate of emigration, especially in 1974 and 1975 when an estimated 15% of the population left for Holland. This mass exodus resulted in the unusual situation that the population of Surinam at the end of 1975 was 4.5% lower than at the end of 1971. Although data are not available on the rate of natural growth of the population for the period prior to 1965, since that year the rate of natural increase of the population has remained fairly stable at about 3.1% annually. Future population growth should more closely approximate the natural increase since the automatic right to migrate to Holland ended with Surinam's independence. Both Dutch and Surinamese authorities are hoping to encourage many of the emigrants to return to Surinam to alleviate the shortage of skilled labor there and to relieve the social problem in Holland resulting from the large number of immigrants.

16. Since the changes In the population and labor force were roughly of the same magnitude after 1973, the effect on the labor force participation rate was minimal. The unemployment rate fell sharply, however, from about 23% in 1973 to around 16% by 1975, since the number employed did not decrease as much as the size of the labor force. Excluding the mining sector, which by and large maintained employment levels despite a nearly 30% reduction in output, total employment decreased by only 1% between 1973 and 1975 compared with a decrease in real GDP (factor cost) of about 1.8%. Despite high levels of unemployment among the unskilled, serious shortages of workers - 8 -

have occurred on the banana, sugar and palm oil plantations during peak employment periods in recent years. Work on these plantations (and to a lesser extent nonmechanized agricultural work in general) still seem to carry the "colonial" period stigmas.

17. Emigration has also had a very significant effect on the general level of skills of the population. While no quantitative data are available, it seems most likely that a high percentage of the emigrants was from the more highly skilled and trained segments of the population. Given the fact that there was a shortage of skilled workers (including managerial and supervisory skills) to begin with, the country's future development prospects may have been dealt a serious blow by the reduction in absorptive capacity of the economy occasioned by this loss of manpower. It appears urgent, therefore, for the Government to expand substantially its technical and managerial training programs. These should be facilitated through external assistance since internal training resources appear insufficient. The recently announced UNDP vocational training project and the increased activity along these lines by the Ministry of Labor are positive steps, but need to be reinforced by additional programs.

18. In the near future prospects for any significant reduction in the unemployment rate of unskilled workers are not very promising. The labor force is expected to grow more rapidly now that emigration to Holland is restricted, especially so if current efforts are successful in getting any substantial numbers of the emigrants to return to Surinam. Permanent jobs are needed also for the excess workers temporarily employed by the Government in makework programs. The solution to this problem will require concerted action by all branches of the Government and the private sector to generate relatively labor-intensive production activities in the country. This issue will be dealt with more fully later in this report.

C. Economic Developments 1960-1975

19. Following very modest advances in the late 1950s, the Surinamese economy experienced an acceleration of growth in the early and mid-1960s as a result of large foreign investments in energy and bauxite processing facilities connected with the bauxite deposits in eastern Surinam. These investments brought about two years of exceptionally high real GDP growth, 14% in 1965 and 21% in 1966, when the alumina and aluminum plants came on line. Real GDP increased at an average annual rate of 9% from 1960 to 1968, compared with an average of only 3.7% over the previous five years. Despite large investments in the mining sector, the sectoral composition of output changed only slightly as the increase in activity spread to most of the other sectors of the economy. Only the agricultural and forestry sectors lost ground, while manufacturing and construction gained relative to all other sectors. Invest- ment rates of 40% and 50% of GDP were not uncommon during this period, financed largely through external private resources. Public sector investment, on the other hand, failed to keep pace with GDP growth and was directed - 9 - prLmarily towards infrastructure projects. Although the public sector did generate a small surplus on current account through the mid-1960s, the vast majority of the public sector investments were financed through Dutch financial assistance and public sector savings as a source of investment financing were relatively unimportant. The balance of payments consistently registered small overall surpluses without resort to short-term compensatory financing in spite of resource gaps in some years rising as high as 25% of GDP. Direct private investment and Dutch assistance inflows were sufficient to both cover these gaps and provide for small increases in international reserves.

20. When the investment boom tapered off in the late 1960s, the economy stagnated. Per capita incomes at best remained constant through the rest of the decade and probably fell somewhat since factor income payments abroad took an increasing proportion of GDP. The growth in employment opportunities was not proportionate to the growth in the labor force, and many of the jobs created in the construction and building trades industries by the investment earlier in the 60s disappeared once that investment declined. Moreover, few permanent jobs had been created in the mining sector since the facilities for processing bauxite were highly capital intensive and externally oriented with few internal linkages. At the same time, rapidly increasing wages in the private sector combined with shortages of some basic consumer items accelerated the rate of inflation, which, while low by international standards, increased to levels unprecedented for Surinam. These factors, along with the attraction of the relatively favorable social amenities available in Holland, encouraged an increasing number of Surinamese to migrate to that country beginning in 1968, a trend which continued into the early 1970s.

21. Perhaps the most salient characteristic of the Surinamese economy has been its high dependence on the external sector, not only for markets for its products, but also for investment and economic growth stimulus. Exports constituted an increasing proportion of GDP, rising to over 50% in the 1960s from less than 47% the previous decade, and increases in economic activity were strongly correlated with private investment inflows. As a corollary, neither domestic private nor public investment were sufficiently dynamic to provide the necessary growth stimulus during periods of low or declining private foreign investment. Although development plans were formulated and adhered to reasonably well, at least until the mid-1960s when budgetary difficulties reduced counterpart funding and slowed implementation, a high percentage of the planned investments were for economic and social overhead and for studies and research (geological surveys, etc.), with relatively little going directly into productive activities. The additions to infrastructure did not induce sufficient private investment to provide significant growth in output.

22. The economic panorama for Surinam during the first half of the 1970s is best described as one of general stagnation, with slow but steady deterioration in the economic situation after 1971 (see Table 3). In addition to a general lack of internal dynamism, economic developments during this period were strongly influenced by internal political and social factors related to the move towards independence and by external factors related to the oil crisis. - 10 -

23. The internal political crisis that arose over the issue of independence vastly accelerated emigration to Holland and strongly curtailed private investment. Since better educated and trained workers were proportionately over-represented among the emigrants, the effect on economic and administrative efficiency was especially serious and the loss of manpower resources jeopardized future development efforts. Although there were good economic reasons for not investing in Surinam during this period, fears of civil disturbances undoubtedly further discouraged foreign and domestic investors. With the exception of some additions to the facilities of two of the large foreign firms with existing heavy investments in the country (a new thermal electric plant built by SURALCO and additional sawmill capacity installed by Bruynzeel), no major new investments were undertaken during the early 1970s.

24. The oil crisis also had two major effects on the economy during this period. 1/ In the first place, the terms of trade deteriorated by 21% from 1970 to 1974. There was some recovery subsequently, however, so that the overall decline in the terms of trade through 1975 was only 10%. Since Surinam depends heavily on imports (57% of GDP, including nonfactor services), the sharp rise in international prices contributed heavily to internal inflation which reached unprecedented levels during this period. Secondly, the recession in the developed countries reduced the demand for aluminum in 1974 and 1975, and was largely responsible for the decrease in real GDP in Surinam in those years.

25. Increased agricultural production in response to higher international prices and increased wage payments by the Government in response to rising internal inflation helped to push up real GDP in 1970, while in 1971 increased output by the mining and mineral processing sector in response to increased international demand gave a boost to the economy. A sizable housing boom provided added impetus and real GDP grew by an average 3.3% during these two years. In 1972, the economy stagnated again as production difficulties in the mining of bauxite and insufficient electricity for increased production of aluminum prevented the mining sector from taking advantage of increased world demand for aluminum. Agricultural output also declined and most other sectors of the economy stagnated. Only the small housing sector was able to maintain any momentum. There was practically no increase in real GDP in 1972 and 1973, and a decrease of 1.2% in 1974, with nearly every sector of the economy equally affected by the stagnation. In 1975, real GDP decreased by an estimated 8.0% due primarily to a drop in international demand for aluminum which reduced production in Surinam's mining and minerals processing sector by some 21%.

26. Nominal GDP, on the other hand, increased throughout the early 1970s. In 1973-75, prices rose rapidly as a result of soaring international prices and price increases in the mining sector associated with the new bauxite levy

1/ Surinam, being less dependent on oil for energy production, was not as seriously affected as most developing countries. Table 3: - ANNUAL PERCENTAGE CHANGE IN REAL GDP BY SECTOR, 1971-1975

(PERCENTAGES)

Estimated 1970 1971 1972 1973 1974 1975

Agriculture and Fisheries 6.0 2.9 -1.5 0.0 2.9 -1.0

Forestry and Wood Processing -13.0 11.0 -6.6 0.0 -13.5 2.5

Mining and Bauxite Processing 1.0 11.6 -0.9 1.7 -1.0 -21.5

Manufacturing and Construction 4.7 6.1 -3.8 -1.8 -11.2 -5.3

Commerce, Banking, Insurance and Other Services 0.5 -6.2 4.1 -0.7 0.5 -0.9

Housing 8.8 19.4 16.2 0.0 0.0 -1.7

Government 15.6 0.6 -1.1 -1.5 0.6 2.3

Total GDP at Factor Cost 2.4 4.1 0.4 0.0 -1.2 -8.0

Total GDP at Market Prices 2.5 4.0 0.8 0.5 -2.3 -7.5

Source: Table 2.2, Statistical Appendix. - 12 -

(see Table 4). Nominal GDP rose by 30% in these two years, despite a 9% drop in real output, and by 67% during the entire five-year period, 1970-75. Owing to decreased factor income payments abroad and the bauxite levy, nominal GNP increased even more rapidly (90% in 1970-75) permitting a jump in GNP per capita from US$655 in 1970 to US$1,364 in 1975. The latter reflects also the decrease of 4.5% in the population that took place during this period.

27. Government development activities were guided by five-year plans covering the periods 1967-71 and 1972-76. The development strategy underlying these plans relied heavily on private initiative to provide stimulus for attaining the planned goal of 7% real GDP growth, 5% unemployment and regional and sectoral decentralization. The Governemnt's role was to provide the necessary infrastructure to support the private sector activities, undertake productive investments in those areas in which private investment was not likely to enter, and to take care of the social needs of the population. When the economy stagnated and inflation began to accelerate in the early 1970s, public discontent over rising unemployment and falling real incomes forced the Government to alter its strategy. In an attempt to bolster incomes, it increased the public payroll and paid higher social benefits. Later it purchased shares in and paid subsidies to private firms to prevent their going out of business and thereby increasing the number of unemployed. When price and import controls were introduced to protect consumer purchasing power and to retain domestic markets for domestic producers, many private investors reacted negatively to what they considered unwarranted government intervention in activities previously reserved for the private sector. With independence and the new 10-year Development Plan, 1976-85, the Government now considers economic growth and full employment its direct responsibility and plans to take a much more active role in the economy.

28. The savings effort in Surinam was quite good in the period 1970-74 when gross domestic savings averaged nearly 26% of GDP. Until the bauxite levy was introduced in 1974, however, a sizable proportion of this saving was lost through factor income payments abroad, only partially offset by net transfer receipts, and gross national savings averaged only 16% of GDP. (see Table 5) Rough estimates of the national accounts for 1975 indicate a sharp drop in gross domestic savings and, concomitantly, in gross national savings, in relation to GDP. There are several possible explanations for this development, among which is the fact that the decrease in output in 1975 occurred primarily in the mining and minerals sector which is a high profit, high savings sector. Also, consumption spending (calculated as a residual in the national accounts) is thought to have increased substantially in 1975 in connection with the independence celebrations of that year. A third possible explanation could be that a large proportion of the emigrants to Holland were high savers and therefore the overall propensity to save had fallen somewhat. Nevertheless, national savings made an important contribution to investment during the early 1970s, covering 74% of gross domestic investment on the average (see Table 5). Table 4: EXPENDITURE ON GROSS DOMESTIC PRODUCT, 1970-1975

(Sur. f. Millions, Current Prices)

1970 1971 1972 1973 1974 1975

Total Consumption 420.1 449.2 474.1 536.9 667.1 748.0

Gross Domestic Investment 100.6 106.4 132.0 157.0 233.0 255.0

Net Resource Balance 29.1 47.4 33.7 19.6 - 17.1 - 82.0

GDP at Current Market Prices 549.8 602.0 639.8 713.5 883.0 921.0

Net Factor Income Payments Abroad - 77.1 - 89.1 - 84.0 - 69.9 - 38.6 - 24.0

GNP at Current Market Prices 472.7 512.9 555.8 642.6 831.3 897.0

GNP per Capita 1,254 1,333 1,413 1,621 2,120 2,440

GNP per Capita (US$) - 665 707 791 906 1185 1364

1/ Exchange Rate: 1970-71, US$1.00 = Sur.f. 1.890; 1972-75, US$1.00 = Sur.f. 1,789.

Source: Table 2.5, Statistical Appendix Table 5: GROSS DOMESTIC INVESTMENT AND ITS FINANCING, 1970-1975

(Millions, Current Prices)

Estimated 1970 1971 1972 1973 1974 1975

Gross Domestic Investment 100.6 105.4 132.0 157.0 233.0 255.0

Gross Domestic Savings 129.7 152.8 165.7 176.6 215.9 173.0

Gross National Savings 70.7 84.8 101.0 106.9 191.0 163.0

GNS/Gross Domestic Investment (%) 71 80 77 68 82 64

GNS/Gross National Product (%) 15.0 16.5 18.2 16.6 23.0 18.1

Source: Tables 2.5 and 2.7, Statistical Appendix. - 15 -

D. Public Sector Savings and Investment

29. Generating public sector 1/ savings has never been considered critical in Surinam since Dutch aid financed nearly the entire public investment program (see Table 6). Public sector savings averaging 2.1% of GDP during the period 1970-72 gave way to deficits averaging 1.5% of GDP over the following two years, mostly as a result of rapidly increasing current expenditures. Public employment programs and large wage increases were responsible for most of the increase in current expenditures. In 1975, collections from the bauxite levy (for 1974 and 1975) raised revenues by 56%, producing public sector savings equal to about 4.8% of GDP. In anticipation of this increase in revenues, the Government increased its budget for both current and direct capital expenditures, thereby using up a substantial portion of the receipts from the levy. Future public sector investments will also be financed largely through Dutch aid; from the US$1.3 billion aid agreement at independence. The Government's investment program entails capital expenditures much in excess of the aid provided however, and therefore it seems important that the Government take the necessary fiscal steps now to assure future public sector contributions to the investment program.

30. Until 1975, practically all public sector investment was financed through a so-called "development account" which was set up to channel external financial assistance, primarily Dutch aid, to development projects. The small amount of investment that came out of general revenues was limited to financing road repair and maintenance, maintenance of public buildings and other public sector facilities, research and studies, etc. Total public sector investment averaged 8.8% of GDP and 27.0% of gross domestic investment during the period 1970-74. Although public sector savings were expected to cover one-third of investments undertaken through the development account, growing budgetary difficulties prevented any significant contribution by Surinam's public sector and Dutch funds financed nearly all of these investments. In fact, the Dutch on occasion provided general budgetary support and postponed debt servLce obligations to help alleviate Surinam's budgetary constraint. Extra funds from the new bauxite levy permitted the Central Government to increase its direct Lnvestments from an annual average of Sur. f. 8.4 million over the previous fLve years to an estLmated Sur. f. 46.6 million in 1975. Included in these expenditures were increased lending to small-scale agriculture and small and medium Industry, purchases of land for agricultural purposes, publLc building programs, road maintenance, and additional lending to private enterprises and other institutions.

1/ The budgetary accounts of entities normally considered in " the rest of the public sector" are in fact included in the Central Government accounts in Surinam, so the "public sector" and the "Central Government" are more or less synonymous for budgetary purposes. Table 6: CENTRAL GOVERNMENT OPERATIONS, 1970-1975

(In Current US$ Millions)

1970 1971 1972 1973 1974 1975

Current Revenues 137.0 153.8 164.9 158.6 188.2 294.4

Current Expenditures 123.8 145.3 149.4 172.4 198.7 249.8

Current Surplus/Deficit 13.3 8.5 15.5 - 13.8 - 10.5 44.6

Capital Revenue 0.9 1.5 1.0 0.8 0.3 0.3

Capital Expenditures 47.0 43.3 49.0 52.3 57.6 109.9

Overall Surplus/Deficit - 32.8 - 33.3 - 32.5 - 65.3 - 67.8 - 65.0

Financing 32.8 33.3 32.5 65.3 67.8 65.0

External 48.1 32.5 41.8 31.1 63.6 65.8 Internal - 5.5 3.2 _ 2.9 21.5 - 3.9 _ 8.5

Residual - 9.8 - 2.4 - 6.4 12.7 8.1 7.7

Source: Table 5.1, Statistical Appendix. - 17 -

31. Investment planning in the public sector is in need of improvement. Plans have established goals and listed projects, but comprehensive, integrated project and policy planning has been lacking. In the absence of general guidelines, continuity has been lost from one plan to another, implementation has nearly always lagged behind plans and ad hoc projects were often given priority ahead of planned projects due to the exigencies of the times (e.g. the need to do somethLng about the high levels of unemployment). Apparently there has been little integration of development account and Central Govern- ment direct investments, the former being the responsibility of the Ministry of Development and the National Planning Agency (now with review and approval of investments by the Joint Commission implementing Dutch aid) and the latter being under the authority of the Mfinistry of Finance. The Planning Bureau, responsible for development planning, has generally been understaffed and has lacked sufficient expertise to plan effectively at the national level. Given the substantial increase in public investment expected over the next several years, financed through both Dutch aid and bauxite levy funds, the urgency for strengthening the Planning Bureau needs to be stressed. Moreover, capital budgeting, which is nearly nonexistent at this time, should be initiated immediately to improve programming of investment spending so as to avoid the misallocation of resources.

E. Balance of Payments

32. Although the resource balance deteriorated sharply in the early 1970s, the external sector was not an important constraint on development since favorable capital movements offset the growing current account deficit (see Table 7). A 21% decline in the terms of trade was responsible for the adverse movement in the resource balance between 1970 and 1973, the volume of exports and imports (including nonfactor services) increasing almost equally during that period. Thereafter, the terms of trade improved somewhat, but the volume of exports declined abruptly relative to imports. Direct investment income payments fell substantially after 1971 due to declining profitability of the mining operations in Surinam. Public capital inflows, almost entirely Dutch aid, covered most of the current deficit, during the first half of the present decade except for a private investment inflow in 1973 to finance a thermal plant to provide additional electricity for the aluminum plant, and a capital transfer in 1975 from one of the foreign mining concessionaires for the retroactive bauxite levy. International reserves increased from US$42.6 million in 1970 to over US$100 million by the end of 1975 (equivalent to 35% of estimated imports in that year). Since the entire debt pertaining to Surinam as a member of the Tripartate Kingdom (along with all unpaid debt service) was cancelled at the time of independence, at the end of 1975 Surinam's external debt was only US$6.7 million. Its annual debt service over the next few years is approximately US$1 million, implying a debt service ratio of less than one-half of 1%. - 18 -

III. SECTOR ISSUES AND PROSPECTS

A. Agriculture

33. From an ecological viewpoint Surinam has a favorable resource endowment which gives it a broad agricultural potential. It enjoys an equitable tropical maritime climate and has an abundance of soils which, with a certain amount of investment, can be made suitable for a variety of agricultural crops. The fact that only a small percentage of the potentially cultivable land is presently used for agriculture is a conspicuous measure of the neglect suffered by the sector in past decades. Of Surinam's total land area of 16 million hectares, only 50,000 hectares are currently used for agriculture, although at least another 750,000 hectares would be suitable for cultivation after certain investments. About one-third of the latter area is in the very fer- tile young coastal plain where required investments would involve major drain- age works and irrigation infrastructure. The remaining 500,000 hectares are located in the so-called Savannah Belt, 100 to 300 kilometers from the coast. Expanding the agricultural frontier in this area would require land clearing and substantial use of fertilizer. Crop research carried out on experimental farms in this area has been promising, especially for oil palm, coconuts, peanuts and pastures. Problems of transport and difficulties in getting labor to settle in these remote areas, which are devoid of basic social infrastructure and services, are factors which militate against early development of Savannah Belt agriculture.

34. The structure of the agricultural sector shifted radically during the 19th and early 20th centuries when the demise of the slave trade brought about a progressive decline in the plantation system of agriculture (sugar, coffee, cocoa) which had underpinned the economy of colonial Surinam for many years. These plantations were replaced by individual farmer smallholdings, established primarily by previously identured plantation workers who, having been brought to the colony from the British East Indies and the Dutch East Indies to replace the freed slaves, had worked off their contracts and taken up permanent residence, in most cases as rice farmers. In addition to the change in land tenure, the importation of large numbers of East Indians, mostly Hindustanis and Javanese, provided the basis for the present highly diverse ethnic composition of the population and the special development problems and opportunities associated therewith. On the other hand, the former slaves generally turned away from agriculture. Thus, by 1940 the number of plantations had been reduced to less than 20 from a peak of 600 at the end of the 18th century, while the number of smallholders had increased manyfold, numbering 23,000 by that date. Today, only a dozen or so plantations are left in Surinam and the number of smallholders has fallen to around 13,000. An increasing divergence between incomes in the agricultural sector and incomes in other sectors of the economy, a growing disdain for agricultural work in general, and encroachment of other uses for the land have all helped contribute to the decline in the number of holdings. Table 7: BALANCE OF PAYMENTS, 1970-1975

(In Current US$ Millions)

1970 1971 1972 1973 1974 1975

Exports (Including NFS) 158.0 182.4 195.9 206.3 264.7 246.0

Imports (Including NFS) 146.6 157.3 177.1 195.3 274.3 292.0

Resource Balance 15.4 25.1 18.8 11.0 - 9.6 - 46.0

Direct Investment Income (Net) -40.9 -47.1 -47.0 - 39.1 -21.6 - 13.4

Other Current Account Items (Net) 10.4 11.6 11.3 0.6 8.8 8.0

Current Account Balance - 15.1 - 10.4 - 16.9 - 27.5 - 22.4 - 49.7

Private Long-Term Capital (Net) - 4.6 _ 5.1 2.8 17.5 - 0.6 37.5

Public Capital (Net) 25.5 17.2 23.3 17.5 28.6 35.0

Net Basic Balance 5.8 1.7 9.2 7.5 5.6 22.8

Short-Term Capital (Net) (Includes Errors and Omissions) 0.8 - 2.6 0.6 9.2 0.4 0.5

Change in Reserves (-Increase) - 6.6 0.9 - 9.8 - 16.7 - 6.0 - 23.3

Source: Table 3.1, Statistical Appendix. - 20 -

35. In the early years of the present century, the mining of bauxite took over from agriculture as the leading economic growth activity. Within the last two decades, however, there has been something of a resurgence in agriculture associated principally with the expansion of large-scale commercial production of rice, but also with increased production of bananas and palm oil, along with notable advances in the output of poultry. Real output of the sector grew at an average annual rate of about 7% throughout the decades of the 50's and 60's. On the other hand, the remarkable advances made in the mechanized production of rice and the technological advances made in growing bananas did nothing to arrest the steady decline in the output of traditional crops such as sugar, cocoa, coffee and coconut, nor did they reverse the historical decline in agricultural employment. It appears, moreover, that the rate of advance in output has slowed appreciably in the last few years.

36. Agriculture and fisheries accounted for an estimated 8% of GDP and some 5% of Surinam's foreign exchange earnings in 1974. In terms of employment, however, the sector occupies a prominent position in the economy, providing work for some 22% of the labor force. Amongst the commodity producing sectors, agriculture is far and away the most important source of employment in the country. It is this latter consideration that makes the sector so important within the country's overall development strategy. The secular dectine in agricultural employment must be reversed if Surinam is to reduce the general level of open unemployment which is currently estimated at 16% of the labor force.

37. Productivity in the agricultural sector will be enhanced and the decline in employment arrested only to the extent that investment in the sector is increased and that a number of sectoral problems are tackled and successfully resolved. Surinam's planners count on the agricultural sector to absorb one-third of the growth in the labor foce and a large proportion of the currently unemployed over the next five to ten years. Moreover, the goal of improved productivity and incomes of smallholders seems especially deserving of high priority. Nearly 85% of the all farms in Surinam contain less than five hectares and their owners earn only one-third to one-half of the incomes earned in other sectors of the economy. Despite their small size, most of these farms use modern and costly farming methods; purchasing machine services from custom operators and using high-priced imported chemical inputs. However, these farms also use much more labor per hectare than nonmechanized farms. Consequently, their cost price is not competitive with larger sized farms, while the quality of their product often does not meet international standards. Sector wage increases far in excess of productivity gains in recent years have contributed strongly to pressures to mechanize farm operations. Nloreover, for attitudinal reasons, fully mechanized farming appears necessary to retain (or attract) people in the sector.

38. The double objective of employment creation and improving farm productivity and incomes raises some fundamental policy issues for the Surinamese Government. First, with regard to overall priority, the allocation of nearly 40% of public sector investment to the agriculture and forestry - 21 - sectors as specified in the Government's Development Plan for the next 10-15 years seems particularly appropriate. The Government has quite a number of project ideas which appear quite reasonable inasmuch as they aim at the substitutLon of imports that can be produced efficiently locally (meat, dairy products, edible oils, etc.) or at the expansion of exports (rice, meat, edible oils, citrus, sugar, etc.) which have a market in the EEC, North America, etc. It is important that these projects receive the same high priority in terms of manpower resources so that they can be implemented promptly and effectively.

39. Another issue concerns the Government's policy regarding land tenure, i.e., as new lands are brought into production through investment what size farms should be established on those lands. At present, the policy is unclear. In some new polders, six hectare farms are being set up alongside 500-1,000 hectare plots. In some cases these large sized plots have been given to absentee owners who farm only a fraction of the land.

40. Studies carried out by the Ministry of Agriculture have shown that a family farm of 12-18 hectares in the rice-growing districts of Nicherie and Commewijne (areas where major investments are planned) can provide a target annual family farm income of US$2,500 (target set by the Government) with a relatively high degree of efficiency. Given their labor intensity compared with larger farms, a policy to limit the division of new polders into farms of approximately this size would seem most appropriate. Likewise, attempts should be made to increase the size of farms currently below this minimum and, where possible, to encourage consolidation of farms in those areas where excessive parcelization is prevalent. Also, in contrast with current practice, the additional 12-18 hectare plots should be made available to farmers or farmers' sons from the same area and with proven skills. It seems most important that the Government establish a clear and consistent policy regarding land tenure and distribution and to apply that policy rigorously as new polders are opened up. 1/

1/ The Government foundation "Wageningen," which continues to operate a 9,000 hectare rice farm despite oft-repeated plans to distribute plots to individual farmers, presents a special case. It would seem desirable to retain the Foundation's effective research capability which produced the technological advances that permitted rice production to increase dramatically in recent years. At the same time, however, there are many exceedingly small farms on the fringes of "Wageningen" that would benefit greatly from additional land. The optimal solution would seem to be to determine the minimum size operation required for continued research effectiveness and to distribute the remainder of the Foundation lands to surrounding smallholders. At the same time, regulations should be established governing the water rights, requirements for maintenance of irrigation and other facilities, etc., of the outgrowers surrounding Wageningen to ensure efficient use of water and other resources. - 22 -

41. The pricing of agricultural products is an issue of major importance in Surinam as it is in most countries. Usually, such a pricing policy attempts to strike a balance between the interest of consumers and producers, and Surinam's policy is no exception in this regard. However, in several cases prices have been maintained at such unrealistically low levels that entire subsectors have been threatened. A striking example is the dairy sector where the price of milk was kept fixed for over 10 years. In 1975 the price was increased by 60% but by that time a large proportion of the dairy herd had been slaughtered and the meat consumed.

42. The Government plans to prohibit the slaughter of female cows 1/ and purchase new stock from foreign sources; however, it will probably take more than a decade to rebuild the herd. The domestic pricing of sugar is another example, and there is a real danger that the present price policy for rice will adversely affect the already precarious viability of the numerous smallholders in that subsector. Since it is in the interest of the consumer as well as the producer that agricultural production be kept at high levels, a more balanced approach to farm prices seems called for. 2/

43. In recent years, the Government has become an important participant in the production of agricultural products, with many of the previously privately owned plantations and corporate farm enterprises now wholly or majority owned by the state. 3/ In some cases (e.g. banana and sugar plantations), state ownership was acquired to maintain employment and production levels under threat of closure when the previous owner's profitablity evaporated, while in other cases the government has been instrumental in establishing farm enterprises (Victoria Oil Palm) or has bought shares to give the State an interest in the subsector. There are a number of issues involved here, including the extent to which the State should support inefficient subsectors, the capacity of the government to manage these enterprises effectively, and the respective roles of government and private sector in the economy. In any event, clear-cut policy guidelines should be established for public sector involvement in productive sectors, taking into consideration the issues mentioned above.

44. There are several other issues in the agricultural sector in Surinam that need to be dealt with as well, of which only mention will be made here. The issues of land rent, water and other physical input charges and farm wage rates which have tended to increase more rapidly than productivity gains need

1/ A bill introduced several months ago to accomplish this has not yet been passed.

2/ Part of the problem may lie in the fact that agriculture price policy is the responsibility of the Minister of Economic Affairs, rather than the Ministry of Agriculture.

3/ See Table 7.5 in the Statistical Appendix for a list of plantations and enterprises having majority government ownership. - 23 - attention, as does the question of labor shortages in the plantation crops such as sugar, bananas and oil palm. In general, on-farm investments should be financed by the farmers themselves, and large infrastructure works (including land clearing) should be provided from public funds. Water and other inputs should be fully charged to the farmer so as to assure optimal use and conser- vation of these resources. The problem of labor shortage on the plantations is especially serious since the crop technology required by conditions in Surinam effectively prohibits mechanization of the plantations. Attitudinal factors appear partially responsible for the aversion to plantation work, along with the relatively high salaries in other, less onerous, occupations and the geographical remoteness of some plantations. The phenomena of what seems to be excessive amounts of idle land on the coast needs to be in- vestigated, and the optimum amounts of credit, extension services, etc., determined.

45. Finally, the broad issue of the appropriate institutional structure needs to be addressed. The Ministry of Agriculture should, of course, play an important role in determining agricultural policy; however, the Ministry itself is in need of some reorganization and restructuring to increase its efficiency. Out of a total staff of 1,750, amounting to nearly one staff member for every ten persons engaged in farming, less than 100 have full or partial university training, and of these, a mere 16 are stationed outside the capital city. A further weakness of the present institutional structure is that responsibility for some important functions relevant to agriculture is scattered among several Ministries. Soil and forestry surveys, for example, are at prsent the responsibility of the Ministry of Development, some aspects of agricultural research and education are administered by the Ministry of Education, and agricultural pricing policy is governed by the Ministry of Economic Affairs. It is recommended that these functions be centralized in the Ministry of Agriculture so that the overall development policy of the sector can be better coordinated.

46. Under the current Development Plan (1972-76) real output of the agriculture and forestry sector was projected to grow at 7% p.a. and the sector was to provide employment for an additional 6,000 people. Despite the rapid growth in rice and some livestock products, these targets are not likely to be reached. Future output and employment growth will, of course, depend upon the speed with which investment projects are implemented and sector issues resolved. Several large projects are scheduled for implementation over the next several years, and many other seemingly good projects are currently in the idea stage. The most important of these in the various concentration areas are the following: - 24 -

Concentration Area

Paramaribo - Commewijne Project - 6,000 hectares of new crop area for rice, vegetables, pulses, dry crops and root crops plus 3,500 hectares of new pastures for livestock.

- Dairy project on 4,000 hectares.

- Expansion of the area under sugar and bananas.

- Investment of US$32 million in various import substitution projects.

- Integrated fisheries project.

Apoera/Kabalebo - Oil palm along railroad. - Peanut farms, size undetermined. - Cattle, adjacent to oil palm.

Nickerie/Coronie - "Stondonsie Project," 24,000 hectares of new rice lands.

- Sugar plantation and factory on 5,000 hectares.

- Livestock project on 5,000 hectares.

Tibiti/Coppename - Cattle project on 8,000 hectares.

- Peanut farms, size undetermined.

Moengo/Patamacca - Oil palm and factory, 5,000 hectares.

- Mechanized rice farm, 2,500 hectares.

- Fisheries operation, size undetermined.

Brokopondo - Expansion of "Victoria" oil palm and factory, 1,200 added hectares.

- Livestock project, undetermined size.

Planned investments in the forestry sector include pulp production in the Paramaribo area; sawn wood, pulp and charcoal production in the Tibiti/ Coppename area; and wood processing, particle board, and charcoal production in the Moengo/Patamacca area. It is largely on the basis of these projects that Surinamese planners have projected output growth of 13% p.a. during the next ten years in the agricultural sector and 28% p.a. in the forestry sector. Notwithstanding the excellent potential of the sector, these projections appear highly optimistic. - 25 -

Rice

47. In terms of output growth, the cultLvation of rice in Surinam has been a remarkable success story. Output rose from 65,000 tons in 1955 to 90,000 tons in 1965 and further to 165,000 tons in 1973. This achievement owes much to the highly mechanized 9,000 hectare operation of the enterprise "Wageningen" in western Surinam, which accounts for over one-third of total paddy production. Most important has been the development of new strains of long-grain rice by Wageningen which bear high yields in the special conditions of Surinam. This techniological breakthrough plus mechanization and the possibility of two crops per year through irrigation have sharply increased yields on both Wageningen lands and the lands of surrounding smallholders which were quick to adopt the new varieties. The lack of irrigatLon infrastructure has prevented the adoption of the new strains in other rice-growing areas of the country.

48. By way of contrast to the Wageningen operation, the smallholders engaged in rice cultivatLon operate at a much lower level of efficiency. Whereas "Wageningen" can produce dry paddy at a cost of Sur.f. 0.18 per kg, the cost price of the smallholder ranges from Sur.f. 0.21 to 0.25 per kg. Since the smallholder generally has no access to drying facilities, he must sell his crop as wet paddy immediately after harvesting. Furthermore, since his output is generally of uneven quality, it fetches a lower price than that of the larger enterprise. At the current price of paddy (current market price averages Sur.f. 0.21 per kg), the farm income of a typical smallholder with three or four hectares is estimated at about US$560 to US$670. 1/ Many smallholders supplement this income from other sources but the large majority earn far less than the US$2,500 that is generally quoted as a target income for full-time farming.

49. In order to raise the productive efficiency of the smallhoder to a level comparable to that of the larger enterprise, concerted action on a number of fronts is necessary. First, there must be an effort to build the many tiny fragmented smallholdings into viable farms. It is estimated that 12-18 has. irrigated (two crops) is the minimum size for an efficient rice farm and that the cost of setting up such a farm is in the order of Sur.f. 60,000 - 90,000. This figure may rise substantially above Sur.f. 100,000 when the cost of social Lnfrastructure is included. Although the Government continues to lease land in large plots of 500-1,000 has. on virgin land adjacent to Wageningen, it is recommended that priority consideration be given to using new land for the establishment of 12-18 has. smallholdings since the employment potential of this kind of farming is much greater. It would be necessary, of course, to adopt this policy in conjunction with a strengthening of extension services, credit facilities and marketing facilitLes that will enable the smallholder to utilize his land efficiently.

1/ This includes provision for the smallholders' own labor valued at the going wage rate of Sur.f. 1 per hour. - 26 -

Livestock

50. Growth within the livestock subsector has been uneven with poultry and egg production--on the basis of imported feed--the dynamic products, while beef production has decreased and pork production has increased moderately. On the other hand, milk output has fallen substantially, particularly in the last five years. The substantial decline in the dairy herd can largely be attributed to the price policy for milk that was followed since 1966. This policy kept the farm gate milk price at Sur.f. 0.20 per litre for over a decade. Gradually, this became a disincentive to producers (most of whom are small farmers working some 5-20 hectares) and resulted in their selling off a large proportion of their herds for slaughter. Early in 1975 the milk price was increased by 50% to Sur.f. 0.30 per litre which is considered remunerative at today's costs. However, it may take many years for the dairy herd to be rebuilt. Surinamese livestock experts have developed two projects deserving high priority. One aims at rebuilding the dairy herd in the Paramaribo area and the other aims at developing beef production in the Savanna Belt. The success of these projects hinges on a price policy that will ensure the producer a dependable and reasonable rate of return on his investment, and on the willingness of farmers to settle in the interior.

Oil Palm

51. Oil palm, which has just recently become a major crop in Surinam, is ideally suited to the country and there are good prospects for its further expansion. Planting on a commercial scale by the then Dutch-managed company "Victoria" began in 1970 and had reached 1,600 hectares by 1975. Further expansion of this plantation to 2,800 hectares is planned over the next few years and new plantations are planned for other areas of the country. Of the area planted, some 600 hectares are now in production, yielding 14 tons of fruit (2.8 tons of unrefined oil) per hectare. Average yields are expected to increase to 22 tons per hectare as additional trees mature and by mid-1977 Surinam should be self-sufficient in edible oils. Thus far, the unrefined oil has been exported; however, a refinery is now being built and should be operational by mid-1977. When the new areas come into production in early 1980s, Surinam should become an important exporter of palm oil.

52. The major obstacle facing the industry is the lack of laborers to harvest the crop and maintain the plantations. Labor productivity has proved lower than anticipated based on experience elsewhere and turnover among the 350 man labor force has exceeded 50% annually in recent years. The plantation's labor force is composed mostly of bush Negroes who have not adapted easily to plantation labor. The remoteness of the plantation from urban centers and the lack of basic social infrastructure and services in the area complicates the problem of attracting laborers.

Bananas

53. Despite fierce competition on the world banana market, Surinam has been able to maintain its banana exports because of the high quality of its product. A contract with United Brands guarantees a minimum f.o.b. price and - 27 - an outlet in the UK for the entire crop of certain quality standards. Surinam is a marginal supplier of world demand with only 1/2% of the world trade, but it has acquired over 10% of the UK market where its high quality produce receives a premium over that of other suppliers. Present production for export is carried out by one company, SURLAND, in two locations: one in the Nickerie District and the other, which is the larger plantation, near Paramaribo. The company is owned by the Government and managed by Surinamese.

54. While the marketing of bananas seems to pose few problems, production difficulties could very well impair the efficiency of the industry to such an extent that this subsector, which currently employs 1,200 people, could follow the path of other once-important export subsectors (sugar, coffee, cocoa) which can no longer compete on world markets. Operating costs on the plantations are high in comparison with other producers because of high wage levels and a cultivation system which does not allow much mechanization. Labor intensity is high (one man per two hectares), exacerbating the effect of the high wages, and productivity at best has remained constant in recent years. Chronic labor shortages, especially at harvest time when the fruit must be picked and processed in a very short period to meet scheduled ship arrivals, have become increasingly serious also, frequently resulting in missed export opportunities and declining quality of the product. As a result of these difficulties, SURLAND has begun to diversify its production into rice and corn, and it appears likely that the company may be forced to convert fully to other crops, unless the Government decides to subsidize the industry. Any decision on this matter should weigh carefully the various options for the use of this land and the probability that the banana industry in Surinam would require perpetual subsidy.

Forestry

55. Though over 80% of the country is covered by tropical lowlands' rain forest, the production of timber and other forest products has so far played only a minor role in the Surinamese economy. According to the most recent data (1972), forestry contributed 2.5% to GDP, 3% to export earnings and employed 4% of the active population. A recent FAO study has suggested that ten years hence, with proper development, forestry could account for 10- 15% of both GDP and employment. From the resent perspective, however, this target appears overly optimistic in view of the difficulties facing the industry, although the industry does appear to have good growth potential. Also, there appears to exist a good basis for cooperative development which should be exploited involving the budding charcoal industry and the lumber industry.

56. Government administration of the forestry sector falls under the authority of the Ministry of Development's Department for State Forest Administration, rather than under the Ministry of Agriculture. Until recently, the activities of this Department, which traditionally has been one of the best organized parts of the Government, were confined to servicing the forest companies. It plans to enter directly into productive activities in the future, however, and is currently operating the sawmill - 28 -

recently established in Apoera to service the lumber needs of Western Surinam. Of the 20-odd companies currently active in the sector, all but one are private.

57. Some of the obstacles facing Surinam's forest exploitation are the relatively small log dimensions and the extreme interspersion of species. Knowledge concerning the number of species that can be exploited productively has increased significantly in recent years. As a result of an FAO/UNDP project which was able to adapt existing machinery to the specific characteristics of a variety of species (out of around 300 species known to exist in sizeable quantities in Surinam), Bruynzeel, the largest forestry company, now uses eight species for its plywood and particle board production as against only one in 1970. Another significant development of late was the construction of a forest penetration road, completed in 1974, connecting Paramaribo in the east with Avanavero on the Corantijn River at the western border of Surinam. Concurrent with the construction of this road, a forest inventory was carried out with the help of the FAO/UNDP project. The increased knowledge and access to the forest provided by the development of this road should contribute greatly to increasing production of the forestry sector. Potential agricultural areas were opened up along the road as well. Other promising developments include the production of wood chips, initially for export, but at a later stage for input to a pulp industry to be established in the country, and the large-scale production of charcoal for export. The latter industry is currently being tested in a pilot project. Other significant obstacles to sector growth include difficulties of inland transport, the location of Surinam away from major export markets, and the difficulty of getting workers to settle in remote forestry areas.

B. The Mining Sector

58. Although geological surveys indicate that Surinam has substantial wealth in minerals, only bauxite is exploited at this time. The bauxite reserves are located in two geographical areas: the coastal plains and the interior mountains. Over 100 million tons of lowland bauxite with alumina content in excess of 50% have been mined in the coastal plains, and it is estimated that reserves of 150-200 million tons are still exploitable. An estimated 200 million tons of plateau bauxite with 45% alumina and a 15-20% iron oxide content were reportedly found in the Bakhuis Mountains of western Surinam in 1965. Later drillings, however, confirmed the existence of only 50 million tons, discouraging exploitation for a number of years. Finally, there are some 20 million tons of bauxite ores in the Nassau Mountains in southeast Surinam, which have been known since 1919. Since these deposits are small and even more remote than those in western Surinam, economic use of these resources is not considered feasible within the next ten years.

59. Bauxite mining started near Moengo (eastern Surinam) in 1919 by a subsidiary of Alcoa called the Surinam Bauxite Company, to be renamed Surinam Aluminum Company (SURALCO) in 1945. If was not until World War II, however, - 29 - when aluminum gained in world importance, that bauxite shipments increased significantly, rising threefold from 615,000 to nearly 2 million tons between 1940 and 1945. It was also about that time that additional bauxite began flowing from deposits near Paranam in the north central part of the country. Surinam's bauxite is now extracted by two companies: SURALCO and BLlliton (a subsidiary of Royal Dutch Shell). Table 8.1 of the Statistical Appendix shows the increase of bauxite production of these two companies and their exports in the 1950s, 1960s and early 1970s. The annual growth rate averaged 3.5% between 1955 and 1965, and then doubled to 6.6% between 1965 and 1970, after the alumina refinery plant and the aluminum smelter were built. Between 1971 and 1974, the production of bauxite reached a plateau of annual output averaging over 6.7 million tons. In 1975, world recession and a production levy contributed to a drastic decline in production of over 2 million tons.

60. Alumina production, which was started by SURALCO near Paranam in 1965, rose consistently to near maximum capacity of 1.4 million tons in 1972/73. The decline to an output of less than 1.2 million tons during the next two years was substantially smaller than the decrease in either bauxite or aluminum production. Also in the early 1960s, SURALCO built a smelter with a capacity of 60,000 tons of aluminum ingots. It receives most of its energy requirements from a power station at the Afobaka dam, which the company had constructed in the preceding years. The processing of bauxite into alumina and aluminum is primarily responsible for the increased contribution of the sector to gross value added, to the value of exports, and to tax revenues. Were it not for these processing facilities, the export value from the bauxite resources would have been $100 million and $150 million less than was actually brought in for 1970 and 1975, respectively.

61. It is therefore no surprise that the bauxite sector's importance in the Surinamese economy has increased during the last ten years, as Table 8.7 of the Statistical Appendix indicates. The export share of the sector has risen from 80% to 85%, value added climbed from an average of 30% to 37% of total GDP, and its tax revenue contribution jumped from less than 30% to over 40%. In addition, Mission calculations show that between 1973 and 1975 roughly one-half of gross sales from the mining sector flowed back into the domestic economy in the form of wages and salaries, taxes, and payments for domestic inputs and investments. Over 75% of net imports, i.e. imports into Surinam with the exception of those of the mining sector, were financed by the net exchange earnings of that sector.

62. In spite of its growing importance in economic output and trade, the mining sector's employment generation has remained small, absorbing slightly over 7% of the total gainfully employed population. Another problem is the weak development of backward and forward linkages, which have failed to develop because of Surinam's small market and the relatively high prices in the market of aluminum products vis-a-vis imported iron-based manufactured articles. Since a more intensive vertical integration is not expected to lead to better results, Surinam is seeking to expand mining industries in a hori- zontal fashion rather than attempting a vertical integration. Two major factors will determine the future output of bauxite and its derivatives: - 30 -

(a) The rate of recovery from the 1974/75 slump, which would mainly be a function of the economic performance in the western world during this and the coming two years;

(b) The large-scale mining and industrial projects in western Surinam, which have been chosen to be the key element in Surinam's new 10-year development plan.

The projected output and export figures of Table 8-2 of the Statistical Appendix, reflect these two elements. In the first place, Lt is estimated that output of bauxite, alumina and aluminum will reach 1973 levels not later than 1978. The fact that idle capacity of the aluminum smelters in the US has decreased faster than expected in the last few months and that several companies have already announced price increases for ingot from the current 414 per pound to 480 a pound may even suggest a more rapid recovery. In that event it can be safely predicted that alumina and aluminum production will face capacity constraints in the late 1970s. Further increases in output could therefore only be achieved by adding new plant and equipment to existing facilities.

63. The major boost Ln future output is expected to come from the exploitation of the bauxite reserves in the Bakhuis Mountains in western Surinam. This project was first conceived in 1971, at which time the then newly founded government-owned N.V. Grasshopper Aluminum Co. (GRASSALCO) entered into a concession agreement with Reynolds Aluminum Company to exploit the deposits. That agreement was cancelled by Reynolds in 1974 because the alumina content of the proven reserves did not reach the Company's expec- tations. GRASSALCO has been negotiating with Billiton for the exploitation of these deposits, and the Dutch firm is currently doing a feasibility study on the project. GRASSALCO's present expectation is that production will start in late 1979. This will also be the time when the Government's railroad into the mine area should be finished, the construction of which began in March of 1976. With respect to the alumina refining plant and the aluminum smelter, GRASSALCO may proceed on its own with the financing and contract construction, management and operation of the plant to foreign firms. It has discussed marketing arrangements with several bauxite/alumina/aluminum consumers already and is currently evaluating a technical assistance arrangement with a French firm, under which a state trading board would be establLshed to market these products.

64. Taking these plans into consideration the figures in Table 8-2 of the Statistical Appendix show a substantial increase in bauxite production from 1980 onward, reaching 9.6 million tons in 1984/85, 3 million of which is expected to come from the mines in western Surinam. Similarly, an increase of 200,000 tons of alumina is projected to come on stream in 1983, which is to be doubled by 1985. On the other hand, the aluminum smelter will not be in production before the late 1980s. In order to reach the projected 75,000 tons in 1985, current facilities in Paraman will have to be expanded by 15 thousand tons' capacity. The growth rate of mining exports in these projections reflect the two major assumptions: recovery and expansion. In real terms, - 31 - annual output is projected to increase by an average of 10% between 1976 and 1978, tapering off to 4% in 1979/80 and then accelerating again to an average of 7% between 1981 and 1984/85. There is the question as to whether the increased capacity can be fully utilized as the projected figures indicate. In order to answer this question a short analysis of world demand and supply of aluminum and its inputs, alumina and bauxite, has been undertaken. Two conclusions emerge: first, the recovery of demand for aluminum is proceeding faster than anticipated and full capacity will probably be reached by the end of 1978. Secondly, the medium-term outlook for both prices and output is favorable. Demand is expected to advance somewhat faster than aluminum supply after 1978, pushing prices up probably somewhat more rapidly than other international prices. The implications for Surinam are twofold. First, tax revenues should experience contininuous real advances, and secondly, new investment in mining and processing of bauxite should become more profitable than under current circumstances.

65. The effective increase of bauxite taxes by Jamaica and by other members of the International Bauxite Association (IBA), was made possible by the short-run immobility of capital in the bauxite industry, which apparently had earned substantial quasi-rents in the past. For the future, however, the Caribbean nations are well aware of the fact that, even assuming concerted action by the members of the Association, alternative sources of bauxite in significant quantities do exist outside the member countries of the Association. Due to the experience in 1975 and the prospects for world bauxite production in the future, the Surinamese Government is at the moment mainly interested in setting minimum production quotas, which will guarantee minimum amounts of public revenue in real terms. 1/ Consequently, it is assumed that the current tax rate will not be altered during the coming ten years. On this basis it can be calculated that the Surinamese Government will enjoy an average annual revenue increase of 16% from Sur. f. 96.2 million in 1976 to Sur. f. 378.3 million in 1985 (see Table 8-6, Statistical Appendix). If the revenue is adjusted for inflation, the real increase would still be between 7% and 8% for the whole period and over 5% if we exclude the extraordinary high growth rates during the recovery years 1976/77. There are, however, some indications that the new venture in western Surinam may not be profitable enough to pay the full levy. In that case total tax revenue to be derived from mining would rise at a slightly lower rate, as the figures in Table 8.6 show.

66. Whereas bauxite production and export in western Surinam appears profitable, alumina production using the traditional Bayer process is thought to be questionable because of rapidly rising construction costs and costs of raw materials. On the other hand, the Pederson metal refining process would

1/ In fact, the Government and SURALCO just recently signed an agreement fixing a minimum production quota for the company of 8,350,000 metric tons for a three-year period 1976-1978; i.e., 2,783,000 metric tons per year. SURALCO's production for 1976 is estimated at approximately 2.6 million metric tons. - 32 -

seem to offer a profitable undertaking, and would also add a larger number of other benefits to the economy, such as forward and backward linkages. This process would produce pig iron by electrical smelting of the alumina-iron bearing ore found in the Bakhuis Mountains, with alumina extracted from the clay as a secondary product. Finally, the residue could be converted into cement. The three major characteristics of the Pederson process are as follows. First, it utilizes the low grade bauxite, which is widely available in western Surinam. Secondly, it needs substantial amounts of electrical energy which would justify expansion of the hydroelectric capacity of the Kabalebo Project and thereby probably decrease per unit costs of energy. More importantly, it would provide basic materials for Surinam's metal and construction industry by supplying rather small amounts of pig iron at relatively modest prices. Through the conversion of grey mud into cement, it will not only provide a basic input for construction in western Surinam, but also solve the problem of disposal of the residue. On the other hand, the process is untested at the scale of operation planned in Surinam and with the specific characteristics of the ores found in the Bakhuis mountains.

67. On the basis of existing forecasts then, the mining of bauxite in western Surinam appears profitable, but the feasibility of further processing into alumina and aluminum in Surinam requires further careful study. This in turn raises doubts about the feasibility of the Kabalebo Project beyond the first stage.

68. Besides bauxite, small amounts of gold are currently mined in southeast Surinam and sold to French Guiana (10 kg per year). First attempts to exploit the gold tracings of the Mindronetti areas (northwest of Afobaka) were undertaken by the English around 1900, but interest decreased with falling gold prices. New attempts to exploit these tracings were initiated only recently when gold prices rose sharply on world markets. Placer, a Canadian company with large copper mines in Canada and Australia, went into Surinam in 1956/57, but has researched the above-mentioned area seriously only since 1974. At present six fields of 200 meters x 1.5 kilometers have been selected and samples have been taken which seem to indicate that each ton of ore mined contains over 1.2 grams of gold. Since the Government is participating in the exploration (50%), the mining company has asked for a contribution by the Government to the second phase of the exploration which is estimated to cost US$0.5 million (first phase US$0.9 million). In this new attempt mine samples will be drawn from only one of the fields.

69. The actual mining operation is not expected to start before 1978, and then only if the findings confirm the earlier tests and if the gold price rises again to US$160 per ounce of gold (currently it is around US$130). At that time Placer has pledged to mine at least 500 tons per day, but under optimal conditions could mine ten times that amount during the same period. Assuming a gold content of 1.2 grams per mined ton, it would be possible to extract 6,000 grams per day, roughly 1,800 kilograms a year. If the world market price of gold rose to US$160, it would be possible to export over $10 million worth of gold each year for a period of 15 years. From the present - 33 -

perspective it appears that gold is unlikely to be more than a minor source of foreign exchange earnings for Surinam.

C. Industry and Construction

70. As could be expected from a small open economy, which has been politically and economically tied to an industrialized country, economic activity is concentrated in those fields where the advantage seems not only to be comparative but also absolute: mining, forestry, and tropical agriculture. Nevertheless, several manufacturing enterprises, both foreign and domestic, have been established to serve the Surinamese market with a number of non- durable consumer goods. Due to the small market, most manufacturing plants are of modest size and there are often not more than one or two firms, processing foodstuff and raw materials, or producing other consumer and intermediate goods.

71. An exception is the wood-processing industry, which comprises nearly a dozen small-sized sawmills and furniture factories, as well as one large plant, which produces for the domestic market and for export. Besides the large plants producing alumina/aluminum, this is the only major factory in Surinam, processing logs into plywood, sawwood, and particle board. The company, which employs 1,000 workers, has started to construct prefabricated houses as well. It was transformed recently from a 100% foreign-owned subsidiary of Bruynzeel B.V. of the Netherlands into a joint venture, of which 40% of the capital is now owned by the Surinamese Government.

72. Whereas the sixties saw a substantial increase of industrial activity in Surinam, output in most branches stagnated since 1969 and declined after 1973. The growth of industrial output at rates of 20-30% between 1964 and 1968 was mainly due to the establishment of a number of new plants, for such products as beer and soft drinks, milk pasteurization, textile, clothing and shoes, paints and soap powder, as well as the installation of new telephone switching equipment. In addition, established industries increased their capacity, as for example the rum distillery, the shrimp processing plant, as well as the cigarette factory. The major causes of the investment boom which led the industrial sector's share in GDP to increase from 7.4% in 1964 to 12% in 1968 can be found in a number of government incentives as well as in the inducement of large outlays in connection with the Brokopondo hydroelectric project. The impact of this latter development was particularly relevant for the construction industry, which enjoyed rapid increases in demand for gravel, sand, cement, tiles, pipes, and timber. Government incentives included five to ten-year tax holidays, accelerated depreciation and exemption from import duties for capital goods and raw materials, provided the firms invested a minimum of Sf. 25,000 and paid a wage bill of over Sf. 10,000 for all non- supervisory personnel. - 34 -

73. Although it was expected that the rapid expansion achieved between 1964 and 1968 could not be maintained in the years to follow, it is nevertheless disappointing to see that industrial output was at a lower level in 1974/75 than it had been in 1967/68. There has not yet been an industrial census in Surinam, and there is no index of industrial production either in volume or value terms, but the data of Table 8.11 (Statistical Appendix) indicate clearly that production in almost all industries decreased significantly in 1974 after a rather mixed performance in the early 1970s.

74. The reasons for the failure to maintain the momentum are many fold and not difficult to enumerate. The already small demand was curtailed by the weaker performance of the foreign sector and its multiplier effects as well as by the increasing drain of consumers emigrating to Holland and other countries. Insecurity about the future and about the stability of the institutional structure discouraged investment. Because of its relatively high labor costs and its inexperience, Surinamese industry was not able to export any meaningful quantities. The only exception was Bruynzeel's shipments of plywood and particle board to the Caribbean Islands. These, however, faced increasingly stiff competition from other foreign suppliers and have decreased in volume since 1972.

75. Recent economic policies have discouraged production in several fields, where the Government believed that firms had reaped excessive profits due to a virtual monopoly position in the market. Also, by implementing price controls and setting up an import agency to supply the local market with lower priced necessities, attempts were made to fight inflation and give relief to the poor. Those measures have curtailed the output of the processing industries and the production of construction material. Neither the costs of the Government's import program nor the opportunity cost of the price control system have yet been determined. The fact that the Government has taken over a number of industrial enterprises which were in financial difficulties, indicates that these measures should be examined carefully in the light of recent experience and with respect to current government policies to stimulate industrial production in Surinam.

76. Basically, the Government has declared that it wants to foster manufacturing, both by incentives and protection. The incentives include larger medium- and long-term credits from commercial banks and from the still underutilized National Development Bank, and the setting up of an Industrial Development Corporation, which would be responsible for an overall industrial strategy. This latter institution, which was proposed by a UNIDO mission in 1972 and discussed again with experts of that agency in 1976, would do every- thing from feasibility studies to coordinating location and granting credit to industrial enterprises, as well as looking for marketing outlets for industrial products. In addition, several training programs will attempt to solve the bottleneck of skilled personnel through vocational training of the unemployed and through a joint program with private industry to train personnel for managerial tasks. - 35 -

77. If these incentives and programs are pursued vigorously, there should be indeed no reason why industrial output cannot resume growth, since there does not seem to be a lack of venture capital in the Surinamese economy. With respect to technology, the Dutch have experts for both the engineering and the managerial aspects of small and medium-scale industry. The potential for rather simple import substitution is evident and should be efficient in cases of several agricultural, fishing and forestry products which could be processed by local industry.

78. The construction industry has followed a slightly different path than manufacturing in general. Although it experienced equally rapid rates of expansion in the mid-sixties, it was able to continue its expansion-- though at a slower pace until 1972. Even the decline in 1973 was relatively moderate and there is now the problem of insufficient capacity and skilled manpower to satisfy projected demand for public and private housing in addition to the other construction work to be undertaken with the new development projects. Since the Government is planning to engage in low-income housing on a large scale in the near future (3,000 homes per year, of which 2,500 are low-cost dwellings), it would seem to be of utmost importance to speed up the vocational training in the building trades and stimulate the production of construction materials through the granting of credit and lifting of price controls.

D. The Energy Sector

79. The impact of the increase in world petroleum prices on Surinam's economy has been less adverse than in most other countries, although the import bill for petroleum and related materials increased from US$17 million in 1972 (11.8% of merchandise imports) to US$48.3 million in 1975 (20.4% of merchandise imports). A relatively large proportion of the country's energy needs comes from hydropower sources. Moreover, about 70% of the fuel imports are consumed by the bauxite companies, which were able to pass on the higher energy prices to their foreign customers.

80. Surinam's public electric supply system consists of an interconnected network around Paramaribo and a number of isolated generating stations dispersed along the coastal strip. The network around Paramaribo obtains its power from a diesel station at Saramaccastraat, with a total installed capacity of 26 MW. In addition, a bulk supply is obtained from the SURALCO-owned Afobaka hydro station. Under the Brokopondo Agreement, SURALCO guarantees to supply a minimum of 80 GWH per annum (equivalent to 9 MW). Any future growth of electricity demand will fall entirely upon thermal, probably diesel, facilities until further hydro energy can be made available from the proposed Kabalebo scheme, probably by the early 1980s. In view of this, the Government has been negotiating with Venezuela for preferential prices for imports of diesel fuel.

81. During the seven-year period 1968-75, the volume of electricity sales in the Paramaribo network increased at an average annual rate of about 7%, the highest rate having been 18.8% (in 1968-69) and the lowest -2.2% (in - 36 -

1973-74). Analysis of Table 8 reveals a steady upward trend in total and in each component of energy sales, except for 1973/74. The sectoral composition of sales has remained remarkably stable over the last seven years.

82. Future demand for electricity in Surinam will depend on three factors: (a) the basic demand in the interconnected Paramaribo network, which consists of the growth in the number of consumers and in the per capita consumption; (b) the contingent demand arising out of the possible interconnec- tion of hitherto isolated load centers with the Paramaribo network; and (c) the addition of major industrial loads to the network, resulting from the planned economic development projects. By far the most important component of changes in future electricity demand will be the third factor. The Government's envisaged development program for western Surinam for example consists of a planned alumina plant at Apoera, with a minimum annual output capacity of 200,000 tons by about 1983, and if the Government is able to supply electrical energy to Apoera at an economic price, an aluminum smelter with a capacity of 60,000 tons is to be completed in the late 1980s. The power for these operations is to be provided by the construction of a hydro power dam at Devis Falls on the Kabalebo River in the first phase, followed by the diversion of the Corantijn and Lucie Rivers into the Kabalebo River leading to the construction of a second dam on the Kabalebo. The total installed capacity from the Devis Falls Dam is expected to be 500 MW, comprising four 125 MW units. With the completion of the Kabalebo Dam, additional generating capacity of 300 MW would be available.

E. Transportation

83. Transportation services are fairly well developed in Surinam and the lack of such services has not been a major obstacle to growth. The areas currently considered economically exploitable, roughly from 100 to 200 kilometers inland from the coast, are well-served by navigable rivers, penetration roads (most often built by the forestry service or mining concessionaries), and small airfields. Recent completion of the Zanderij to Avanavero all-weather road through the savannah forestry belt has opened nearly 2 million hectares to agricultural and forestry exploitation and has provided an important land link between the capital, Paramaribo, and the western Surinam development area.

84. Surinam is well served internationally by air and sea carriers. Being somewhat off regular sea lanes has meant somewhat irregular service and higher freight costs for Surinamese exporters, especially vis-a-vis its Caribbean competitors, and as exports become more diversified this may become more of a barrier. Since over 90% of the country's exports are bauxite and bauxite derivatives which are sold under controlled marketing arrangements, this has not proven a major problem in the past. Most seriously affected seems to have been the wood products industry, which accounts for only 3% of total exports.

85. The most immediate needs for investment in transportation appear to be those associated with the west Surinam development program. These include the railroad now under construction from Apoera into the area of the - 37 -

Table 8: ENERGY SALES IN THE PARAMARIBO NETWORK, 1968-1975

(In GWH)

Industrial & Large Total Energy Year Domestic Commercial Miscellaneous Consumers Sold

1968 31.9 17.3 15.1 22.9 87.2

1969 37.3 20.0 16.7 29.6 103.6

1970 41.2 22.0 17.9 31.9 113.0

1971 43.2 22.8 18.4 32.6 117.0

1972 46.7 [email protected] 21.3 35.3 128.5

1973 51.1 28.1 21.8 39.L 140.4

197)4 49.3 26.9 23.L 37.0 136.6

1597 52.6 28.3 25.9 38.8 1 45.6

Source: Energie Bedrijven Suriname (E.B.S.) - 38 - bauxite deposits in the Bakhuis Mountains, dredging of the Corantijn River inland to Apoera to make it navigable for heavy draft barges and small ships, service and penetration roads connected with the hydro-electric dam to be built on the Kabalebo River, and access roads into the newly identified areas with agricultural and forestry potential. Also of priority should be those access roads related to the several agricultural projects which have been identified as having economic potential.

F. The Social Sectors

(a) Health

86. Compared with other of developing countries, Surinam has relatively good health standards. Death rates and infant mortaltty rates are the lowest in South America, and the expectation of life at birth is the highest in the region after Argentina, Uruguay and Venezuela (see Table 9). At the end of 1975, the figures for the population per doctor and per hospital bed were, respectively, 1,850 and 170, figures which are quite impressive for a developing country. The situation has improved considerably over the last decade, with the death rate, infant mortality rate and maternal mortality rate all declining, though not monotonically.

Table 9: SOME DEMOGRAPHIC STATISTICS FOR SURINAM, 1965-72

1965 1970 1971 1972 ----- (per thousand population) =

Birth rate 38.20 34.15 36.13 37.51 Death rate 7.00 6.94 6.93 6.15

----(per thousand live births)-----

Infant mortality rate 34.51 36.90 39.12 21.20 Maternal mortality rate 1.08 0.71 0.87 0.27

Source: Fourth and Fifth Reports on the World Health Situation, WHO.

87. Hospitalization facilities include the Public General Hospital (the hospital for out-patients) and four other hospitals in Paramaribo, in addition to a number of smaller hospitals in the districts and a modern 70-bed hospital in New Nickerie.

88. Responsibility for the health services rests with the Ministry of Health, which coordinates the health services provided by the Government, private missionary organizations subsidized by the Government, and private industrial enterprises. Responsibility for the training of doctors lies with the Ministry of Education while the Ministry of Social Affairs provides - 39 - custodial care for the elderly and a feeding program for school children. Finally, the Ministry of Public Works is responsible for the disposal of solid wastes and for sewerage.

89. The public health system has two main deficiencies. First, there is still a shortage of physicians, paramedical personnel and technical and auxiliary staff. The situation was further aggravated in the last few years by the migration of many qualified doctors and nurses abroad, mainly to the Netherlands. Second, there is great regional disparity between the health facilities of the narrow coastal strip of the north and those of the rural interior. Per thousand of the population, there are at least five times as many physicians in the urban areas as in the rural areas. Health centers in the interior, mostly run by missionaries, are inadequate, and would not be able to function except for government subsidies. Moreover, while the general level of nutrition in Surinam is adequate, this is not true for the Bush Negroes of the interior. 1/

90. As partial remedy for the lack of personnel, the Government has increased the enrollment of medical students, which now stands at 180. Twenty- five students are expected to graduate in 1976. As a result of these and other measures, the Ministry of Health expects to reduce the number of persons per physician from 1,850 in 1975 to 1,250 by 1980 and to 1,000 by 1985. Assuming that population increases at 3-1/2% annually for the next ten years, this would imply a 75% increase in the number of doctors (from 200 to 350) between 1975 and 1980, and an additional 150% increase between 1980 and 1985. The training of medical personnel is a difficult task, however, and it would appear that these targets may be overly optimistic.

91. The mission feels that the present system of health care in Surinam concentrates too much on medical services in urban areas, and neglects rural areas. Given inadequate transport facilities from the interior to Paramaribo, and given the reluctance of doctors to work in the interior, one possible solut[on would be to train local primary health workers in the Bush Negro and Amerindian villages. Such health workers, male and female, would be much better suited to cope with the health problems of the interior than the typical clinical physician. The worker would receive brief training in treating the most common ailments of Bush Negro and Amerindian villages such as malaria, typhoid, amoebic dysentery and diphtheria. In addition, the worker would be taught the fundamentals of maternal and child care and be responsible for planning community efforts in environmental health, water supply and sewerage.

(b) Education

93. About 57% of the population of Surinam is under 19 years of age and three-quarters thereof receive some kind of formal education. As a result, expenditure on education is high--Sur. f. 62.2 million in 1976--about 16% of

1/ For an elaboration of this point, see R. Luyken's "Nutrition Studies in Surinam," American Medical AssocLation, 1969. - 40 - the total Central Government budget. Despite a considerable expansion of the education system in the last decade, many problems persist in this servLce.

93. Of the total expenditure on education, about 80% is taken up by personnel costs, leaving little for maintenance and physical improvements of schools. One possible way of reducing personnel costs would be to institute shorter periods of teacher training, backed by in-service training. Another possibility would be to increase class sizes by, say, 10% at the middle levels. Class sizes at those levels are not inordinately large in Surinam and significant reduction in current costs could be effected.

94. The curriculum in high schools is too general and biased too heavily towards arts and pure sciences. Education is not sufficiently geared to public needs for middle level technical and administrative fields. There is urgent need for "vocationalizing" the curricula of academic schools and emphasizing vocational and technical schools such as lagere technische schools (junior technical schools providing training for technical functions in industry), huishoudschools (providing training for girls in home economics), Natuur Technische Instituut (technical institute for middle technical functions) and Middelbare handelschools (for middle economic and administrative training).

95. The Ministry of Education is considering regionalizing the educational system to reflect the cultural, social and economic setup of the different ethnic groups within Surinam. More specifically, the high dropout rate is generally attributed to the use of Dutch as the medium of instruction. The mission recommends that the pros and cons of regionalizing education should be studied very carefully before the required changes are instituted. Regionalization of education may not be a feasible strategy in terms of personnel and material costs (different textbooks, etc.) arising from the use of several languages of instruction. Also, the use of Dutch as the medium of instruction may not be the key factor for the high dropout and repeater rates. There may be other, perhaps more potent, factors such as the need to work, inability to pay fees, the distance to school and poor examination systems.

96. In Surinam, housing construction has not kept pace with the increase in population. According to estimates of the Ministry of Labor and Housing, an average of 2,500 new houses need to be constructed each year to avoid any backlog in this sector. On the other hand, the actual number of licenses for the construction of houses between 1970 and 1975 averaged 1,230 annually (see Table 8.4, Statistical Appendix). 1/ The present shortage of houses (the shortage being measured in terms of overcrowding in existing houses) is calculated at about 25,000 including a shortage of 15,000 in Paramaribo. To

1/ The actual number of houses constructed has been even lower. The number of licenses issued has not been a good proxy for the actual number of houses constructed, particularly in the last two years. - 41 -

remove this deficit and to meet future demand, the Government plans to construct 3,000 houses annually, of which 2,500 are expected to be low-cost houses.

97. The planned construction of 3,000 houses annually appears far too optimistic. A more realistic target for the next five years would be 2,000 annually. The planned construction of 2,000 houses would require roughly Sur. f. 13 million (in 1975 prices) in materials, of which about half would be imported.

98. Housing finance in Surinam is quite adequate. The main sources of mortgage credit are the commercial banks, the insurance companLes, pension funds of enterprises, and the Post Office and Surinam Mortgage Banks (see Table 8.3, Statistical Appendix). The Government intends to subsidize low- cost housing, which is also a high priority item in the bilateral development aid from the Netherlands.

99. In view of the high cost of public housing in Paramaribo, the mission recommends an examination by the Ministry of Labor and Housing of the feasibility of constructing houses in the cheaper suburban areas. These areas also provide opportunities for growing vegetables and breeding poultry.

G. Tourism

100. International tourism which flourished in the Caribbean from the 1950's, sought out the Dutch Antilles but bypassed Surinam. Even today the country remains without any real link with the international tourist industry. For instance, tourists from the US have to make an overnight stopover either at Curacao or Port-of-Spain, Trinidad. Otherwise it is a long, all-day flight with at least four stops, and a late-night arrival at Zanderij Airport, about 30 miles from ParamarLbo. Some cruise ships (for instance, the Renaissance and Mermoz of Paquet Lines) have Paramaribo on their itineraries, but few visitors go much beyond the capital city.

101. Despite these problems of inaccessibility, the number of tourists visiting Surinam has grown at an annual rate of about 10% in recent years. Because of the low priority given to tourism, however, this industry cannot be expected to increase appreciably its contribution to GDP in the next few years. The Surinam Tourist Development Board, founded by private business and sponsored by government, has been in operation since 1973, but has had little impact, primarily due to lack of funds. The Government is trying to rectify the situation. The 1976 budget allocates approximately US$3 million to tourism, which includes recreational facilities at Steelman's Island and new hotels at Albina and nearby Galibi, a thriving Amerindian settlement. The State-run company METS is also working on the first project to be geared mainly to internal tourism, at Cola-kreok, not far from Zanderij Airport. - 42 -

102. As a Caribbean-style beach resort, Surinam has nothing to offer. What it does offer is an area of tropical forest the size of Florida, most of it settled thinly by a few thousand indigenous Amerindians and Bush Negroes, an undisturbed concentration of bird- and animal life and a transport system of canoe-navigable rivers. The future strength of Surinam's tourist industry will depend considerably in attracting specialized or "unusual" tourists, specifically wild life enthusiasts and conservationists. The Government should set aside areas or reserves for the protection of wild life. A good example of this is the coastal reserve at Wia Wia for flamingos and ibises. This reserve is also a breeding ground--one of the very few remaining ones in the Caribbean--for turtles.

IV. DEVELOPMENT STRATEGY AND INVESTMENT REQUIREMENTS

103. With independence approaching and with the assurance that large amounts of Dutch aid would be available, a new Development Plan for the period 1976-1985 was drawn up. This Plan was a joint Dutch-Surinam effort to set the parameters for future growth and to provide guidelines for Dutch assistance to Surinam after the latter's independence.

104. It was in this context that an apparent change in development strategy occurred in Surinam in the mid-1970s. The major difference in the new strategy is that the government apparently now intends to play a much more active role in the economy to assure economic growth and to provide employment opportunities for all Surinamese. It diverges from the "makework and subsidy" strategy of the early 1970s in that a major public sector investment program has been developed for implementation over the next 10 to 15 years which is expected to generate economic growth, provide jobs and bolster incomes. Also, the Government has announced its intention to participate directly in the development of the country's natural resources through joint venture arrangements with foreign (and domestic) private investors. To this end, the Govern- ment is currently attempting to negotiate a joint venture with a foreign multinational mining firm for exploitation of the bauxite deposits in western SurLnam and has already entered into a joint venture with a Canadian firm to exploit the country's gold deposits. These joint ventures together with taxes on the exploitation of the country's natural wealth (such as the bauxite levy) are to assure that a larger proportion of the value of those resources is retained by Surinam and reinvested into the local economy. In addition, the Government plans to develop several large agricultural projects, including rice and livestock farms, apparently independent of the private sector. Presumably, these may eventually be turned over to private owners, perhaps through cooperative arrangements.

105. A second major aspect of the Government's new strategy is a heavy emphasis on sectoral diversification and regional decentralization. Whereas under the previous strategy practically all investment was concentrated in the Paramaribo area where over 70% of the population lives, the new strategy designates eight concentration areas scattered through the northern one- third of the country as "growth poles" to which investment is to be directed - 43 -

(The southern two-thIrds is almost completely uninhabited, covered with a dense rain forest, and almost completely cut off from the northern third). While only two of these areas, Paramaribo and Apoera (western Surinam), are slated to receive nearly 60% of the total planned public sector investment, large investment programs are proposed for the other areas which previously have had to rely almost entirely on private sector initiatives. With regard to economic sectors, the planned investment is geared more specifically to directly productive activities (agriculture, forestry, and mining) rather than economic and social overhead capital. This shift in emphasis can be seen in the following Table.

Table 10: PUBLIC CAPITAL DEVELOPMENT EXPENDITURES (Percent)

Second Five- Multi Year Actual Year Plan Plan 1948-71 1972-76 1976-85

Directly productive activities 35.2 40.0 65.4

Infrastructure and social overhead capital 64.8 60.0 34.6

Total 100.0 100.0 100.0

106. The more active role of the public sector and the diversification of economic structure explicit in the development strategy seem Lmportant for future growth. With regard to diversification, the heavy emphasis placed on increasing agricultural production for export and for local consumption seems especially appropriate, as does the attention given to exploiting the country's natural resources and assuring increasing proportionate returns to the national economy. The strategy appears deficient, however,in certain respects. First, the future role of the private sector remains unclear. Although the Government expects the private sector to undertake most of the industrial sector ancillia- ries to public investments in the future, recent investor concerns relating to price, import and other controls remain very much alive. Moreover, the strategy may well overestimate the degree of responsiveness of private investors to incentives in the form of in-place infrastructure and low cost electrical energy especially in remote, isolated areas that involve high investment and transport cost such as western Surinam.

107. Second, the skilled manpower constraint Ls recognized Ln the strategy, but may be much more binding on investment and growth than anticipated. Adequate programs to deal with this problem do not appear as part of the strategy, although certain positive steps have already been taken. In other words, the development plan to implement the Government's strategy appears ambitious for the size of the skilled manpower base and should be scaled down to a more manageable, high priority program. Consideration should be given to a turnkey type of project development, with limited-term management contract, - 44 -

including an appropriate tralning component for eventual takeover by Surinamese, especially for highly technical projects for which the country lacks expertise. The proposed alumina reduction plant and aluminum smelter, the pig iron plant, the silicon metal and ferrosilicon plants, etc., would seem to be good candi- dates for this type of strategy.

108. A third weakness of the present development strategy is that insufficient recognition is given to the difficulties that Surinam may face in resolving its unemployment problem. Although the Development Plan projects a reduction in unemployment to 2% of the labor force by 1985, it appears that this target may be overly optimistic for the following reasons. Many of the planned investments are capital intensive; employment elasticities experienced in the recent past are relatively low; and the capacity of the agricultural sector to absorb large number of additional workers within the context of the present development strategy is particularly questionable. These several factors suggest that the investment program may take longer than ten years to be fulfilled. Given the limitations in absorptive capacity, a 15-year horizon appears to be a more realistic target for implementation of the development plan. In this event, the projections of the Joint Commission indicate that the rate of unemployment may actually rise slightly by 1990. In order to avoid this eventuality, the composition of the present development strategy should be restructured towards more labor-intensive projects with shorter gestation periods. The large number of workers currently employed in Government makework programs constitutes a potential long term problem which merits serious attention from the Government. Makework programs and supplemental income payments are not an effective means of dealing with the basic structural imbalances which cause unemployment. This underscores the need for a realignment of the Government's development strategy to assign higher priority to relatively labor intensive projects.

109. Projections indicate the need for some 55,000 new jobs over the next ten years in order to eliminate the problem of unemployment. Of this number some 18,000 constitutes the existing unemployed while the remainder represents the projected increase in the labor force. Assuming that appropriate measures are taken to shift the structure of investment towards labor absorbing activities, it should be possible to increase employment significantly above present levels. An acceleration of investment in the agricultural sector with an emphasis upon the establishment of smallholdings could provide directly an estimated 11,000 additional jobs. The forestry sector could add a further 4,000 jobs while the potential of industry and commerce for absorbing employment is estimated at 22,000 during the coming decade. This would not include the mining and minerals sector which is projected to generate some 4,000 new jobs by 1985, mostly in western Surinam. The achievement of these sectoral targets would not eliminate the problem of unemployment entirely, but raising employment by a total of 41,000 jobs would reduce the rate of unemployment to below 10% of the labor force by 1985.

110. In order that this target may be attained it may be necessary to channel a relatively larger proportion of investment than is at present envisaged into the agricultural and manufacturing sectors. Moreover, government policies with respect to interest rates and credit should be reviewed with the - 45 -

objective of achieving an appropriate balance between the cost of labor and the cost of capital in these sectors. Consideration should be given to the Lntroduction of employment incentives such as tax rebates and to increasing subsidized training programs. A clarification of Government policy with respect to the role of private sector Investment could be important in this context, since the private sector has a considerable potential for generating employment opportunitLes in agricultural processing and manufacturing industry.

111. Finally, the strategy does not deal adequately in an integrated fashion with important policy issues, e.g. wage and price policy, interest and exchange rate policy, import regulatLons and tariffs, monetary policy, etc. The short-term plans (one and two-year operating plans), which are to be developed annually and which are expected to incorporate these various policy issues, should be given high priority in the Government's planning process.

112. The task facing SurLnam in the short run is to restore economic growth and reduce the level of unemployment, while over the long run Lt must lessen its external dependence and strengthen its economic structure so that growth can be maintaLned after the Dutch aid has been depleted. Prospects for the economy in the near term appear to depend squarely on the speed with which the Government's investment program can be implemented. Some recovery is expected in world demand for aluminum over the next several months; however, until the new deposits Ln western Surinam come on line, the impetus to growth from this sector is likely to be modest. Additional Infrastructure Investments with rather long gestation periods (dams, polders, etc.) will be required for any significant increase in agriculture production. Domestic private investment is not likely to grow very rapidly until Government polLcies vis-a-vis the sector are clarifLed and the only major foreign Investment possibility at this time seems to be that associated with developing the Bakhuis Mountain bauxite deposits in western Surinam whLch is not expected to begin until 1977 at the earliest. The lack of feasibility studies on most of the Government's investment projects will probably delay their execution. Construction has begun on the railroad to service the bauxite deposits in western Surinam and some of the infrastructure work on the Devis Falls Dam (Kabalebo Project) in the same general area has begun. Also, the Government has announced a major housing program which should provide some additional employment in the short run.

113. There is no doubt that Surinam will continue to depend on foreign markets for many of its products in the foreseeable future since its domestic market with only 370,000 people and US$1300 per capita GNP is too small to support firms serving only that market. Its external dependence Is sufficiently high that fluctuations in output and employment in Surinam are closely correlated with developments in world markets, especially in the bauxite/ aluminum market. Domestic consumption and Investment are also heavily dependent on imports. Hence, diversification of the economic structure to include other products and other markets should rightfully be an important part of the country's development strategy. Some diversification has been initiated already with the recent (1970) introductLon of an oil palm plantation, the production of charcoal and the resumption of gold mining, all under the auspices of the Government. Other opportunItLes for diversification appear - 46 -

to exist in the agricultural sector and in the industrial sector. With regard to diversification of markets, it is noteworthy that Surinam is considering becoming a member of CARICOM to take advantage of the growing regional market under the external protection granted by the integration scheme.

A. Growth Constraints

114. The major constraint on future economic growth in Surinam will most likely be a lack of sufficient skilled manpower to carry out the various public and private sector programs. As mentioned earlier in this report, the massive exodus to Holland of skilled Surinamese workers contributed heavily to this shortage of trained manpower. Although both Governments are encouraging these emigrants to return to their home country, it seems unlikely that any large number will do so, at least in the near future. On the other hand, the high unemployment rate (16%) would indicate the presence of large numbers of available workers in Surinam that could be trained in the required skills. The Government has introduced vocational training programs for workers on relief and the UNDP has recently agreed to provide assistance to Surinam in vocational training. Much more needs to be done, however. Many workers, including public sector employees, presently hold jobs for which they lack the appropriate skills or training, having advanced to those jobs in the shuffle that occurred during the period of heavy emigration. These workers will require training also. A manpower survey, including projections of future manpower needs, would seem to be an urgent need.

115. Public finances are another area of possible constraint on future growth. The steady deterioration in the government accounts throughout the 1970s was pointed out earlier in this report. Only the increased revenues from the bauxite levy prevented a serious budgetary problem for the Government in 1975, turning the potentially large recurrent budget deficit that year into a surplus equal to 5% of GDP. The strong upward trend in current expenditures experienced in the early 1970s should be a matter of concern since a continuation of that trend could cause future budgetary difficulties (especially in the short run) despite the additional revenues from the bauxite levy. The public payroll has expanded greatly due to general wage increases, an increase in public employment, and rapidly increasing transfers to the private sector. Transfers had risen to about 5% of GDP by 1975. Since unemployment is unlikely to decrease significantly in the short run, continuing pressures will probably be levied on the Government for costly social programs. The Government's planned subsidies for increased national health care is also likely to exacer- bate the current expenditure problem. A careful evaluation of these programs and the subsidies to the private sector should be undertaken in order to determine the level at which the budget can support such programs. In addition, the Government should exercise restraint on wage increases for public employees and approach the unemployment and income maintenance problem through increased public investment and incentives to the private sector, rather than through Government subsidies. Revenues are projected to increase moderately over the next few years in line with the increase in GDP, except for the - 47 - bauxite levy which should increase somewhat more rapidly in line with expected recovery of the aluminum industry. In the early 1980s there should be a jump in revenue from the levy in connection with the coming on line of the Bakhuis Mountain deposits. There seems to be some potential for increasing other taxes as well, since the tax burden is moderate at 19% of GDP. It would seem prudent for the Government to begin now to build a structure of public finances which will sustain the economy once the present high level of external assistance has reverted to more normal levels. More importantly, an increasing amount of public sector savings--in addition to the external funds--will most likely be required over the next few years if the Government's investment program is to be carried out as planned.

116. The external sector should not exercise any significant constraint on growth in Surinam over the next several years since large amounts of external capital will be available to finance the needed imports. Since the Govern- ment's development strategy is focused on developing the country's natural resources, including its unused agricultural resources, exports are expected to increase rapidly once these projects are operational. While the resource balance may increase sharply in the short- to medium-term when these investments are being carried out, it should decline by the mid-1980s when additional export receipts become available and the investment program slacks off somewhat. The debt service burden will be quite light also during this earlier period due to the cancellation of the entire debt associated with Surinam's participation in the Tripartate Kingdom of The Netherlands, amounting to over 95% of the total external debt outstanding of Surinam, as part of the independent settlement of November 1975. Moreover, a large portion of the Dutch assistance over the next 10-15 years will be in the form of grants and soft loans. With the expected large inflows of capital, both on private and public account, Surinam should have no difficulty financing its current account balance of payments deficit; in fact, its international reserves are expected to increase moderately during the 10-15 year Plan period.

117. Likewise, national savings should be sufficient to finance a sizeable part of gross domestic investment during this period. Surinam has always been a relatively high-saving country, with gross domestic savings averaging nearly 25% of GDP over the period 1970-74, then dropping to less than 20% in 1975 as a result of the heavy emigration to Holland and the consumption increases associated with the independence celebrations. Up until 1973, over 50% of these savings were claimed by factor income payments abroad. The economic recession beginning in that year followed by the bauxite levy (in 1974) reduced these factor payments to around 15% of GDS by 1974/75, leaving a larger share for investment in Surinam. As long as a reasonable amount of internal stability is maintained, the ratio of national savings to GDP should continue at relatively high levels.

Role of the Private Sector

118. The private sector has traditionally played a dominant role in the economy of Surinam, and it wasn't until the onset of the recession in the early - 48 -

1970s that the Government began to intervene in hitherto private sector activities in an attempt to protect consumer purchasing power and prevent increased unemploynment. Most of the growth stimulus in the past was provided by foreign private investors rather than by domestic entrepreneurs who seemed to prefer investments in internal trade and commerce as opposed to investments in manufacturing, mining or other export-oriented enterprises. When foreign investment fell off in the early 1970s, domestic investment was not sufficient to provide the required growth stimulus, prompting the Government to become more active in the economy. Historically, the Government's policy has been to provide the required infrastructure, keep interest rates low and provide tax incentives to "public interest" industries or firms to encourage private investment. To a large extent that policy remains in effect. The National Development Bank, the Agricultural Bank and a large commercial bank (50% owned by the Government) were given large injections of capital recently from the proceeds of the bauxite levy for on-lending to small and medium- sized enterprises at concessional rates of interest. Commercial bank interest rates on loans have increased only slightly in recent years, despite accelerating rates of inflation, and have remained substantially below international levels, encouraging some large foreign-owned firms to borrow from local banks. The Government has indicated its willingness to enter into joint ventures with private sector firms, either domestic or foreign, to exploit the country's natural resources and to provide the necessary infrastructure to support private investments (especially in the western Surinam area).

119. It is clear however that the Government intends to proceed with public sector investments in those areas neglected by the private sector, with or without a partnership arrangement, and that government regulation of prices, imports, etc., will probably expand rather than contract. What is not clear is the boundary between public and private sector activity as perceived by the Government and this appears to have discouraged private domestic investment over the past couple of years. Early clarification of the future roles of the private and public sectors in the Surinamese economy would appear warranted in order to rejuvenate private investment and this should be done as soon as possible since domestic private investment is unlikely to provide any significant stimulus to the economy until these matters are cleared up. Once the Government's investments in infrastructure and in development projects get under way, investment opportunities should be plentiful in the private sector. Both the cost and availability of credit to the private sector should pose no obstacles to investment for the foreseeable future, whereas regulation of the overall amount of credit may be of some concern over the longer run.

B. Development Plan 1976-1985

120. The 10-year Development Plan 1976-85 drawn up by the joint Dutch- Surinamese Commission set forth general goals for the economy, which include rapid economic growth, greater employment opportunities, sectoral diversification and geographical decentralization of economic activity, more equitable income distribution, reduced external dependence and increased well-being for - 49 - entire population. An investment program was drawn up for the 10 years amounting to Sur. f. 4.5 billion (in 1975 prices and exchange rates: equal to US$2.5 billion) and roughly time phased over the period. Eight areas of concentration were identifLed scattered throughout the northern one-third of the country and the investment spread over these areas according to identified projects (see Table 11.) A large proportion of the planned investment is located In the Paramaribo and western Surinam concentration areas; however, the degree of regional dispersion of projects appears much greater than in previous plans. Emphasis is given to the mining sector - developing the Bakhuis Mountain bauxite deposits - but large investments are also planned in the agricultural and forestry sectors as well. The relatively small amount allocated to industry, 8% of the total, is further evidence that the Govern- ment intends to continue its policy of leaving the industrial sector to private initiative.

121. The keystone of the Government's Development Program is the Kabalebo Project in western Surinam. This project centers around a large hydroelectric power complex which is to provide electricity (and water) for large investments in mining, agriculture and industry in the area, and for supplemental demand in the Paramaribo area. A plant processing bauxite into alumina and an aluminum smelter are the major investments planned for the area, along with projects for the production of pig iron, silicon metal and ferro-sLlicon. Sizeable infrastructure investments are required as well for the project, since the area is completely uninhabited and nearly inaccessible. Much of the infrastructure work has already been completed. A total investment of nearly US$1.0 billion is planned for the area over the next 10-15 years. A detailed feasibility study (executed under World Bank supervision) of the first phase of the project has shown that phase to be economically viable. This phase includes a dam at Devis Falls producing 250 kw of electricity for sale to the Paramaribo area. Further hydroelectric development will depend on future studies, as will the establishment of the various industrial and mining investments.

122. Execution of the investment program is considered under two alternatives in the Plan; alternative A, a 10-year execution period and alternative B, a 15-year execution period. Under alternative A, real GDP would rise by 10 or 11% annually, investment would increase to 45% of GDP by 1985, and unemployment would fall to 1.9% of the labor force by the end of the 10 years. Under alternative B, real GDP would increase by 7-8% annually and investment would reach 30% of GDP by 1990, but unemployment would Lncrease to 18% of the labor force by 1990, up from an estimated 16% in 1975. There are no interim goals or targets set in the 10-year Plan, but to complement this Plan the Surinamese Government Ls expected to produce annual plans to guLde implementation of the longer term plan. The first of these one year plans was hurriedly completed for 1976; however, it contains little more than a list and brief description of potential projects.

123. Development planning and plan execution in Surinam need improvement. Previous plans have not been detailed enough in setting goals, quantifyLng polLcy issues and providing policy directives for the economic decision makers. They have also lacked contLnuLty and there appears to have been Table 11: SURINAM: PROPOSED INVESTMENTS UNDER THE 10-YEAR DEVELOPMENT PLAN 1976-1985, BY ECONOMIC SECTOR AND BWi CONCENTRATION AREA

(Millions of Surinam Guilders)

Economic Sector Social Admin. Hydro. and Infra- and Total Agriculture Forestry Mining Power Industry Cultural structure Other (Percent)

861.0 1. P?rararibo 160.1 405.0 - - 22.8+PM 194.0 79.1 - (19.3)

300.0 2. ';ickerie 199.0 - - - PM 48.0 53.0 - (6.7)

3. Apcera 119.5 132.5 875.1 361.0 PM 40.3 219.2 - 1747.6 (39.1)

'. Tibi-:i 2S6.5 60.7 PM _ PM 39.0 68.1 - 454.3 (10.2) °

303.0 5. :oergo 124.0 115.2 PM - 3.5 44.9 15.4 - (6.8)

80.6 o. Brokupor.dc 32.1 8.5 PM - . 1.0 28.6 10.4 - (1.8)

7. Bovan, Sjrinam, 48.5 Saramiac.a 7.6 - - - - 13.2 27.7 - (1.1)

23.0 - 40.4 8. Tepar_-.hony 6.2 - - - - 11.2 (0.9)

629.5 2/ 9. General - 50.0 - - 31.0 60.0 104.5 105.0 +PM (14.1) +PM

105.0 4464.9 Total 935.0 771.9 875.1 361.0 337.3 479.2 600.4 +PM +PM +PM +PM

20.9 17X3 19.6 8.1 7.6 10.7 13.4 2.4 100.0

1/ p:!- To be specified later.

2/ Of wMnich Sur. f. 250 million is designated for investment in existing companies. - 51 - little coordination between the various government entitLes in developing or executing the plans. There seems to have been little integration between targets, policies, and investments as well. Moreover, sources of financing are not dealt with adequately In the plans, nor is there sufficient analysis of the effects of the investment program on the public finances, balance of payments, etc. Since substantial public sector investment is scheduled over the next several years, including a large amount financed with external assistance, it is urgent that the planning function be improved. A useful first step would be to upgrade the staff of the Planning Bureau, both with new personnel and with additional training. At present the staff is too small and is inadequately trained to carry out the important tasks assigned to it. In addition, means should be sought to assure coordination between the Bureau and the other public sector entities and procedures should be established for monitoring and evaluating plan execution.

124. In addition to and along with, improving the planning function, improvements in budgeting and budgetary control are badly needed in Surinam. Prompt and effective analysis of the public sector accounts is extremely difficult because of the current state of the accounts. Capital budgeting is particularly deficient, and given the large capital expenditures planned over the next several years, it is especially important that effective budgeting of these expenditures occur. Procedures should be instituted immediately to improve the budgeting of all expenditures and to provide for control and evaluation of all budget expenditures and receipts. Improving the flow, collation and presentation of relevant statistics in vital to better budgetary management.

C. Growth Prospects

125. On the basis of past economic performance, the Government's Develop- ment Plan and alternative assumptions regarding absorptive capacity, two sets of projections of future growth have been prepared by the Mission; a high growth case and a low growth case. The shortage of skilled manpower is assumed to influence both the level of investment and the incremental capital output ratio (ICOR). The greater the shortage of manpower the smaller the number of projects that can be prepared and implemented by the public and private sectors, thus the lower the level of investment. Also, project technology will tend to be more capital intensive and the lack of skilled workers will reduce the operating efficiency of the investments, resulting in a higher ICOR. Therefore, in the high growth case, gross investment is estimated to average about US$200 millLon annually (1974 prices) over the 10-year period 1976-85 and an average ICOR of 4.0 is assumed, which Is very close to the estimated ICOR over the past 10 years. In the low growth alternative, investment is expected to average about US$170 million (1974 prices), or 15% less than in the high growth case, and an average ICOR of 5.3 is assumed. The ICOR in the low growth case was arbitrarily set one-third higher than in the high growth case. The hLgh growth investment level assures roughly 80% implementation of the government's investment program and 85% drawdown of the Dutch - 52 - aid over the 10 years, while the low growth case assumes only 67% lmplemen- tation of the investment program and 65% drawdown of the Dutch aid over the same period. A second major difference in the two cases is the assumption in the low growth case of a shift in investment priorities to the more labor intensive agricultural and industrial sectors and a greater emphasis on labor intensive technologies in the investment projects. This difference is reflected in the higher employment elasticity used in the projections of the low growth case, and follows up upon one of the major recommendations of this report. Both alternatives presented here assume also a continuation of the decline in the participation ratio to an average of .31 for the entire projection period. This is not only consistent with current trends, but also moves the ratio closer to its historic level. Given the importance of reducing the high unemployment level, efforts should be made to shift to a more labor intensive investment program. Table 12 contains a thLrd alternative projection of manpower demand which assumes some shift in investment patterns and technologies to those which are more labor absorbing, but assumes the same rate of investment, etc., as in the high growth option. This third alternative is reflected primarily by the higher employment elasticity used in the projection. As the table shows, only a modest effort to increase the labor absorption of the investment program can have very consequential effects on the rate of unemployment when combined with the higher investment levels and growth rates. Under this adjusted high growth option the unemployment rate would fall to about 8% by 1980 and to only 2.5% of the labor force by 1985. These alternatives differ from those in the Development Plan of the Joint Commission in that the high growth option here conforms roughly to the 15-year implementation alternative in the Plan, which is seen by the mission as an optimistic projection. With respect to the western Surinam concentration area, the two alternatives differ in that completion of the alumlia and aluminum plants occur in 1981 in 1983 respectively in the high growth option whereas in the low growth option the alumina plant is completed in 1983 and only initial investments are made on the aluminum smelter in 1984 and 1985. Under the assumptions of the high growth case, real GDP would increase at slightly over 7% annually on the average while in the low growth case it would rise by slightly less than 5%.

High Growth Case

126. It is difficult to see how Surinam could implement an investment program much in excess of that required to reach the 7-8% real growth level, given the serious skilled manpower constraint it currently faces. A higher level of investment would require the return of a large proportion of the skilled emigrants from Holland plus a very large training program. As already noted, it is not considered likely that many of the emigrants will return. Under the assumptions of the high growth option, the unemployment rate would fall to 11% by 1980 and to 9% by 1985 with the absolute number of unemployed falling to about 14,000 by the latter year (see Table 12). No greater inroads on the unemployment problem seem possible given the lack of skills of a large part of the labor force, the high growth rate of the population (3.1%) and the rather low (0.45) elasticity of employment. About 20,000 - 49 -

Table 12: MANPOWER PROJECTIONS, 1975-1985 (Population and Labor Force in 000's)

High Growth High Growth Low Growth Unadjusted Adjusted Adjusted 1970 1975 1980 1985 1980 1985 1980 1985

Total Population 377.0 367.6 428.2 498.2 428.2 498.8 428.2 498.8

Participation Ratio 26.4 32.0 31.0 31.0 31.0 31.0 31.0 31.0

Total Available Labor Force 99.7 117.5 132.7 154.6 132.7 154.6 132.7 154.6

GDP in 1974 Sur.$ Millions 857.7 816.3 1158.6 1660.2 1158.6 1660.2 1040.7 1313.1

Total % Change in GDP 41.9 43.3 41.9 43.3 27.5 26.2

Employment Elasticity 0.45 0.45 0.55 0.55 0.70 0.70

% Change in Employment 18.9 19X5 23.0 23.8 19.2 18.3

Total Available Employment 91.0 99.o 117.7 140.7 121.7 150.8 118.0 139.6

Total Unemployed 8.7 18.5 15.0 13.9 11.0 3.3 14.7 15.0

Unemployment Rate 8.7% 15.7% 11.3% 9.0% 8.3% 2.5 11.1% 9.7% - 54 - new jobs would be created by 1980 (42,000 by 1985) under these assumptions, a large percentage of which would no doubt be skilled positions, some highly technical, including managerial skills. To meet this demand would entail a considerable vocational training effort even assuming many of the projects are implemented by foreign firms as turnkey operations. Moreover, the estimated ICOR (4.0) is quite low for a developing country and for the heavy infrastructure and capital-intensive project orientation of the development program. Therefore, the growth rate projected in this high growth option seems about the maximum that could be expected over the 10 years.

127. Neither the resource gap nor the savings gap should provide any significant constraint on growth during the 10-year period (see Tables 13 and 14). The resource gap will increase sharply through the early 1980s due to the rapidly increasing imports related to the capital intensive investments to be undertaken during this period, especially the alumina and aluminum plants and the hydropower project in western Surinam. Meanwhile, exports should not increase as rapidly during this gestation period, but later in the mid-1980s they would increase more rapidly than imports as the gestation period ends and the investments start producing. Capital inflows (largely from external aid) should be more than sufficient to cover the expanding resource gap. Gross national savings should equal 20% of GDP on the average over the 10 years, enough to finance nearly 70% of gross domestic investment, which will average 28% of GDP. Government fLnances would produce increasing surpluses over the next several years, due to increasing revenues from the bauxite levy. Public sector saving would average about 2% of GDP through 1980 and 4% of GDP for the next five years. However, these projections assume that public sector current expenditures increase no more rapidly than nominal GDP and therefore only increase in real terms along with the rest of the economy. This implies a reduction in the rate of growth of these expenditures from that permitted in the early 1970s. World aluminum prices are assumed to increase in ILne with international inflation and no additional tax measures are included as part of the projection.

Low Growth Case

128. The level of investment required to achieve 5% average growth in real GDP over the 10-year projection period appears much more feasible, and the ICOR assumed in the low growth case (5.3) seems more realistic given the size of the manpower constraint (see Table 15). Assuming the same participation ratio but a higher employment elasticity (0.70) than in the high growth case, the rate of unemployment would decrease to 11% by 1980 and to slightly less than 10% by 1985 (see Table 12). The fact that the unemployment rate would actually increase in the absence of an increase in the employment elasticity illustrates the importance of shifting to labor intensive sectors and methods. Without this shift, the other assumptions of this alternative, i.e. reduced investment, higher ICOR, etc., would result in an increase in the rate of unemployment to clearly unacceptable levels: 19% by 1980 and 22% by 1985. The absolute number of persons unemployed would average about 15,000 during the early 1980s, with 40,000 new jobs created during the 10-year period. Table 13: PROJECTED EXPENDITURE ON GROSS DOMESTIC PRODUCT, 1976-1985

(HIGH GROWTH ALTERNATIVE; OONSTANT 1974 US$ MILLIONS)

Estimated 1975 1976 1977 1978 1979 1980 1985

Total Consumption 370.6 393.4 416.7 448.6 469.8 504.1 698.3

Gross Domestic Investment 126.3 129.2 145.7 175.1 200.9 213.8 247.0

Net Resource Balance - 40.6 - 38.2 -441.6 - 59.1 - 66.9 - 70.3 - 17.3

GDP at Current Market Prices 456.3 484.4 520.8 564.6 603.8 647.6 928.0

Net Factor Income Payments Abroad - 11.1 - 14.5 - 21.3 - 22.4 - 24.2 - 26.8 - 34.0

GNP at Current Market Prices 445.2 469.9 499.5 542.2 579.6 620.8 894.0

GNP per Capita I/ 1211.1 1239.8 1278.5 1345.7 1395.6 1406.1 1792.3

1/ Assumed average annual population growth rate is 3.1%; assumed exchange rate is US$1.00 Sur. f. 1.789

Source: Table 2.8, Statistical Appendix. Table 14: PROJECTED GROSS DOMESTIC INVESTMENT AND ITS FINANCING, 1976-1985

(HIGH GROWTH ALTERNATIVE; CONSTANT 1974 US$ MILLIONS)

Estimated 1975 1976 1977 1978 1979 1980 1985

Gross Domestic Investment 126.3 129.2 145.7 175.1 200.9 213.8 247.0

Gross Domestic Savings 84.9 93.3 104.3 117.4 131.8 142.1 226.5

Gross National Savings 80.8 85.2 89.7 101.8 114.6 122.5 199.8

GNS/Gross Domestic Investment (%) 64.1 65.9 61.6 58.1 57.0 57.3 80.9

GNS/Gross National Product (%) 18.1 18.1 18.0 18.8 19.8 19.8 22.3

Source: Table 2.8, Statistical Appendix. Table 15: PROJECTED ANNUAL PERCENTAGE CHANGE IN REAL GDP BY SECTOR, 1976-1985

(LOW GROWTH ALTERNATIVE; PERCENTAGES)

Estimated 1975 1976 1977 1978 1979 1980 1985

Agriculture, Fisheries and Forestry 0.0 2.0 2.0 3.0 3.0 3.0 4.8

Mining and Bauxite Processing -21.6 7.5 10.9 11.4 5.2 3.4 4.4

Other -1.0 3.0 3.0 4.0 4.0 5.0 5.0

Total GDP at Factor Cost -8.0 4.2 5.5 6.5 4.4 4.3 4.8

Total GDP at Market Prices -7.5 4.2 5.5 6.5 4.4 4.3 4.8

Source: Mission estimates. - 58 -

129. Again, neither the resource gap nor the savings gap would be binding on the economy in the low growth case (see Tables 16 and 17). The resource gap would rise throughout the early 1980s and fall throughout the rest of the 10-year period, as imports expand during the period of maximum investment up until the early 1980s and then fall off as the investment declines. This case assumes only initial investment in the aluminum works in western Surinam in the last two years of the period. Capital inflows under the various assistance programs should easily finance this gap plus the outflows on investment income account and, therefore, the overall level of international reserves should increase steadily, averaging over three months imports throughout the period. Public sector savings are projected to average 1.9% of GDP through 1980 and 2.7% of GDP for the following five years.

V. FINANCING OF DEVELOPMENT

A. The Private Sector

130. The financial system of Surinam consists of a Central Bank, four commercial banks, four specialized banks (Post Office Savings Bank, Surinam Mortgage Bank, Agricultural Bank and the National Development Bank), and a number of insurance companies and pension and provident funds. The Govern- ment recently expanded its ownership in the banking system by purchasing a majority of the shares of one of the two largest commercial banks and is expected to acquire a majority of the shares of the other large commercial bank in the near future. It also owns the National Development Bank, one of the smaller commercial banks, and 100% of the capital of the Agricultural Bank. The commercial banks are most important to the system in terms of assets and liabilities, although, the insurance companies and pension and provident funds also collect large amounts of private savings which are invested in mortgages and long-term loans to the private sector. The insurance companies and pension and provident funds also maintain large deposits with the commercial banks.

131. Monetary policy in Surinam has traditionally been oriented towards protecting the balance of payments, rather than regulating the supply of credit within the country. The major tool of this policy has been a system of general credit ceilings related through a complex formula to the "natural" rate of growth of the economy (assumed to be 6%) and to increases in the banks' long-term resources. Although the Central Bank has a wide range of monetary tools available to it, including selective credit controls, these have not been used to influence the supply of money and credit. The discount rate has not been changed since 1962, for example, and banks are not required to maintain minimum liquidity ratios. Central Bank credit to the Government is limited to 5% of budgeted expenditures and has been used fully by the Government in recent years. Commercial banks generally have maintained high liquidity ratios and stayed within the general credit ceilings except for 1974 Table 16: PROJECTED EXPENDITURE ON GROSS DOMESTTC PRODUCT, 1976-1985

(LOW GROWTH ALTERNATIVE; CONSTANT 1974 US$ MILLIONS)

Estimated 1975 1976 1977 1978 1979 1980 1985

Total Consumption 370.6 380.4 399.0 426.1 443.1 460.3 575.1

Gross Domestic Investment 126.3 127.0 142.1 168.2 172.3 180.7 173.5

Net Resource Balance - 40.6 - 31.9 - 39.2 - 39.2 - 57.5 - 59.3 - 14.6

GDP at Current Market Prices 456.3 475.5 501.9 534.6 557.9 581.7 734.0

Net Factor Income Payments Abroad - 11.1 - 14.5 - 21.5 - 23.3 - 26.0 - 29.1 - 33.3

GNP at Current Market Prices 445.2 461.0 480.4 511.3 531.9 552.6 700.7

GNP per Capita 1211.1 1216.3 1229.6 1269.0 1280.7 1290.5 1404.8

1/ Assumed average annual population growth rate is 3.1%; assumed exchange rate is US$1.00 = Sur. f. 1.789

Source: Table 2.9, Statistical Appendix. Table 17: PROJECTED GROSS DOMESTIC INVESTMENT AND ITS FINANCING, 1976-1985

(LOW GROWTH ALTERNATIVE; CONSTANT 1974 US$ MILLIONS)

Estimated 1975 1976 1977 1978 1979 1980 1985

Gross Domestic Investment 126.3 127.0 142.1 168.2 172.3 180.7 173.5

Gross Domestic Savings 84.9 97.4 102.5 110.0 114.1 122.3 163.8

Gross National Savings 80.8 89.3 887.7 93.5 95.1 100.4 137.9

GNS/Gross Domestic Investment (%) 64.1 70.3 61.7 55.6 55.2 55.6 79.5 o

GNS/Gross National Product (7) 18.1 19.4 18.3 18.3 17.9 18.2 19.6

Source: Table 2.9, Statistical Appendix. - 61 -

slowed growth in the credit ceilings and restricted lending. After falling to 19% in 1974, the liquidity ratio (net liquid assets to total deposit liabilities) rose to 30% by the end of 1975.

132. Government attempts dur.ing the past several years to channel credit into the productive sectors of the economy have been only partially successful. By 1975, 64% of commercial bank credit went to the trade and service sectors (including government), down only slightly from 73% in 1970. The National Development Bank, which was established in 1963 to provide development loans to pr.ivate enterprise, extended only Sur. f. 7.7 million (US$4.3 million) in loans during the 1970-75 period and by the end of 1975 its outstanding loans were only 8% above the level of 1970. Undoubtedly, the economic recession abroad and a poor internal investment climate were largely responsible for this low loan rate since few projects were presented for financing, however, a more aggressive attitude on the part of the Bank would seem advisable. The major competitive advantage of the Bank is that it provides longer term loans than the commercial banks; interest rates are more or less comparable. With the new resources available to the Bank this year, it should be in a position to expand its loans considerably and should be encouraged to aggressively seek borrowers, even at some marginal increase in risk. Credit to the agricultural sector increased sharply after establishment of the Agricultural Bank in 1972, with loans to this sector rising from 5.4% of total private sector credit in 1972 to over 9% by 1975. In 1975 alone, credit to this sector increased by nearly 50%. Additional funds are scheduled to be made available to the Bank by the Government in 1976, so loans to the sector should continue to grow rapidly. Due to the high percentage of food imports, expanding domestic food production should have high priority and the increase in credit to the agricultural sector must be considered a highly favorable development. While the pension and provident funds have assets totallLng nearly 40% of those of the commercial banks, little is known of their operations other than the general directLon of their investments as mentioned above.

133. Financing private sector activities should enta.il no significant difficulties at least up until the early 1980s. Gross national savings is expected to average 18% to 20% of gross national income during this period, a large portion of which will find lts way into the banking system, and therefore financial savings should Increase in line with the general economy. Most of this saving should continue to go into term deposits (as it has in recent years) at the expense of saving and short-term deposits, since interest rates on the former have consistently exceeded rates on the latter two types of deposits and are expected to continue to do so. It is interesting to note that despite the fact that the rate of inflation exceeded the interest rate on savings during the past several years, the level of gross domestic savings as a percentage of GDP remained relatively constant. The decrease in the ratio in 1975 was due to extraordinary circumstances which reduced savings (increased consumption expenditures associated with the independence celebratLons and the use of savings by emigrants), and the ratio is expected to return to its previous level over the next few years. - 62 -

134. The government's policy continues to favor low interest rates on loans to encourage investment with the expansion of credit limited by the ceilings mentioned above. For most of the past five years, interest rates have been negative in real terms due to the high rates of inflation, but even so, large amounts of new investment have not been forthcoming. The even lower rates on savings deposits, with little adverse effect on saving, has permitted the banks to continue these low lending rates. Until the demand for credit increases sufficiently to put pressure on interest rates, the Government's current policy will probably be adequate. However, once the rationing of credit becomes more critical, i.e., if and when the economy recovers sufficiently to cause a shortage of credit, the Government may need to employ its other monetary tools, such as its selective credit controls.

135. Commercial banks in Surinam, in common with those in most developing countries, tend to restrict their lending to a rather narrow clientele of traditional customers, comprised of the larger businesses in the community that have substantial capital assets and proven managerial skills. Moreover, they prefer to lend for short-term commercial purposes rather than for longer term productive purposes and they tend to shy away from working capital loans. While these practices may be advantageous from the viewpoint of bank soundness, they do little to encourage entrepreneurship or to contribute to a wider distribution of income-producing wealth. Smaller enterprises, especially new ventures by untried entrepreneurs, are effectively precluded by bank credit since they seldom can meet the stringent collateral requirements nor can they point to a proven managerial capacity. In addition, they usually require working capital to cover the start-up period. Consequently, they are effectively precluded from investment by their inability to acquire credit. Even the National Development Bank, which presumably is supposed to provide credit for greater rLsk ventures, has followed restrictive lending policies similar to those of the commercial banks. Since the Government owns the National Development Bank and has participation in the major commercial banks, it should be able to influence these policy decisions so as to channel a greater proportion of the credit to a broader spectrum of entrepreneurs and into the productive sectors. It should be possible to accomplish this without impairing the soundness of the banking system. Other approaches could be used as well, e.g., government guarantees, interest subsidies, selective credit controls, etc. In any event, stimulating new investment in small-scale enterprises through credit and other means should merit high priority due to its employment and income distribution effects.

B. The Public Sector

136. The public sector in Surinam consists of several organizations with varying degrees of integration with the budgetary process. Included in the central government budget are various ministries and agencies, a large group of government institutions such as the post office, hospitals, agricultural experimental stations, bus service, railroad stations, airline service, pilot - 63 - service, and many others. There exists also small group of semi-autonomous public corporations whose budgets are part of the overall budget, but are presented separately from the central government budget, Only the surpluses or deficits of these corporations are included in the Central Government's budget. There is also a separate group of quasi-private corporations whose budgets are independent of the government budgeting process, but which receive frequent subsidies (initially called loans) from the Government. These include a radio station, a television station, an organization to promote sports, citrus and milk processing plants, and several others. The Government's budget for 1976 includes subsidies of Sur. f. 9.2 million for these corporations. Finally, there are the "private enterprises" which are not connected with the Government's budget directly, but which pay dividends to or receive loans from the Central Government. All these companies are either partly or fully owned by the government, but for the most part operate independently. The companies purchased recently by the Government because of their financial difficuLties are included in this group, as are the government's interest in commercial banks, the National Development Bank, and the investment projects recently developed by the Government, e.g., the oil palm plantation and the charcoal producing company.

137. Government expenditures are separated into three different accounts in Surinam; the current account, the capital account of the Central Govern- ment, and the development account. The development account handles all development expenditures financed with external assistance, and, in fact, no expenditures are made from this account without first having the external financing available. The regular capital account of the central government traditionally handles very limited amounts of capital expenditure financed either through public sector savings (when positive) or through internal loans, usually from the banking system. In 1975, when large amounts of additional revenue were available from the bauxite levy, direct capital expenditures by the Central Government increased severalfold. The development account is controlled by the Planning Bureau In the Ministry of Development, while the other two accounts are controlled by the Ministry of Finance.

138. As noted earlier in this report, the Government finances in Surinam deteriorated rapidly in the early 1970s, finally showing current account deficits in 1973 and 1974. Dutch grants and borrowings from domestic banks were used to cover these deficits. The major reason for these deficits was the sharp rise In expenditures associated with Government attempts to support employment and Income levels in the face of a deepening recession. Makework programs were introduced employing hundreds of workers, albeit at subsistence wages. The permanent payroll of the Government was increased also and finan- cially troubled firms were purchased or subsidized by the Government. In addition, social benefits were increased sharply as were public sector wages, largely in response to social unrest over the economic deterioration. Expen- ditures on current account increased by 51% during 1970-74, with transfers to the public and private sectors for social benefits and subsidies rising by 118% (see Table 18). Government attempts to restrain Increases in wages and salaries and purchases of other goods and services were only partially successful during the perLod. With regard to functional classtfication, extra budgetary and community service expenditures increased at the expense of those for general administration (see Table 19). - 64 -

139. Current revenues, on the other hand, faiLed to grow apace with current expenditures prior to the imposition of the bauxite levy in 1974 (see Table 20). Personal income tax receipts stagnated throughout the period, due to slow growth in personal incomes up through 1972 and lower collections in the following two years due to the loss of tax records. 1/ Nontax revenues actually declined after 1972 when certain private enterprise receipts and expenditures were removed from the Central Government budget. Corporate profits tax receipts increased slowly until 1973 when they began a persistent decline (in absolute terms) that lasted through 1975. Most of these profit taxes are paid by foreign firms which were adversely affected by the world recession. Taxes on domestic production and consumption and those on international trade (mostly import duties) increased rapidly on the other hand, largely due to rate increases for the former and international price increases for the latter. Overall current receipts increased by 37.5% from 1970 to 1974 compared with the 60.5% increase in expenditures, with total tax revenues increasing by 52.6%.

140. In 1975, the entire fiscal situation was changed by the substantial additional revenues flowing from the bauxite levy. Even though current expenditures were increased by 26% through a supplementary budget at mid-year, the current account registered a surplus of Sur. f. 44 million, equal to nearly 5% of GDP. Collections from the levy alone were 63% of total current receipts of the previous year, although part of these receipts pertained to amounts owed from the previous year. Direct capital expenditures by the Central Government, which had remained fairly constant at around Sur. f. 8 million during the previous four years, increased to Sur. f. 46.6 million in 1975 on the basis of expenditures out of the bauxite levy funds.

141. There are no transactions between the development account and the other government accounts. Practically all projects under the Development Plan are financed through the development account and at least in the past all external aid has been channelled through it. Expenditures from this account increased slowly from 1970 to 1973 and accelerated somewhat in 1974 and 1975, for a total increase of 66% over the period. AdmLnistrative problems and project delays plus delays in approval of projects by financing agents were responsible for the slow growth in these expenditures prior to 1975. Some improvement was effected in 1975 and it is hoped that further improvement will be forthcoming in future years.

142. In general, tax administration appears relatively good in Surinam, notwithstanding the continuing effects of the loss of records in early 1973, and tax compliance is reportedly fairly high. Expenditure control appears deficient however. Once the various ministries have an approved budget, relatively little supervision seems to be exercised over those budgets by the

1/ A fire destroyed the building in which the records were held preventing effective collections of the tax. Table 18: CENTRAL GOVERNMENT CURRENT EXPENDITURES - ECONOMIC CLASSIFICATION 1970, 1975

(PERCENTAGE GROWTH RATES OVER PREVIOUS YEAR)

1971 1972 1973 1974 1975

Total Current Expenditures 17.4 2.8 15.4 15.3 25.7

Wages and Salaries 2.7 8.7 11.0 13.9 25.7

Other Goods and Services, plus Interest 35.3 - 3.2 - 26.4 58.5 35.2

Transfers 23.1 12.7 46.2 35.7 12.2

Source: Table 5.3, Statistical Appendix. Table 19: CENTRAL GOVERNMENT CURRENT EXPENDITURES, 1970-1975 - FUNCTIONAL CLASSIFICATION

(PERCENTAGE COMPOSITION)

1970 1971 1972 1973 1974 1975

Total Current Expenditures 100.0 100.0 100.0 100.0 100.0 100.0

General Administration 33.9 31.7 31.7 31.2 27.0 23.7

(Central Administration, Finance, Police, etc.)

Social Services 41.3 43.8 45.4 35.7 39.5 33.4

(Education, Training, Health, etc.)

Community Services 14.2 12.6 12.9 21.1 17.0 25.6

(Transport, Energy, Communications, etc.)

Economic Services 5.7 6.4 6.8 5.5 5.5 4.4

(Agriculture, Forestry, Trade, Industry, etc.)

Unallocated and Extra-Budgetary 4.9 5.5 3.1 6.5 11.0 13.0

Source: Table 5.3, Statistical Appendix. Table 20: CENTRAL GOVERNMENT REVENUES, 1970-1975

(PERCENT OF TOTAL CURRENT REVENUE)

1970 1971 1972 1973 1974 1975

Taxes on Income and Profit 1/ 37.3 37.9 39.1 35.5 39.7 56.9

Taxes on Property 0.8 0.9 0.7 0.3 0.1 0.2

Taxes on Domestic Production and Consumption 9.1 9.2 9.4 11.9 11.2 7.4

Taxes on International Trade 32.7 31.1 31.2 35.7 37.7 26.7

(Total Tax Revenue) (79.9) (79.1) (80.4) (83.4) (88.7) (91.2)

Non-Tax Revenue 20.1 20.9 19.6 16.6 11.3 8.8

Total Current Revenue 100.0 100.0 100.0 100.0 100.0 100.0

1/ Includes bauxite levy in 1974 and 1975.

Source: Table 5.2, Statistical Appendix. - 68 -

central authorities (Ministry of Finance) . Authorization by the Ministry of Finance of all expenditures even after the budget approval is required however. Budgetary procedures appear to be in urgent need of improvement, i.e., with respect to budget formulation, execution and control. Greater supervision should be exercised by the Ministry of Finance over all budgetary functions to assure that these functions are performed efficiently and in line with budget priorities. The development account should be better integrated with the Central Government accounts and all accounts should be closely aligned to the goals of the Development Plan. Capital budgeting should be initiated as soon as possible with capital project expenditures phased over time to reduce losses through delays in performance and inadequate planning of resource movements. Budgetary statistics, especially expenditure data, are practically nonexistent for 1974 and 1975 (due to loss of records) and the entire data gathering process is in serious need of improvement. This should have very high priority in the Ministry of Finance.

Prospects for Public Finances

143. As the projections in the accompanying tables show, public sector saving should be sufficient to finance a substantial portion of gross domestic investment over the next ten years, largely from bauxite levy revenues. Other revenues are expected to no more than keep pace with GDP growth. The projected steady increase in the world price of aluminum and the increased production of bauxite in Surinam should assure a rapid growth in revenues from the levy. A significant additional increase in revenues is expected in the early 1980s when the Bakhuis Mountain deposits come on line.

144. Future current expenditures are projected to increase no more rapidly than money GDP, which is especially questionable in the low growth case where unemployment is projected to increase significantly. The Govern- ment will be under pressure to provide jobs and social benefits for the unemployed as it has done in the past, and the escape value to Holland will no longer be available to relieve some of that pressure. Wages in the private sector are likely to increase rapidly in the future as a result of shortages of skilled labor and as a result of the effects on wage rates of foreign firms operating in the country. This phenomenon of wage increases in a leading sector (usually foreign) lifting the general wage and price levels was prevalent in the 1960s and early 1970s in Surinam when the two foreign-owned aluminum companies set the wage trends. The spread of large wage increases into industries where productivity was relatively low is said to have forced many firms out of business since they could no longer compete, especially in foreign markets. The relatively high wage levels also discQuraged investment, and intensified pressure for public sector wage increases. If this phenomenon is to be avoided in the future as foreign firms are invited to help Surinam exploit its natural resources, the Government will have to establish a system to monitor and limit wage increases in the private sector. Such an incomes policy would seem to be a requirement for internal stability and budgetary soundness. The inflationary potential of the large influx of capital onto the limited absorptive capacity of the economy appears very high and will need to be controlled. If the Government were to add additional fuel to the fire by running a current account deficit, inflation could well get out of hand. Table 21: ZENTRAL GOVERNMENT OPERATIONS: ACTUAL 1974; Estimated 1975: Projected 1978, 1980, 1985

(HIGH GROWTH ALTERNATIVE)

Current Surinamese Guilders Percent of GDP

Actual Estimated Proj. Proj. Proj. Actual Estimated Proj. Proj. Proj. 1974 1975 1978 1980 1985 1974 1975 1978 1980 1985

Current Revenues 188.2 294.4 371.0 503.0 981.0 20.6 32.0 25.3 24.5 23.8

Currert Expenditures 198.7 249.8 340.0 446.0 834.0 22.5 27.1 23.2 21.7 20.3

Ourrent Savings/Deficit - 10.5 44.6 31.0 57.0 147.0 - 1.2 4.8 2.1 2.8 3.6

Capital Expenditure 57.6 109.9 302.2 421.0 366.0 6.5 11.9 20.6 20.5 8.9

Overall Surplus/Deficit 1/ - 67.8 - 65.0 -270.0 -363.0 -216.0 - 7.7 - 7.1 -18.4 -17.8 _ 5.2 co

Financing 67.8 65.0 270.0 363.0 216.0 7.7 7.1 18.4 17.8 5.2

External 63.3 65.8 225.0 315.0 218.0 7.2 7.1 15.4 15.4 5.3

Internal - 3.9 - 8.5 45.0 48.0 - 2.0 - 0.4 - 0.9 3.1 2.3 - 0.1

Residual 8.1 7.7 - - - 0.9 0.8 - - _

1/ Includes a small amount of capital revenue.

Source: Table 5.6, Statistical Appendix. Table 22: CENTRAL GOVERNMENT OPERATIONS: PROJECTS 1978, 1980, 1985

(LOW GROWTH ALTERNATIVE)

Current Surnamese Guilders Percent of GDP

Proj. Proj. Proj. Proj. Proj. Proj. 1978 1980 1985 1978 1980 1985

Current Revenue 365.0 469.0 825.0 26.3 25.5 25.3

Current Expenditures 335.0 424.0 722.0 24.2 23.0 22.2

Current Surplus/Deficit 30.0 45.0 103.0 2.2 2.4 3.2

Capital Expenditures 225.0 329.0 309.0 16.2 17.9 9.5

Overall Surplus/Deficit -194.0 -283.0 -203.0 -14.0 -15.4 -6.2 Financing 194.0 283.0 203.0 14.0 15.4 6.2

External 172.0 250.0 163.0 12.4 13.6 5.0

Internal 22.0 33.0 40.0 1.6 1.8 1.2

1/ Includes a small amount of capital revenue.

Source: Table 5.8, Statistical Appendix - 71 -

145. On the basLs of these assumptions, public sector savings are projected to average 1.8% of GDP for the period 1976-80 and 4.2% for the period 1980-85 in the high growth case and 1.7% and 3.2%, respectively, for the two perLods in the low growth case (see Tables 21 and 22). These savings will cover about 9% of total Central Government capital expenditures (including the development account) in the high growth case during the first half of the 10-year period, rising thereafter to 40% by 1985. In the low growth case, the comparable figures are 10%, rising to 33% by 1985. It appears then that public sector savings will finance very reasonable and increasing amounts of the 10-year investment program under either of these alternative growth paths.

External Resources

146. The major external contributor to SurLnam's investment program over the next several years will, of course, be The Netherlands. Upon Surinam's Lndependence, The Netherlands agreed to an assistance program composed of the following elements:

In millions Sur.f. US$

A. For cofinancing of development projects and programs, social- educational development projects of private organizations, univer- sities, and development finance corporations 1,800 1,006

B. For financing [tems similar to those above after the above sum is exhausted, but on a parity with Surinamese funds 200 112

C. Unused funds under the last five- year development plan (1972-76) which will continue to be available 259 145

Total 2,259 1,263

In addition, The Netherlands agreed to guarantee loans in total amounts up to Sur.F. 332 million (US$186 million) from external development agencies and banks for projects included in the multiple year plan; however, the amounts of such guarantees would be deducted fully from the other financial assistance provided by the Dutch. Furthermore, all existing debt obligations to The Netherlands Government, amounting to approximately Sur.f. 344 million (US$192 million) were cancelled as of November 25, 1975, including all postponed and unpaid debt service. It was considered that this debt pertaining to Surinam was part of the internal natLonal debt of the Tripartite Kingdom of The - 72 -

Netherlands Government, amounting to approximately Sur.f. 344 million (US$192 million) were cancelled as of November 25, 1975, including all postponed and unpaid debt service. It was considered that this debt pertaining to Surinam was part of the internal national debt of the Tripartite Kingdom of The Netherlands, and, therefore, not a specific debt obligation of Surinam itself. If economically and technically feasible, Surinam is to give preference to NetherLands goods and services in its development program and the Dutch have agreed to promote the sale of Surinamese products outside of Surinam. Both governments agreed to promote Dutch private investments in Surinam. The agreement also specifies that if any Dutch property is nationalized without compensation, the value of the- investment involved would be deducted from the assistance funds made available by the Dutch under the agreement.

147. The total amount of Dutch assistance available for development purposes during the next 10-15 years (excluding the guarantef-s since they are fully deductible) will be approximately Sur.f. 2,259 million, equal to about US$1,263 million. Assuming this amount is drawn within the 10-year time frame and based on the estimated average population for the next ten years, this assistance would equal approximately US$291 per capita per annum. Under the assumption that this aid is drawn over the longer, more realistic time frame of 15 years and again based on the average population for the 15 years, the assistance would equal about US$178 per capita per annum.

148. While the amount of assistance provided for in the agreement is quite large, certain factors should be taken into account in measuring its potential contribution to Surinam's development program. First, its is important to note that The Netherlands has only agreed to "participate" in financing Surinam's development program. This means that the assistance provided Surinam must be approved by the Dutch Parliament on an annual basis. The US$1,263 million is the estimated amount that the Dutch will provide based on the development program drawn up by the joint Dutch/Surinamese Commission. These funds are not under the sole control of the Surinamese nor does any interest accrue to Surinam on these funds. Individual projects must be approved by joing Dutch/Surinamese Commission with equal representation (three members each) from the two countries. Moreover, the agreement to "participate" in Surinam's development program implies that other donors and/ or the Surinamese Government itself will also participate in financing projects related to the development program, and in fact this appears to be a condition of Dutch participation, especially in the larger projects.

149. Secondly, it is also important to point out that the amount of assistance provided for in the agreement is stated in nominal terms and therefore is subject to erosion through inflation and possible exchange rate changes. Assuming the total amount is disbursed in equal annual amounts over the 10-year period and assuming the Bank's international inflation index, the real value of the assistance would equal US$929.3 million (US$92.9 million per year) or US$214 per capita per year, using the average population over the ten years. Under the same assumptions for the 15-year time frame, the real value of the aid would be US$802.3 million (US$53.5 million per year), equal to - 73 -

US$113 per capita per year. To the extent that the aid Ls utilized more heavLly in the latter years of the periods specified above (which is very likely to be the case), its real value will be even less. This provides a buLlt-in motive for early drawdown of the aid, which also carrLes with it the danger that the funds may be used unproductively in the desire to maximize theLr real value to the country. SLmilarly, to the extent that the actual annual rates of inflation exceed those of the Bank's projected international inflatLon index, the real value of the Dutch assistance will be less.

150. Finally, Lt should be noted that the amount of the Dutch assistance is equal to only part of the total (Lnternally and externally financed) public sector investment proposed Ln Surinam's multi-year development plan. That plan calls for public sector Lnvestments totalling Sur.f. 4,465 million, US$2,496 million, in 1976 prices and exchange rates. Once again, assumLng thLs proposed Lnvestment were to be implemented in equal annual amounts over the 10-year period 1976-85, the money value of those expenditures would total US$3,531 million, of whLch the Dutch aLd would cover about 36%. Over the longer period wLth similar assumptLons, required total investment expenditures in current prices would equal US$4,289 million, of which the Dutch aid would cover only about 29%. A slower rate of project execution (and therefore Lnvestment) and/or a higher rate of Lnflation would raise the Lnvestment required Ln current prices and lower the proportLon fLnancLable wLth the Dutch aid. As these data show, the amount of SurLnam's proposed publLc sector Ln- vestment program far exceeds the amount of aid receLved from The Netherlands. This highlights the Lmportance of maximizing public sector savLng durLng the next several years and also indLcates the country's sizeable additLonal requirements for assistance from external bilateral and multilateral sources.

151. In the projections in this report, the use of external aid resources is estimated at 15% and 13% of GDP Ln the hLgh growth and low growth cases, respectively for the period 1976 to 1980. After 1980, the use of external resources is expected to decline gradually Ln both cases up until 1985 with increasing proportions of public sector investment financed out of pubilic sector saving. DurLng the earlier five-year period, external aid is projected to finance 72% of Central Government capital expenditures (including the development account) Ln the high growth case and 75% in the low growth case. These percentages decrease gradually over the five years to 1985 reaching 59% and 53%, respectively In that last year (see Tables 23 and 24).

152. The external capital requirements of the two options are expected to be financed Ln accordance with the projections Ln Tables 25 and 26. In both cases around 85% of the inflows required over the 10-year projection period to finance the current account deficit, amortization of the external debt and the maLntenance of Lnternational reserves at a level equal to about three months' imports are expected to come from external assistance in the form of grants and loans (mostly on soft terms) to the public sector. Direct foreign investment is expected to average about US$20 million over the period in the high growth case and about US$17 million in the low growth case. Table 23 FINANCIN9{ CENTRAL COVERNMENICAP11AI. EXPENNlIsUREs 1975-811( 1985 (111(JI GROWTihAL.TERNATIVER

(Pureanteg.l

1980 X 1985 *. 1975 /. 1976 717 197897. 19 7/

Lo tl ,.l .overomeo-t 421.0 366.0 ures.. ,IOI.9 (54.3 239.0 32.0 383.0 (.pt1 ieL Le'-d

421.0 (100.0) 366.0 (1or1 0) F,n,e,rt,,, 109.9 1100.0) 154.3 fI,no.0) 239.0 (10(0.0;) 30'., (101.0) 383 0 (IOU.0)

( 10.3) 44 0 11 5) 57.0 ( 13.6) 147 0 ( 40.2) PNbl SectLr 0.. v,,, 4.64 0.7 ( 5.6) 11. 0 ) (.) 31.0

47 . ( 12 3) 49.0 11.6) 1.0 1 0.2) Other Istereal-0.5( Sestogs -0.0 ( 46 6 1 30.2) 540o 22.61 460 0 15 .2)

76.2) 315.0 ( 74.8) 2i8.0o 59.6) I-ternal Resources 65.F ( 59.q0 99 J ( 66 2) 174 0 ( 12 8) 225.0 74.5) 292.0 (

Sooce .beoLe 5.6, Statistical App.ndix oElol -o 4- N5o

0' 00 01 0 -~ l - 0 01 0 .0

0 0 0 0 0 0o 00 0 .

10~~~ ~~~so .o o

0 0 0 0 0o_ 0

- :

01 10.. _ 0

0~ ~- ~ , - Table 2: PROJEiCTED EXTERNAL CAPITAL PEQURE:MENTS -IIIGII GINUW-l1ALTERNA1 IVE (Current US$ riLlions)

Estimited Projected l'otal Average Annsa' 1975 1976 1977 1978 1979 1930 1985 1976-85 1976-80 1961-85

Current Balance (+ = deficit) 49.7 56.4 77.1 107.7 '138.5 156.3 102.1 1159.0 107.2 124.6

Amortization on Medium- and Long- Term Public Capital 0.7 0.7 1.6 3.1 . 5.7 8.3 14.5 86.0 3.9 13.3

Gross External Capital Reqjirecmnts 50.4 57.1 78.7 110.8 144.2 1C4.6 116.6 1245.0 111.1 131.9

Financing 50.4 57.1 78.7 110.8 144.2 164.6 116.6 1245.0 111.1 137.9

Net direct Foreign Investment 37.5 5.0 9.0 12.0 16.0 20.0 27.0 194.0 12.0 26.6 Capital Grants 17.6 35.3 54.0 72.0 108.0 117.0 99.0 890.0 77.3 100.7

Gross disbursemaents on Medium- and. Long-Term Public Capital 18.1 20.0 43.5 54.4 54.8 59.2 33.4 423.0 46.4 38.2

Short-Term Capital 0.5 1.0 1.2 1.5 1.5 1.5 2.5 15.0 1.3 1.7

Change in reserves (- = increase) -23.3 -4.2 -29.0 -29.1 -36.1 -33.1 -45.3 -277 -25.9 -29.5

Source: Mission Estimates - 77 -

Residual Financing

153. The resulting unfinanced gap in the public sector investment program would equal Sur. f. 242 million (US$135 million) and Sur. f.147 million (US$82 million) respectively in the high and low growth cases over the five years 1976-80, representing on the average about 3% and 2% respectively of GDP. Assuming it were financed entirely with internal savings, this gap plus public sector savings would absorb approximately 25% and 20% of gross national savings respectively In the two cases. After 1980, the gap would decline steadily until virtually zero in 1985 under the high growth case. In the low growth alternative, however, the gap is projected to increase slowly in nominal terms, but decline as a percentage of GDP. Most likely, a significant part of this gap in both cases would be covered by external suppliers' credits and additional foreign credits, some perhaps from other aid donors. Any resulting balance could be financed easily through domestic borrowing.

VI. THE EXTERNAL SECTOR

Past Experience and Current Situation

154. The structure of Surinam's external trade and its balance of payments have been largely determined by development of the mining sector. The shift from a negative to a positive balance of trade in the mid-sixties was caused by the new exports of alumina and aluminum. At the same time, the service balance deteriorated continuously, due to increased interest payments and profit remittances. The capital account balance reflected the large investments of foreign private capital in the Brokopondo project between 1960 and 1965 as well as additional investments undertaken in the mining sector in recent years. The latest inflows of private capital, however, have been smaller than the outflows for the amortization of long-term loans and repa- triation of capital. Foreign aid in the form of low interest rate loans and grants from Holland have become increasingly important, leading to a positive basic balance and a gradual accumulation of foreign reserves since 1970.

155. The growth of exports in the last 15 years was again strictly determined by developments in the mining sector. After stagnating between 1960 and 1964, export revenues more than doubled from nearly US$50 million in 1964 to over US$100 million in 1967, and continued to grow by an average of 9.4% in the late sixties and early seventies. Just at the time when the volume of exports stagnated again because of world recession, the bauxite levy provided a new push in export receipts, which amounted to nearly US$60 million in 1974. Simultaneous with the rapid rise of exports, the mining sector's share in total merchandise exports expanded from an average of 80% between 1960 and 1964 to over 85% in 1970. The only other two export products which produced some sizable revenue have been rice (over US$10 million since 1973), and forestry product (over US$5 million since 1973). Whereas rice exports were stimulated by both expanded production and higher prices, the volume of wood product exports has actually declined since 1973, and total sales abroad Table 26: !.IECTED EX'IER';.;i.CA. I'.1,. RVQjiREUNTS - iO.W U,)(A11i AL'LiU.ATIV'I (Curre;;t t!S! ttillions)

EsEimated Projected Total Average Anrnual 1975 1976 1977 1978 1979 1980 - 1985 1976-85 1976-80 1981-85

Current Balance (+= deficit) 49.7 48.5 73.7 106.5 117.7 131.4 92.2 1069.0 95.5 118.3

Amortization on Medium- 'and Long- Term Public Capital 0.7 0.7 1.5 3.0 5.5 8.0 14.0 80.0 3.7 12.3

= Gross External Capital Requirements 50.4 49.2 75.2 109.5 123.2 139.4 106.2 1149.0 99.2 130.6

Financirng 50.4 49.2 75.2 109.5 123.2 139.4 106.2 1149.0 99.2 130.6

Net direct Foreign Investment 37.5 5.0 8.0 11.0 15;0 18.0 25.0 175.0 11.4 23.6

Capital Grants 17.6 32.0 45.0 52.5 82.5 90.0 60.0 737.0 60.4 87.0

Gross disbursements on Medium- and Long- Term Public Capital 18.1 17.0 31.9 44.9 44.3 49.7 30.3 390.0 37.6 40.4

Short-Term Capital 0.5 1.0 1.1 1.2 1.3 1.4 2.0 12.0 1.2 1.2

Change in reserves (- = increase) -23.3 -5.8 -1'.8 * -0.1 -19.9 -19.7 -11.1 -165.0 -11.4 -21.6

Source: Mission Estimates

t0 - 79 - were maintained at about US$7 millLon in 1973/75 only through substantial price increases. A stagnating or declining tendency was also evident in the export of other agricultural and fishery products, such as bananas, citrus fruits, sugar, and shrimp.

156. Imports fluctuated around US$55 million in the early sixties, took off to over US$90 million in the mid- and late sixties and showed annual rates of increase of over 15% during the early seventies. Whereas the rapid rise in 1964/65 mainly reflected a substantially enlarged volume of foreign goods, the increased values since 1971 were determined by rising import prices accompanied by the devaluation of US and Surinamese currencies against the currencies of the most important European trading partners: Holland and Germany. If the imports are deflated, their value hardly advanced after 1972 (in 1970 prices the average was US$132 million). Parallel to the shift in the composition of exports, the import structure briefly changed in 1964/65, with investment goods raising their share from 18% to 23% (construction of the bauxite processing facilities) and the consumer goods percentage falling from over 30% to 25%. In 1970 the composition was again back to the traditional division, with raw materials and intermediate goods taking one- half, consumer goods nearly one-third and capital goods less than a fifth of total imports. The impact of the higher oil prices further increased the share of the first category after 1973.

157. Although data are available only until 1973, the direction of trade (both with respect to exports and imports) has been fairly constant. Western Europe received 30% of Surinan s exports and supplied 38% of its imports. Two other trading partners of some significance were the Caribbean islands, which participated with an average if 13% in total imports but only around 4% in exports, and Japan with an import share of around 7%. The major trend in the geographical distribution of external trade was the continuous decline of the US share in total imports, which fell from over 45% in 1965 to 33% in 1970/73. This change was mainly a function of the relative decrease in the imports of capital goods and may be reversed when Surinam implements its large-scale development projects in the near future.

158. After having increased steadily in the second half of the 1960s and early 1970s, the factor servi_E balance deficit decreased from over US$38 million in 1973 to around US$12 million in 1975. The main causes of this development can be found in the substantial reduction in profit remittances (from abouc US$39 million in 1973 to around US$12 million in 1975) and in the large increase in interest earned on foreign exchange reserves. As discussed earlier, world recession, as well as the levying of the bauxite tax, were the major reasons for the lower profit remittances in 1974/75. At the same time, however, Surinam's travel balance deteriorated sharply, due largely to the increased rate of emigration. Net travel payments increased fivefold between 1973 and 1975, from US$5.5 million to US$27.9 million.

159. Surinam's capital balance has consistently shown net surpluses, averaging US$25 million in the sixties. In 1964/65 the new investment in the alumina and aluminum processing facilities required funds of over US$100 - 80 -

million. A surplus was maintained from 1970 to 1975, but the amounts have fluctuated much more than before. This development was determined by larger private capital outflows, which surpassed inflows in three of the first six years. In 1973 and 1975 large inflows--for a new thermoelectric plant in 1973 and funds to cover the new bauxite levy in 1975--led to capital balance surpluses of US$44 million and US$73 million respectively. Net inflows of funds to the public sector have become available in greater amounts since the Government initiated its ten-year and five-year development plans during the past 20 years. They averaged US$13 million from 1960 to 1969 and nearly US$25 million from 1970 to 1974. Although some fluctuatLons have occurred, mainly due to a lack of absorptive capacity in 1971 and 1973, their contribution to capital formation and the balance-of-payments surpluses have become increasingly important. One special feature has been the growing amount of grants, which has alleviated the burden of debt repayments.

160. Since the Surinamese economy has been very much dependent on foreign savings, total debt outstanding amounted to US$70 million, or roughly 25% of GDP in 1970 and rose to US$199 million nearly 39% of GDP by 1975, a share quite high even in relation to other LDCs. Since a large part of the loans were provided at a subsidized rate of interest, the annual debt-service ratio was never higher than one percent between 1970 and 1975. This exceptional position was enhanced by the cancellation of all debts Surinam owed to the Tripartate Kingdome in November 1975, when Surinam became independent. Since these debts made up over 95% of outstanding debt, the current amount has shrunk to $6.7 million or 1 5% of GDP. With that low of a debt service obligation, it should be possible for Surinam to attract long-term public and private capital at market Lnterest rates and normal repayment schedules.

Future Prospects for the External Sector

161. With the development program discussed earlier it can be projected that Surinam's foreign sector will experience a very similar structural pattern as that of the last 15 years. As Table 27 shows, both the high growth and the low growth projections result in substantial trade deficits by 1980, to be converted into surpluses by 1985. Similar to the investment boom in the mid-sixties, it can be expected that the heavy government investment expenditures in western Surinam, together with private outlays in other mining ventures (gold), agriculture (rice), and construction will demand substantially higher imports in the coming five years. The new output and exports of several of these projects should lead to the reversal of the increasing resource gap by 1985, as it did in 1970.

162. With respect to the structure of exports, bauxite mining and its processing into alumina and aluminum will continue to dominate until 1980, and thereafter probably decline from 82% to 72% of total exports, if the new rice projects are realized as expected, which would double that crop's participation from 6.6% in 1976 to nearly 13% of exports in 1985. The other products with substantial export potential are gold and shrimp which can be expected to gross between US$10 and US$15 million annually in the 1980s. Table 27 : BALANCE OF PAYMENTS, 1960-85

(US$ millions)

High Low Growth Growth Est. Projections Projections 1960 1965 1970 1975 1980 1985 1980 1985

Exports (f.o.b.) 44.4 59.3 140.9 230.7 477.0 1005.0 449.0 849.0 Imports (c.i.f.) -54.1 -94.0 -108.5 -236.3 -535.0 -945.0 -484.0 -807.0 Trade Balance -9.7 -34.7 32.4 -5.6 -58.0 60.0 -35.0 42.0

Net Nonfactor Services 1.1 -1.5 -17.0 -40.4 -62.0 -107.1 -62.3 -86.5 Resource Balance -8.6 -36.2 15.4 -46.0 -120.0 -47.1 -97.3 -44.5

Net Factor Service Income -14.7 -15.1 -40.1 -11.7 -48.3 -72.0 -46.1 -64.7 Net Current Transfers -0.1 0.0 9.6 8.0 12.0 17.0 12.0 17.0 Current Account Balance -23.4 -51.3 -15.1 -49.7 -156.3 -102.1 -131.4 -92.2

Net Long-term Capital: - Public 7.0 13.8 25.5 35.0 167.9 117.9 131.7 76.3 - Private 9.7 35.1 -4.6 37.5 20.0 27.0 18.0 25.0 Basic Balance -6.6 -2.4 5.8 22.8 31.6 42.8 18.3 9.1 1/ Short-term Capital 4.4 5.5 0.8 0.5 1.5 2.5 1.4 2.0 2/ Change in Reserves 2.2 -3.1 -6.6 -23.3 -33.1 -45.3 -19.7 -11.1

1/ Includes errors and omissions.

2/ Balancing item, negative valuegsignify increase in foreign exchange holdings.

Sources: Tables 3.1, 3.3, 3.11, 3.13, 3.15, IBRD, Basic Reports on the Economy of Surinam, 1972. - 82 -

163. On the import side, past behavior gives a similar clue to future growth and structural change. Imports should grow rapidly until 1980, then taper off when most of the larger investment projects are realized. In the case of the high growth alternative, annual rates of increase in real terms have been forecast to be 9.5% for the first five years, averaging 5.7% thereafter. The share of investment goods should increase from 15.5% to 23.6% between 1976 and 1980, and fall to less than 12% in 1985. In the case of the more pessimistic outlook, which takes into consideration more intense problems of absorptive capacity, the average growth rates are slightly lower, 8.4% and 4.5% for the two respective time periods.

164. Using the high growth rate assumption, the current account deficit in the balance of payments over the period 1976-80 would average roughly US$107 million annually in current prices. With imports expected to grow rapidly until 1980 and then tapering off when most of the larger investment projects are completed, the average current account deficit is expected to reach a maximum in 1980 and then fall in succeeding years. This deficit should reach between US$150 million and US$160 million in 1980 and amount to around US$100 million in 1985. Furthermore, amortization payments on existing and future debt would average about US$4 million annually in current prices up to 1980 and increase to US$14.5 million in 1985. As a consequence, the gross external capital required annually to cover both the current account deficit and requisite amortization payments would have to average about US$110 million up until 1980, in which year they would reach a maximum of USS165 million. Thereafter, they would fall gradually, reaching about US$115 million by 1985. additi.,.l L'SS30-40 million annually on the average would be desirable to maintain the present level of import coverage of foreign exchange reserves. The above external capital requirements can be met along the following lines. Capital grants from the Netherlands should bring in US$77 million annually. Gross disbursements on medium- and long-term loans should contribute another US$42 million annually. The balance of US$17 million annually should easily be covered by net direct foreign investment and short-term capital inflows. Since most of the capital inflows in the future will be grants or concessional loans, debt-servicing problems should not arise.

165. In the low growth case, the current account deficit is expected to average US$95 million from 1976-1980 inclusive. Capital grants and net public disbursements are again expected to exceed this deficit, amortization requirement and allow for a continued Lncrease in reserves. The resource gap Ls expected to decline after 1980 (see Table 3.13, Statistical Appendix). Despite the bright prospects for the external sector of Surinam, it seems important that proper policies be taken to assure growing public sector savings throughout the period, in anticipation of the time when such large amounts of Dutch aid will no longer be available. It seems important also that the available funds be used as much as possible for investments in directly productive, employment-creating activities, rather than in socially oriented, consunlption expanding activities, in order to establish a firm structure for further economic growth. The relatively large public investment program projected for the next 10-15 years will also require consi- derabLe external technical assistance, especially in new areas of large scale development. TABLE OF CONTENTS

STATISTICAL APPENDIX

Table No.

I. POPULATION AND LABOR FORCE

1.1 Population by Age, based on the four censuses 1921, 1950, 1964 and 1971, as of December 31 1.2 Population by Race and Sex, based on the four censuses, 1921, 1950, 1964 and 1971, as of December 31 1.3 Data on Migration 1964-1975 1.4 Gross and Net Population Estimates 1970-1976 1.5 Sectoral Distribution of Working Population, 1964-1974 1.6 Employment Elasticity by Sector, 1964-1974 1.7 Income Distribution, 1962 1.8 Characteristics of the Registered Unemployed in Paramaribo and Surroundings, 1970-1975 1.9 Number of Industrial Disputes

II. NATIONAL ACCOUNTS

2.1 Sectoral Origin of Gross Domestic Product in Current Prices at Factor Cost and Market Prices, 1970-1975 2.2 Sectoral Origin of Gross Domestic Product in Constant Prices at Factor Cost and Market Prices, 1970-1975 2.3 Implicit Deflators, 1970-1975 2.4 National Income Ratios, 1970-1975 2.5 Expenditure on Gross Domestic Product, 1970-1975 2.6 Terms of Trade and Resource Gap, 1970-1975 2.7 Gross Domestic Investment and its Financing, 1970-1975 2.8 Summary Growth Projectons, 1976-1985, High Growth Alternative 2.9 Summary Growth Projections, 1976-1985, Low Growth Alternative

III. BALANCE OF PAYMENTS

3.1 Balance of Payments (US$ millions), 1970-1975 3.2 Balance of Payments (Sur f. millions), 1970-1975 3.3 Details on Current Account (US$ milions), 1970-1975 3.4 Details on Current Account (Sur. f. millions), 1970-1975 3.5 Composition of Merchandise Exports, 1970-1973 3.6 Value, Volume and Unit Price of Major Exports, 1970-1975 3.7 Composition;of Merchandise Imports, 1970-1973 3.8 Composition of Registered Imports, 1975 3.9 Geographical Distribution of Exports and Imports, 1969-1973 TABLE OF CONTENTS

STATISTICAL APPENDIX (Continued)

3.10 International Reserves at End of Period, 1970-1974 3.11 Export and Import Price Indices, 1970-1975 3.12 Balance of Payments Projections, 1976-1985, High Growth Alternative 3.13 Balance of Payments Projections, 1976-1985, Low Growth Alternative 3.14 Export Projections, 1976-1985, High Growth Alternative 3.15 Export Projections, 1976-1985, Low Growth Alternative 3.16 Import Projections, 1976-1985, High Growth Alternative 3.17 Import Projections, 1976-1985, Low Growth Alternative

IV. EXTERNAL PUBLIC DEBT

4.1 External Public Debt Outstanding, Including Undisbursed as of December 31, 1975 4.2 Service Payments, Commitments, Disbursements and Outstanding Amounts of External Public Debt Projections Based on Debt Outstanding, Including Undisbursed, as of December 31, 1975

V. PUBLIC FINANCE

5.1 Central Government Operations, 1970-1975 5.2 Central Government Current Revenues, 1970-1975 5.3 Central Government Current Expenditures, 1970-1975 5.4 Central Government Capital Expenditures, 1970-1975 5.5 Planned and Actual Investment from Development Aid, 1970-1976 5.6 Central Government Operations, Actual 1974, Estimated 1975 and Projections 1976-1985 (High Growth Alternative) 5.7 Central Government Revenues, Actual 1974, Estimated 1975 and Projections 1976-1985 (High Growth Alternative) 5.8 Central Government Operations, Actual 1974, Estimated 1975 and Projections 1976-1985, (Low Growth Alternative) 5.9 Central Government Revenues, Actual 1974, Estimated 1975 and Projections 1976-1985, (Low Growth Alternative)

VI. MONETARY SECTOR

6.1 Summary Accounts of the Banking System, 1970-1975 6.2 Changes in Monetary Aggregates, 1970-1975 6.3 Distribution of Lending by Commercial Banks, 1970-1975 6.4 Liquidity of the Commercial Banks, 1970-1975 6.5 Interest Rate Structure, 1970-1974 TABLE OF CONTENTS

STATISTICAL APPENDIX (Continued)

VII. AGRICULTURE

7.1 Value of Major Agricultural Products, 1955-1973 7.2 Production of Major Agricultural Crops, 1955-1973 7.3 Imports of Agricultural Products also produced in Surinam, 1969-1973 7.4 Number of Holdings, Total Area of Holdings, Number of Parcels, and Cultivated Area, by Size of Housing; 1959-1969 7.5 Government Participation in Agricultural Production-1976

VIII. MINING AND OTHER SECTORS

8.1 Bauxite, Alumina and Aluminum Production and Exports, 1955-1975 8.2 Projected Output and Exports of Bauxite, Alumina and Aluminum, 1975-1985 8.3 World Production, Consumption and Trade of Bauxite, 1970-1985 8.4 World Alumina Production and Consumption, 1972-1985 8.5 Supply of, and Demand for, Primary Aluminum, 1973-1985 8.6 Estimated Bauxite Production and Tax Revenues in Surinam, 1976-1985 8.7 Bauxite, Alumina and Aluminum--Major Indicators in Surinam and Other Caribbean Countries, 1973-1985 8.8 Data on Private Housing Construction, 1970-1975 8.9 Sources of Mortgage Credit, 1970-1975 8.10 Number of Registered Motor Vehicles, 1970-1975 8.11 Production and Value Indices of Some Domestically Produced Items, 1970-1975

II. WAGES AND PRICES

9.1 Consumer Price Indices for Paramaribo and Surroundings, 1972-1975 9.2 Indices of Nominal and Real Wages, 1971-1975 9.3 Wage Increases in Large Enterprises, 1972-1975.

Table 1.1 POPULATION BY AGE, BASED ON THE FOUR CENSUSES 1921, 1950, 1964 AND 1971, AS OF DECEMBER 31

Age 1921 1950 1964 19711l

(in thousands)

0 - 15 37.0 75.1 154.4 175.7

Over 15 75.0 97.1 163.2 190.5

Unknown - 12.5 3.4 18.7

Total 112.0 184.7 321.0 384.9

(as % of total)

0 - 15 33.0 40.7 48.1 45.6

Over 15 67.0 52.6 50.8 49.5

Unknown - 6.7 1.1 4.9

Total 100.0 100.0 100.0 100.0

1) The figures for 1971 are preliminary Source: Tables 3 and 5 of "The Fourth General Population Census. A Preliminary Report". Table 1.2: POPULATION BY RACE AND SEX, BASED ON THE FOUR CENSUSES, 1921, 1950, 1964 AND 1971, AS OF DECEMBER 31

1921 1950 1964 19717 (in thousands)

Creole 55.8 75.1 113.9 I18.5 Hindustani 30.9 64.1 1ll.4 14 2 .3 Indonesian 18.8 36.1 48.o 58.9 Chinese N.A. N.A. 5.3 6.4 Amerindian N.A. N.A. 7.2 10.2 Bush Negro N.A. N.A. 27.5 39.5 European N.A. N.A. 4.3 4.0 Others 2/ 6.5 9.4 3.4 5.1 Total 112.0 184.7 321.0 384.9

(as % of total)

Creole 49.8 40.7 35.5 30.8 Hindustani 27.6 34.7 34.7 37.0 Indonesian 16.8 19.5 15.0 15.3 Chinese N.A. N.A. 1.7 1.7 Amerindian N.A. N.A. 2.2 2.6 Bush Negro N.A. N.A. 8.6 10.3 European N.A. N.A. 1.3 1.0 Others 2/ 5.8 5.1 1.0 1.3 Total 100.0 100.0 100.0 100.0

1/ The figures for 1971 are preliminary.

2/ Where the breakdown is not available, "others" also includes Chinese, Amerindian, Bush Negro and European.

Source: Table 3 of "The Fourth General Population Census. A Preliminary Report." Table 1.3: DATA ON MIGRATION 1964-75 /

Year Emigration Immigration Net Migration Emigration Immigration Net Migration Absolute Numbers % of Gross Population 1964 1,302 1,202 - 100 0.44 o.40 - 0.04 1965 1,768 1,354 - 414 0.57 0.44 - 0.13 1966 2,256 1,580 - 676 0.71 0.50 - 0.21 1967 2,942 1,834 - 1,108 0.90 0.56 - 0.34 1968 3,947 1,825 - 2,122 1.18 0.54 - o.64 1969 5,384 1,834 - 3,550 1.57 0.53 - 1.04 1970 7,097 1,871 - 5,226 1.86 o.49 - 1.37 1971 7,210 2,149 - 5,061 1.85 0.55 - 1.30 1972 6,971 2,615 - 4,356 1.75 o.66 - 1.09 1973 9,267 2,442 - 6,825 2.29 o.60 - 1.69 Estimated 1974 25,000 2,000 -23,000 6.02 o.48 - 5.54 Estimated 1975 45,000 1,800 -43,200 10.95 o.44 - 10.51 Projected 1976 10,000 8,000 - 2,000 2.63 2.10 - 0.53

/1 No actual figures are available for 1974 and 1975. The estimates for these years are based on conversations with different people and are probably subject to substantial margins of error. A generally quoted figure for total emigration between 1964 and 1975 is 120,000.

Sources Table 1 of "Programma voor de Sociaal-economische ontwikkeling van Suriname" and Mission estimates. Tdble 1.4: GROSS AND NET POPULATION,1970-76 /

Year Gross Net Net % increase in Population Migration Population Net Population

1970 382,209 - 5,226 376,983 2.2%

1971 389,961 - 5,061 384,900 2.1%

1972 397,724 - 4,356 393,368 2.2%

1973 404,127 - 6.825 397,302 1.0%

1974 415,137 -23,000 392,137 -1.3%

1975 410,830 -43,200 367,630 -6.2%

1976 380,450 - 2,000 378,450 2.9%

/i Estiniated.

Source: Same as for Table 1.3. Table 1.5: SECTCRAL DISTRIBUTION OF WORKING POPULATION, 196h-74

/1 1964 1968 1970 1972 1974

(in thousands)

Agriculture & Fisheries 24.5 22.0 22.7 23.3 23.0

Forestry & Wood Processing 2.4 3.0 3.1 3.5 3.8

Mining & Bauxite Processing 5.7 6.6 6.h 6.9 7.5

Manufacturing & Construction 9.0 9.2 9.3 9.5 9.8

Government 16.1 19.5 25.1 24.7 33.0 Other 20.1 23.8 24.4 22.5 25.9

Total 77.8 84.1 91.0 90.h 103.0

Percent of Total Working Population

Agriculture & Fisheries 31.5 26.2 2h.9 25.8 22.3 Forestry & Wood Processing 3.1 3.6 3.4 3.9 3.7 Mining & Bauxite Processing 7.3 7.8 7.0 7.6 7.3 Manufacturing & Construction 11.6 10.9 10.2 10.5 9.5 Government 20.7 23.2 27.6 27.3 32.0 Other 25.8 28.3 26.9 24.9 25.2

Total 100.0 100.0 100.0 100.0 100.0 a Preliminary.

/2 Includes water and power, financial institutions, other services and housing.

Source: Ministry of Labor and Housing; Planning Bureau. Table 1.6: EMPLOYMENT ELASTICITY BY SECTOR 1964-74

1964-68 1968-74 1964-74

Aariculture and Fisheries 7%change in employment -10.2 4.5 +6.1 % change in output 36.0 8.0 47.0 Elasticity -0.28 0.56 +0.13

Forestry and Wood Processing % change in employment 25.0 26.7 58.3 % change in output 16.0 -19.8 -9.1 Elasticity 1.56 -1.35 -6.41

Mining and Bauxite Processing % change in employment 1508 13.6 31.6 % change in output 94.0 19.6 132.0 Elasticity 0.17 o.69 0.24

Manufacturing and Construction % change in employment 2.2 6.5 U.9 % change in output 85.0 -9.0 40.0 Elasticity 0.03 -0.72 0.22

Government % change in employment 21.1 69.2 105.0 % change in output 22.0 26.2 54.0 Elasticity O.96 2.64 1.94

Cther 1/ % change in employment 18.4 8.8 28.9 % change in output 78.7 -5.0 69.1 Elasticity 0.23 -1.76 0.42

Total % change in employment 8.1 22.5 32.4 % change in output 65.0 6.1 75.0 Elasticity 0.12 3.69 0.43

1/ Includes water and power, financial institutions, other services and housing.

Source: Tables 1.5 and 2.2, and Planning Bureau Table 1.7: INCOM4E DISTRIBUTION, 1962

Percent of Percent of Population Income 0- 10 4.3 10- 20 5.0 20- 30 5.6 30 - 40 6.4 40 - 50 7.2 50- 60 8.3 60- 70 9.6 70 - 80 11.6 80 - 90 14.7 90 - 100 27.3 95 - 100 17.8

GINI COEFFICIENT 0.3243

KUZNETS INDEX 0.2484

Source: Development Research Center, World Bank. Table 1.8: CHARACTERISTICS OF THE REGISTERED UNEMPLOYED IN PARAMARIBO AND SURROUNDING AREA, 1970-75 1/

1970 1971 1972 1973 1974 1975

TOTAL 1179 2621 5896 10550 13742 16309 of which: Totally unemployed 102 1203 4278 8149 10965 14139 Relief work 1077 1106 1041 2037 2232 1648 Vocational training - 312 577 364 545 522

(percent of total registered unemployed) TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 Totally unemployed 8.7 45.9 72.6 77.2 79.8 86.7 Relief work 91.3 42.2 17.7 19.3 16.2 10.1 Vocational training - 11.9 9.7 3.5 4.o 3.2

1) End of period

Source: Ministry of Labor and Housing Table 1.9: NUMBER OF INDUSTRIAL DISPUTES /1

Year Number of Number of Employees Number of Disputes Involved Man Days Lost

1961 5 245 1593

1962 5 1782 10381

1963 NoA. N.A. N.A.

1964 N.A. N.A. N.A.

1965 5 738 3337

1966 2 196 675

1967 4 727 3199

1968 4 1919 24962 1969 26 5063 62428

1970 7 419 1469

1971 49 6641 19934

1972 16 3206 44461

1973 30 5073 31840

1974 10 3411 28884

1975 8 1999 1662 4

/'3 Excluding strikes of public sector employees.

Source: Table 16 of "Loonontwikkeling en Nationaal Loonbeleid", a publication of the Ministry of Labor and Housing. Table 2.1: SECTORAL ORIGIN OF GROSS DOMESTIC PRODUCT IN CURRENT PRICES AT FACTOR COST AND MARKET PRICES, 1970-75

(Sur f. millions)

Est. 1970 1971 1972 1973 1974 1975

Agriculture & Fisheries 37.9 41.2 46.2 50.5 62.0 65,o

Forestry & Wood Processing 12.6 15.5 14.3 11.C LoO 12.0

Mining & Bauxite Processing 162.6 186.7 186.6 198.0 300.0 295.0

Manufacturing & Construction 42.7 47.1 51.3 56.1 55.0 58.0

Commerce, Banking, Insurance & Other Services 123.1 123.0 135.3 150.4 168iO 182.0

Housing 16.5 20.0 24.0 26.4 32.0 33.0

Government 9h.3 10h.5 113.0 141.0 163.0 175.0

Total GDP at Factor Cost 1450.7 533.0 570.7 633.4 791.0 820.0

Indirect Taxes & Subsidies 59.1 6L.0 69.1 80.' C9.0 101.0

Total GDP at Market Prices 5149.8 602.0 639.8 713.5 88p3.0 921.0

Sources: Planning Bureau, Bureau of Statistics and mission estimates. Table 2.2: SECTORAL CRIGIN OF GROSS DOI'ESTIC PRODUCT IN CONSTANT PRICES AT FACTCR COST AND MARKET PRICES, 1970-75

(Sur f. millions 1970 prices)

1970 1971 1972 1973 1974 1975

AgricuLture & Fisheries 37.9 39.0 38.4 38.4 39.5 39.1

Forestry & Wood Processing 13.6 15.1 L4.1 14.1 12.2 12.5

Mining & Bauxite Processing 162.6 181.4 179.8 182.9 181.0 1142.0

Manufacturing & Construction 42.7 h.5.3 43.6 42.8 3800 36.0

Commerce, Banking, Insurance & Other Services 123.1 115.5 120.2 119.4 120.0 118.9

Housing 16.5 19.7 22.9 22.9 22.9 22.5

Gover rxnent 91h.3 914.9 93.9 92.5 93.1 95.2

Total GDP at Factor Cost 190.7 510.9 512.9 513.0 506.7 L66.2

Indirect Taxes & Subsidies (Net) 59.1 60.8 63.6 66.1 59.0 57.0

Total GDP at Market Prices 549.8 571.7 576.5 579.1 565.7 523.2

Sources: Planning Bureau, Bureau of Statistics and mission estimates. Table 2.3: IMPLICIT DEFLATCRS, 1970-75 (1970 = 100)

Est. 1970 1971 1972 1973 197L 1975

Agriculture & Fisheries 100.0 105.6 120.3 131.5 157.0 166.2

Forestry & Wood Processing 100.0 102.6 101.h 78.0 90 9 96.0

Mining & Bauxi.te Processing 100.0 102.9 103.$ 108.3 1-5.7 207.7

Manufacturing & Construction 1DO.0 104.0 117.7 131.0 1LU.7 161.1

Ccmmerce, Banking, Insurance & Other Services 100.0 106.5 112.6 > 05.O 1L0.0 15 .1

Housing 100.0 1C'.5 1oL.8 115.3 139.7 146.7

Gov ernmen 100.0 110.1 120.3 152.4 175.0 183.8

Total GDP at Factor Ccst 100.0 105.3 111.3 123.5 1. 1 I 75.9

Total GDP at Market Prices 100.0 105.3 111.0 123.2 '55.0 176.0

Sources: Taoles 2.) and 2.2. Table 2.4: NATIONAL INCOME RATIOS, 1970-7$

Est. ______1970____ 1971 1972 1973 197.7 19975

Sectoral Outputs as a Percehtage of GD? at Factor Cost

Agriculture & Fisheries 7.7 7.7 8.1 8.0 7.9

Forestry & Wood Processing L.8 2.9 2.5 1.7 1.b 1.5 itining & Bawdxite Processing 33.1 34.7 32.7 3'.< 97.9 36.0

Yanufacturing & Construction 8.7 8.8 9.0 3,o 7' 7.1

Commerce, Banking, Insurance & Other Services . 2R

Nousing 3.'w 3.7 L.2..2.i

Government 5.? Pa. 19,' 2. ' ".K> 21. 3

Total lCfl.0 1. 1.. rlOf.0. 1 :,c c.0

IJational Income Categories as a Percentage of GDP at Market Prices

Consumptior- 76 Vi7 . 7.1 75 , 7t.5 81.2

Gross Domestic Investment 18.3 17.5 20.6 22 .0 26.L 27.7

Gross Donestic Savings 23.6 55.L5 9 2L1.8 24.4 18.8

Gross National Savings 12c9 1'. _ 5.c 21.6 17.7

Exports (incl. N.F.S.) 54.2 57.L 5L.8 51..7 53.6 47.8

Imports (incl. N.F.S.) 48.9 49.3 49.5 48.9 55.6 56.7

Sources: Tables 2.1, 2.5 and 2.7. Table 2.5: EXPENDITURE ON GROSS DOMESTIC PRODUCT, 1970-75

(Sur f. millions, current prices)

Est. 1970 1971 1972 1973 1974 1975

Consumption 420.1 449.2 474.1 536.9 667.1 748.0 Private (292.0) (310.8) (312.6) (356.8) (460.2) (508.0) Public (128.1) (138.4) (161.5) (180.1) (206.9) (240.0)

Gross Domestic Investment 100.6 105.4 132.0 157.0 233.0 255.0 Private (69.1) (77.0) (98.1) (115.0) (172.0) (180.0) Public (31.5) (28.4) (33.9) (42.0) (61.0) (75.0)

Goods & Nonfactor Services Balance 29.1 47.4 33.7 19.6 -17.1 -82.0 Exports (inc. N.FS.) (297.9) (344.1) (350.5) (369.1) (473.5) (440.0) Inports (incl. N.F.S.) (268.8) (296.7) (316.8) (349.5) (190.6) (522.0)

GDP at Current Market Prices 5149.8 602.C 639.8 713.5 883.0 921.0

Net Factor Income Payments Abroad -77. -89.1 -84.0 -69.9 -38.6 -24.0

GNP at Current Market Prices 472.7 512.9 555.8 643.6 8,31.3 897.0

Indirect Taxes & Subsidies (Net) 5,. 64.0 6,.1 80.1 92.0 101.0

GNP at Current Factor Cost L-23.E 14148-. L65.7 561.5 739.? 796.0

Sources: Planning Bureau, Bureau of Statistics and mission estimates. Table 2.6: TERMS OF TRADE AND RESOURCE GAP, 1970-75

(Sur f. millions)

Est. 1970 1971 1972 1973 1974 1975

1. Price Index for Exports 100.0 102.0 100.0 101.0 13h.0 158.0 (incl. NFS)

2. Price Index for Imports 100.0 106.0 107.0 128.0 152.0 176.0 (incl. NFS)

3. Terms of Trade Index '100.0 96.0 93.0 79.0 89.0 90.0 (1 * 2) 4. Exports (incl. NFS), 297.9 31 Lb1 350.5 369.1 473.5 440.0 (current prices)

5. Imports (incl. NFS), 268.8 296.7 316.8 31S9.5 490.6 522.0 (current prices)

6. Exports as Capacity to 297.9 i37-L 327.6 288.4 311.5 250.0 Import (4 4 2)

7. Exports (incl. NFS), ?97.9 221;.6 350.5 365.L 353.4 278.5 constant 1970 prices (14 1)

8. Imports (incl. NFS) 268.8 2 79.9 290.1 27.>C 322.8 296.6 const.-nt 1970 prices (5 # 2)

9. Terms of Trade Adjustment 0.0 1I.2 -22.9 -77-0 -41.9 -28.5 (6-7)

10. Resource Gap (8-6) -29.1 -57.5 -31.5 -15.4 11.3 46.6 11. GDP, Market (constant 1970) 549.8 571.7 576.5 579.1 565.7 532.2 Prices

12. GDY, Market (constant 1970) 549.6 58465 553.6 5C2.1 523.8 503.7 Prices (11 + 9)

13. Resource Gap as % of GDY -, 3 -9.8 -5.7 -?J 2.2 9.3 (10 4 12)

Source: Central Bank of Surinam; Bureau of Statistics. Table 2.7: GROSS DOWMSTIC INVESTIM2T AND ITS FINANCING, 1970-75

(Sur f. millions)

Est. 1970 1971 1972 1973 1974 1975

Gross Domestic Investment 1()00.6 C.5.L 132O 237.0 233.0 -, 0

Net Resource Inflow (-irflov) 2°.1 [27. 33.7 19.6 -17.1 -89.0

Gross Domestic Savings 1 9. 7 '52 16.7 176.6 215.9 173.0

Net Factor Income Payments -77-1 -85.1 -8'.C -l .2 -38.6 -. :

Net Transfer Payments .1 13.3 " 1.7 IL.CL. x.

Gross National Savings 7 14 101.0 106.3 191.0 1`'..'

Sources: Central Bank of Suxinam; Ministry of Finance. Table 2.8: SUMMARY GROWTH PROJECTIONS, 1976-85, HIGH GROWTH ALTERNATIVE

(US$ Millions)

Actual Estimated 1974 1975 1976 1977 1978 1979 1980 1985

National Income Accounts (1974 Prices & Exchange Rates)

Gross Domestic Product 493.6 456.3 484.4 520.8 564.6 603.8 647.6 928.0 Terms of Trade Adjustment 0.0 0.0 2.3 0.2 1.4 -2.2 -1.4 -3.2 Gross Domestic Income 493.6 456.3 486.7 521.0 566.0 601.6 646.2 924.8

Imports 274.3 248.3 268.2 296.6 332.1 357.8 383.3 502.3 Exports 264.7 207.7 230.9 255.0 273.0 291.0 313.0 485.0 Exports (as Capacity to Import) 264.7 207.7 232.3 255.2 274.4 288.7 311.6 481.8 Resource Gap 9.6 40.6 35.9 41.4 57.7 69.1 71.7 20.5

Consumption 372.9 370.6 393.4 416.7 448.6 469.8 504.1 698.3 Investment 130.3 126.3 129.2 145.7 175.1 200.9 213.8 247.0 Resources Available 503.2 496.9 522.6 562.4 623.7 670.7 717.9 945.3

Gross Domestic Savings 120.7 84.9 93.3 104.3 117.4 131.8 142.1 226.5 Factor Service Income (Net) -20.5 -11.1 -14.5 -21.3 -22.4 -24.2 -26.8 -34.0 Current Transfers (Net) 7.7 7.0 6.4 6.7 6.8 7.0 7.2 7.3 Gross National Savings 107.9 80.8 85.2 89.7 101.8 114.6 122.5 199.8

Gross National Product 473.1 445.2 469.9 499.5 542.2 579.6 620.8 894.0 Gross National Income 473.1 445.2 472.2 499.7 543.6 577.4 619.4 890.8

Selected Indicators Real GDP Growth Rate (%) -2.3 -7.6 6.1 7.5 8.4 6.9 7.2 5.9 Imports/GDP (%) 55.6 54.4 55.5 56.9 58.8 59.3 59.2 54.1 Exports/GDP (7) 53.6 45.5 47.5 49.0 48.4 48.2 48.3 52.3 Import Elasticity - - 1.3 1.4 1.4 1.0 0.8 0.7 ICOR - 3.5 4.5 3.6 3.3 4.5 4.6 4.3 Domestic Savings/GDY (%) 24.4 18.6 19.2 20.0 20.7 21.9 22.0 24.5 National Savings/GNY (%) 22.8 18.1 18.0 18.0 18.7 19.8 19.8 22.4

Source: Mission Estimates Table 2.9: SUMMARY GROWTH PROJECTIONS, 1976-85, LOW GROWTH ALTERNATIVE

(US$ Millions)

Actual Estimated 1974 1975 1976 1977 1978 1979 1980 1985

National Income Accounts (1974 Prices & Exchange Rates)

Gross Domestic Product 493.6 456.3 475.5 501.9 534.6 557.9 581.7 734.0 Terms of Trade Adjustment 0.0 0.0 2.3 -0.4 1.5 -0.7 0.9 4.9 Gross Domestic Income 493.6 456.3 477.8 501.5 536.1 557.2 582.6 738.9 Imports 274.3 248.3 261.9 287.1 321.7 336.4 351.3 426.6 Exports 264.7 207.7 230.0 248.0 262.0 279.0 292.0 402.0 Exports (as Capacity to Import) 264.7 207.7 232.3 247.5 263.5 278.2 292.9 406.9 Resource Gap 9.6 40.6 29.6 39.6 58.2 58.2 58.4 19.7 Consumption 372.9 370.6 380.4 399.0 426.1 443.1 460.3 575.1 Investment 130.3 126.3 127.0 142.1 168.2 172.3 180.7 173.5 Resources Available 503.2 496.9 507.4 541.1 594.3 615.4 641.0 748.6 Gross Domestic Savings 120.7 84.9 97.4 102.5 110.0 114.1 122.3 163.8 Factor Service Income (Net) -20.5 -11.1 -14.5 -21.5 -23.3 -26.0 -29.1 -33.3 Current Transfers (Net) 7.7 7.0 6.4 6.7 6.8 7.0 7.2 7.4 Gross National Savings 107.9 80.8 89.3 87.7 93.5 95.1 100.4 137.9 Gross National Product 473.1 445.2 461.0 480.4 511.3 531.9 552.6 700.7 Gross National Income 473.1 445.2 463.3 480.0 512.8 531.2 553.5 705.6 Selected Indicators Real GDP Growth Rate (%) -2.3 -7.6 4.2 5.5 6.5 4.4 4.3 3.7 Imports/GDP 55.6 54.4 55.1 57.2 60.2 60.3 60.4 56.5 Exports/GDP 53.6 45.5 48.4 49.4 49.0 50.0 50.2 54.8 Import Elasticity - - 1.3 1.7 1.8 1.0 1.0 0.8 ICOR - 3.5 6.6 4.7 4.8 7.0 5.9 5.2 Domestic Saving/GDY 24.4 18.6 20.4 20.4 20.5 20.5 21.0 22.2 National Savings/GNY 22.8 18.1 19.3 18.3 18.2 17.9 18.1 19.5

Source: Mission Estimates Table 3.1: BALANCE OF PAYMENTS, 1970-75 (US$ millions)

Estimated 1970 1971 1972 1973 1974 1975

Exports (including NFS) 158.0 182.4 195.9 206.3 264.7 246.0

Imports (including NFS) 146.6 157.3 177.1 195.3 274.3 292.0

Resource Balance 15.4 25.1 18.8 11.0 -9.6 -46.o

Workers' Remittances (net) 0.8 o.4 o.5 o.5 1.1 1.7

Direct Investment Income (net) -4o.9 -47.1 -47.0 -39.1 -21.6 -13.4

Current Transfers (net) 9.6 11.2 10.8 0.1 7.7 8.o

Current Account Balance -15.1 -10.4 -16.9 -27.5 -22.4 -49.7

Private Long-Term Cepital -4.6 -5.1 2.8 17.5 -o.6 37.5

Public Capital (net) 25.5 17.2 23.3 17.5 28.6 35.0

(Gross disbursements) (12.1) (4.0) (18.4) (8.6) (10.6) (..)

(Amortization) (0.6) (-1.3) (-1.3) (-3.1) (0.9) ( )

(Grants) (12.7) (12.8) (12.8) (13.6) (19.8) (.)

(Other official capital) (1.3) (1.7) (-6.6) (-1.6) (-0.9) (.)

Short-Term Private Capitall) 0.8 -2.6 o.6 9.2 o.4 o.5

Capital Account Balance 21.7 9.5 26.7 44.2 28.4 73.0

Change in Reserves (-increase) -6.6 0.9 -9.8 -16.7 -6.o -23.3

1) Including errors and omissions

Sources: Central Bank of Surinam, Bureau of Statistics. Table 3.2 Balance of Payments, 1970-75

(Sur. f. millions)

Estimated 1970 1971 1972 1973 1974 1975

Exports (including NFS) 297.9 344.1 350.5 369.1 473.5 44o.o Imports (including NFS) 268.8 296.7 316.8 349.5 490.6 522.0 Resource Balance 29.1 47.4 33.7 19.6 -17.1 -82.0

Workers' Remittances (net) 1.4 0.8 0.9 0.9 2.0 3.0

Direct Investment Income (net) -77.1 -89.1 -84.o -69.9 -38.6 -24.0 Current Transfers (net) 18.1 21.1 19.3 0.2 13.7 14.0 Current Account Balance -28.5 -19.8 -30.1 -49.2 -40.0 -89.0

Private Long-Term Capital -8.6 -9.7 5.0 31.3 -1.0 67.1

Public Capital (net) 48.1 32.5 41.7 31.1 51.1 62.6 (Gross disbursements) (22.9) (7.5) (32.9) (15.3) (18.9) ( ) (Amortization) (-1.2) (-2.4) (-2.4) (-5.5) (-1.6) ( ) (Grants) (23.9) (24.2) (22.9) (24.3) (35.5) (.) (Other official capital) (2.5) (3.2) (-11.7) (-3.0) (-1.7) (..) Short-Term Private Capitall) 1.6 -4.8 1.0 16.6 0.7 0.9

Capital Account Balance 41.1 18.0 47.7 79.0 50.8 130.6

Change in Reserves (-increase) -12.6 1.8 -17.6 -29.8 -10.8 -41.6

1) Including errors and omissions.

Source: Central Bank of Surinam, Bureau of Statistics. Table 3.3: BALANCE OF PAYMENTS ON CURRENT ACCOUNT, 1970-75

(US$ millions)

Estimated 1970 1971 1972 1973 1974 1975

Trade Balance 32.h 43.8 39.7 25.7 22.0 -5.6

Merchandise Exports (f.o.b.) l4o.9 163.5 178.5 182.8 241.1 230.7

Merchandise Imports (c.i.f.) 108.5 119.7 138.8 157.1 219.1 236.3

Non-Factor Services Balance -17.0 -18.8 -20.9 -14.7 -31.6 -4o.2

Transport & Insurance (net) - -1.2 -0.5 -1.7 -5.5 -6.7

Travel (net) -5.1 -5.4 -7.3 -5.5 -20.5 -27.9

Other Services (net) -11.9 -12.2 -13.1 -7.5 -5.6 -5.6

Resource Balance 15.4 25.1 18.8 11.0 -9.6 -45h.8

Factor Services Balance -4o.1 -46.7 -46.5 -38.6 -20.5 -11.7

Workerst Remittances (net) 0.8 0.4 0.5 0.5 1.1 1.7

Investment Income (net) -4o.9 -47.1 -47.0 -39.1 -21.6 -12.4

Current Transfers (net) 9.6 11.2 10.8 0.1 7.7 7.8

Current Account Balance -15.1 -10.4 -16.9 -27.5 -22.4 -49.7

Sources: Central Bank of Surinam, Bureau of Statistics and mission estimates. Table 3.4: BALANCE OF PAYMENTS ON CURRENT ACCOUNT, 1970-75 (Sur. f. millions)

Estimated 1970 1971 1972 1973 1974 1975

Trade Balance 61.1 82.9 71.1 46.o 39.3 -10.0

Merchandise Exports (f.O.b.) 265.8 309.3 319.4 327.0 431.3 413.0

Merchandise Imports (c.i.f.) 204.7 226.4 248.3 281.0 392.0 423.0

Non-Factor Services Balance -32.0 -35.5 -37.4 -26.4 -56.4 -72.0

Transport and Insurance (net) -0.1 -2.3 -0.9 -3.0 -9.9 -12.0

Travel (net) -9.6 10.3 -13.0 -19.1 -36.7 -50.0

Other Services (net) -22.3 -22.9 -23.5 -4.3 -9.8 -10.0

Resource Balance 29.1 47.4 33.7 19.6 -17.1 -82.0

Factor Services Balance -75.7 -88.3 -83.1 -69.o -36.6 -21.0

Workers' Remittances (net) 1.4 o.8 0.9 0.9 2.0 3.0

Investment Income (net) -77.1 -89.1 -84.o -69.9 -38.6 -24.0

Current Transfers (net) 18.1 21.1 19.3 0.2 13.7 14.0

Current Account Balance -28.5 -19.8 -30.1 -49.2 -4o.o -89.0

Source: Central Bank of Surinam, Bureau of Statistics and mission estimates. Table 3.5 Composition of Merchandise Exports, 1970-73 (Sur f millions)

1970 1971 1972 1973

MINING PRODUCTS 231.3 267.0 277.5 273.6 Bauxite 76.2 83.4 82.1 85.0 Alumina 106.3 138.3 147.8 143.6 Aluminum 48.6 4502 47.6 44.6 Other 0.2 0.1 0.0 0.4

AGRICULTURAL PRODUCTS 11.0 15.9 15.6 26.6 Rice 5.2 10.0 8.6 20.6 Bananas & Plantains 3.1 4.7 4.6 3.8 Citrus 1.0 0.3 0.1 1.0 Sugar O.8 o.4 1.0 0.2 Other 0.9 0.5 1.3 1.0

FISHERY PRODUCTS 1.0 1.0 1.0

FORESTRY PRODUCTS 8.2 7.7 8.6 12.4 Plywood 4.0 4.3 4.9 6.4 Particle Board 1.3 1.3 1.4 2.7 Other 2.9 2.1 2.3 3.8

OTHER PRO-DUCTS 11.6 15.4 14.2 8.5

RE-EXPORTS 2.7 2.3 2.5 4.2

TOTAL 265.8 309,3 319.4 327.0

Sources Central Bank of Surinam; Bureau of Statistics Table 3.6: VALUE, VOLUME AND UNIT PRICE OF MAJOR EXPORTS, 1970-75

Est. Unit 1970 1971 1972 1973 1974 1975

Bauxite Value million Sur.f. 76.2 83.4 82.1 85.0 127.9 92.7 Volume 1,000 metric ton 3419 3597 3476 3666 3974 2437 Unit Price Sur.f. per m.t. 22.3 23.2 23.6 23.2 32.2 38.0

ALUMINA Value million Sur.f. 106.3 138.3 147.8 143.6 171.2 213.1 Volume 1,000 m.t. 893 1149 1279 1209 1077 1123 Unit Price Sur.f. per m.t. 119 120 116 119 159 190 ALUMINUNI Value million Sur.f. 48.6 45.2 47.6 44.6 67.9 39.2 Volume 1,000 m.t. 53 47 53 54 54 26 Unit Price Sur.f. per m.t. 917 960 898 824 1259 1508 RICE Value million Sur.f. 5.2 10.0 8.6 20.6 24.5 26.0 Volume 1,000 m.t. 16.1 32.1 30.7 44.8 47.6 48.0 Unit Price Sur.f. per m.t. 323 311 280 429 515 542

BANANAS AND PLANTAINS Valu.e million Sur.f. 3.1 4.7 4.6 3.8 4.7 6.1 Volume 1,000 m.t. 25.1 38.1 39.7 30.1 34.6 38.3 Unit Price Sur.f. per m.t. 124 123 116 126 136 159

WOOD PRODUCTS 1/ Value million Sur.f. 8.2 7.7 8.6 12.4 12.1 12.5 Volume 1000 cubic meters 41.1 35.3 39.4 48.7 45s0 43.0 Unit Price Sur.f. per m 3 199 218 218 255 269 291

1/ Including processed wood and prefabricated wooden houses.

Source: Central Bank of Surinam. Table 3.7 Composition of Merchandise Import .1, 1970-73 (Sur. f. millions)

1970 1971 1972 1973

RAW & BASIC MATERIALS 77,7 108.6

CONSUMPTION GOODS 72.1 78.6 L2.98, Food & Beverages 20.1 24.5 27.4 28.4 Furniture 8.9 9.4 9.8 11.0 Clothing 3.6 3.8 4.1 4.3 Yarn & Fabrics 8.5 9.3 8.6 7.4 Medical Products 6.5 8.1 8.5 9.8 Cars & Motor cycles 7.0 6.4 7.2 6.3 Other 17.5 17.1 18.3 20.7

FUELS & LUBRICANTS 25.6 30.2 ho.4 36.1

INVESTMENT GOODS 42.3 39.8 48.4 48.5

TOTAL 217.7 237.8 258.2 281.0

/1 Because these figures include re-exports, some totals differ from Table 3.4.

Sources Bureau of Statistics; Central Bank of Surinam Table 3.8: COMPOSITION OF RE3ISTERED IMPCRTS, 1975

Imports Import V in 1000 Shares Product Group Sf in %

Live animals and animal products 132376.3 2.2

Live plants and plant products (excl. oils) 33,962.2 5.5

Fats and Oils 15,368.3 2.5

Processed food and beverages 77,722.8 12.6

Minerals and fuels 85,049.0 13.8

Chemical products 69,734 6 11.3

Plastic and rubber products 21,310.6 3.5

Hides and skins 9,556.9 1.6 Wood and cork products 517.0 0.1

Paper and paper products 19,L491.o 3.2

Textiles and clothing 49,549.1 8.0

Shoes, hats, umbrellas, etc. 7,074-9 1.1

Nonmetallic minerals 9,835.4 1.6

Precious metals, jewelry 2,217.6 0.4

Minerals and metals 48,065.7 7.8 Machinery 76,414.8 12.4

Transport vehicles and materials 51,806.5 8.4

Precision instruments, optical and photographic equipment, musical instruments 14,729.1 2.4

Weapons and ammunition 369.6 0.1

Diverse goods 9,791.4 1.6

Works of art and antiques 7.0 _ TOTAL 615,943.6 100.0

Product groups are classified according to a tariff list published in 1957. It is similar to but not identical to the usual SITC classification.

Sourcet Surinam, Ministry of Economic Affairs, Imports Control Board. Table 3.9: GEOGRAPHICAL DISTRIBUTION OF EXPORTS/IMPORTS, 1969-73 (% of total)

1969 1970 1971 1972 1973

Exports to United States 43 39 48 44 35 EEC 31 38 24 28 34 Netherlands (10) (14) (lo) (12) (12) Germany (12) (15) (8) (11) (14) Italy (7) (7) (4) (4) (3) Other EEC countries (2) (2) (2) (1) (5) Scandinavian Countries 1) 8 9 7 8 10 Other European Countries 2) 7 7 8 5 9 Caribbean islands 3 4 3 3 5 Canada 4 2 3 4 4 Japan 2 - 3 1 1 Other countries 2 1 4 7 2 Imports from EEC 37 39 38 39 38 Netherlands (21) (22) (23) (24) (24) Germany (6) (6) (6) (5) (5) United Kingdom (6) (6) (6) (5) (5) Other countries (4) (5) (4) (5) (4) United States 38 35 33 32 34 Caribbean islands 11 11 13 11 13 Japan 6 6 7 8 6 Other Asian countries 3 3 3 3 3 Other countries 5 6 6 7 6

1) Excluding Denmark 2) Including the U.S.S.R.

Source: Central Bank of Surinam Table 3.10: INTERNATIONAL RESERVES AT END OF PERIOD, 1970-74

1970 1971 1972 1973 1974

(Sur f. millions)

MONETARY AUTHORITIES (NET) 69.1 75.1 83.2 110.6 130.4

Central Bank 69.3 75.1 79.4 110.7 130.5 Foreign Exchange (53.1) (58.5) (62.8) (99-7) (119.5) Gold (16.2) (16.6) (16.6) (1i.o) (11.0)

Liabilities(-) (-) (-) (-) (-) Central Government -0.2 - 3.8 -0.1 -0.1

COMMERCIAL BANKS (NET) 18.1 10.3 19.8 22.2 13.2 Assets (23.9) (17.0) (24.2) (27.8) (18.0) Liabilities (-5.8) (-6.7) (-4.4) (-5.6) (-4.8)

TOTAL RESERVES (NET) 87.2 85.4 103.0 132.8 143.6

(US$ millions) TOTAL RESERVES (NET) 46.2 453 57.6 7_42 80.3

(as per cent of imports)

TOTAL RESERVES (NET) 32.4 28.8 32.538.0 29.3

Source: Central Bank of Surinam and IMF. Table 3.11: EXPORT AND IMPORT PRICE INDICES, 1970-75 (1970 - 100)

Export Price Import Price Terms of Trade Index Index Index

1970 100 100 100 1971 .102 106 96 1972 100 107 93 1973 101 128 79

Estimated 1974 1.34 152 11 89

Estimated 1975 158 176 1. 90

j/ Estimates are a weighted average of the export price indices of Surinam's main trading partners.

Sources Central Bank of Surinam; Mission Estimates. Table 3.12: BALANCE OF PAYMENTS PROJECTIONS, 1976-85, HIGH GROWTH ALTERNATIVE

(US$ Millions)

Actual Estimated 1974 1975 1976 1977 1978 1979 1980 1985

Exports (including Nonfactor Services) 264.7 246.0 291.7 343.6 396.5 453.8 521.2 1110.0 Imports (including Nonfactor Services) 274.3 292.0 336.8 399.4 479.8 562.4 641.2 1157.1 Resource Balance -9.6 -46.0 -45.1 -55.8 -83.3 -108.6 -120.0 -47.1

Net Factor Service Income -20.5 -11.7 -19.3 -30.3 -34.4 -40.9 -48.3 -72.0 (Net Interest) (-) (-) (-0.3) (-0.3) (-0.4) (-2.9) (-4.3) (-9.0) (Net Direct Investment Income) (-21.6) (-13.4) (-22.0) (-33.0) (-37.0) (-41.0) (-47.0) (-67.0) (Workers' Remittances) (1.1) (1.7) (3.0) (3.0) (3.0) (3.0) (3.0) (4.0) Net Current Transfers 7.7 8.0 8.0 9.0 10.0 11.0 12.0 17.0 Current Account Balance -22.4 -49.7 -56.4 -77.1 -107.7 -138.5 -156.3 -102.1

Net Direct Foreign Investment -0.6 37.5 5.0 9.0 12.0 16.0 20.0 27.0 Capital Grants 19.8 17.6 35.3 54.0 72.0 108.0 117.0 99.0

Net Public Disbursements 9.7 17.4 19.3 41.9 51.3 49.1 50.9 18.9 (Gross Public Disbursements) (10.6) (18.1) (20.0) (43.5) (54.4) (54.8) (59.2) (33.4) (Amortization) (-0.9) (-0.7) (-0.7) (-1.6) (-3.1) (-5.7) (-8.3) (-14.5)

Short-Term Capital -0.5 0.5 1.0 1.2 1.5 1.5 1.5 2.5 Capital Account Balance 28.4 73.0 60.6 105.9 136.8 174.6 189.4 147.4

Change in Reserves (- increase) -6.0 -23.3 -4.2 -29.0 -29.1 -36.1 -33.1 -45.3

Level of Reserves 80.3 103.6 107.8 136.8 165.9 202.0 235.1 385.7

Import Coverage of Reserves (in Months) 3.5 4.3 3.8 4.1 4.2 4.3 4.4 4.0

Source: Mission Estimates. Table 3.13: BALANCE OF PAYMENTS PROJECTIONS, 1976-85, LOW GROWTH ALTERNATIVE

(US$ Millions)

Actual Estimated 1974 1975 1976 1977 1978 1979 1980 1985

Exports (including Nonfactor Services) 264.7 246.0 291.7 333.8 380.7 435.3 487.9 936.7 Imports (including Nonfactor Services) 274.3 292.0 328.9 387.2 464.8 526.2 585.2 981.2 Resource Balance -9.6 -46.0 -37.2 -53.4 -84.1 -90.9 -97.3 -44.5 Net Factor Service Income -20.5 -11.7 -19.3 -29.3 -32.4 -37.8 (Net Interest) -46.1 -64.7 (-) (-) (-0.3) (-0.3) (-0.4) (-2.8) (-4.1) (-8.7) (Net Direct Investment Income) (-21.6) (-13.4) (-22.0) (-32.0) (-35.0) (-38.0) (-45.0) (-60.0) (Workers' Remittances) (1.1) (1.7) (3.0) (3.0) (3.0) (3.0) (3.0) (4.0) Net Current Transfers 7.7 8.0 8.0 9.0 10.0 11.0 12.0 17.0 Cerrent Account Balance -22.4 -49.7 -48.5 -73.7 -106.5 -117.7 -131.4 -92.2 Net Direct Foreign Investment -0.6 37.5 5.0 8.0 11.0 15.0 18.0 25.0 Capital Grants 19.8 17.6 32.0 45.0 52.5 82.5 90.0 60.0 Net Public Disbursements 9.7 17.4 16.3 30.4 41.9 38.8 41.7 16.3 (Gross Public Disbursements) (10.6) (18.1) (17.0) (31.9) (44.9) (44.3) (49.7) (30.3) (Amortization) (-0.9) (-0.7) (-0.7) (-1.5) (-3.0) (-5.5) (-8.0) (-14.0) Short-Term Capital -0.5 0.5 1.0 1.1 1.2 1.3 1.4 2.0 Capital Account Balance 28.4 73.0 54.3 84.5 106.6 137.6 151.1 103.3 Change in Reserves (- increase) -6.0 -23.3 -5.8 -10.8 -0.1 -19.9 -19.7 -11.1 Level of Reserves 80.3 103.6 109.4 120.2 120.3 140.2 159.9 294.4 Import Coverage of Reserves (in Months) 3.5 4.3 4.0 3.7 3.1 3.2 3.3 3.6

Source: Mission Estimates Table 3.14: EYPORT PROJECTIONS, 1976-85, HIGH GRa1TH ALTERNATIVE

(US$ millions)

Est. 1975 1976 1977 1978 1979 1980 1985

Constant (1971 ) Prices Bauxite 43.6 47 52 63 68 75 101 Alumina 99.2 100 106 109 114 118 163 Aluminum 18.2 29 40 40 42 43 53 Rice 13.8 14 15 16 17 19 56 Wood Products 8.5 7 7 8 8 9 12 Bananas 2.9 3 3 3 4 4 6 Other 11.3 12 12 13 14 20 49 Total Merchandise 195.5 212 235 252 267 288 440 Nonfactor Services 12.2 18 20 21 24 25 45 Total Goods & N.F.S. 207.7 230 255 273 291 313 485

Price Indices (1974 = 100) - Bauxite 118 128 135 146 156 167 234 Alumina 120 129 135 146 157 168 235 Aluminum 120 131 143 156 169 182 257 Rice 105 110 111 111 115 118 167 Wood Products 108 127 146 167 186 208 320 Bananas 117 94 101 107 117 125 195 Other 115 125 135 140 150 160 215 Total Merchandise 118 127 134 144 156 166 229 Nonfactor Services 125 127 134 144 156 166 229 Total Goods & N.F.S. 118 127 134 114 156 166 229

Current Prices Bauxite 51.8 60 70 92 106 125 236 Alumina 119.1 129 143 159 179 198 383 Aluminum 21.9 38 57 62 71 78 136 Rice 14.5 15 17 18 20 22 94 Wood Products 7.0 9 10 12 15 17 38 Bananas 3.4 3 3 3 5 5 13 Other 13.0 15 16 18 21 32 105 Total Merchandise 230.7 269 316 364 417 477 1005 Nonfactor Services 15.3 23 27 32 37 43 105 Total Goods & N.F.S. 246.0 292 343 396 454 521 1110

Source: Mission estimates. Table 3.15: EXPORT PROJECTIONS, 1976-85, LOW GROWTH-I ALTERNATIVE

(US$ millions)

Est. 1975 1976 1977 1978 1979 1980 1985

Constant (1974) Prices Bauxite 43.6 47 52 58 65 70 98 Alumina 99.2 100 104 107 110 113 138 Aluminum 18.2 29 36 39 41 43 49 Rice 13.8 14 15 15 16 16 27 'Wood Products 6.5 7 7 7 8 8 12 Bananas 2.9 3 3 3 4 4 6 Other 11.3 12 12 13 114 15 35 Total Merchandise 195.5 212 229 242 258 269 365 Nonfactor Services 12.2 18 19 20 21 23 37 Total Goods & N.F.S. 207.7 230 248 262 279 292 402 Price Indices (1974 = 100) Bauxite 118 128 135 1146 156 167 234 Alumina 120 129 135 146 157 168 235 Aluminum 120 131 143 156 169 182 257 Rice 105 110 111 111 115 118 167 Wood Products 108 127 146 167 186 208 320 Bananas 117 94 101 107 117 125 195 Other 115 125 135 140 150 160 215 Total Merchandise 118 127 134 144 156 166 229 Nonfactor Services 125 127 134 144 156 166 229 Total Goods & N.F.S. 118 127 134 144 156 166 229

Current Prices BaLuite 51.8 60 70 85 101 116 229 Alumina 119.1 129 140 156 173 190 324 Aluminum 21.9 38 51 61 69 78 126 Rice 14.5 15 17 17 18 19 45 Wood Products 7.0 9 10 12 15 17 38 Bananas 3.4 3 3 3 5 5 12 Other 13.0 15 17 18 21 24 75 Total Merchandise 230.7 260 308 352 402 449 849 Nonfactor Services 15.3 23 26 29 33 39 88 Total Goods & N.F.S. 246.0 292 3314 381 435 488 937

Source: Mission estimates. Table 3.16: IMPORT PROJECTIO3S, 1976-85, HIGH GRlOdTH ALTEMATIVE

(USs millions)

Est. 1975 1976 1977 1978 1979 1980 1985

Constant (1974) Prices Food 22.0 24 26 28 28 29 46 Other Consumer Goods 42.0 46 49 54 54 55 92 Petroleum & Products 42.o 46 50 54 58 62 89 Other Intermediate Goods 67.1 74 84 95 99 105 137 Capital Goods 30.6 31 37 -46 60 69 47 Total Merchandise 203.7 221 246 277 299 320 411 Nonfactor Services 44.6 47 51 55 59 63 91 Total Goods & N.F.S. 2li 8.3 268 297 332 358 383 502

Price Indices (1974 - 100) Food 110 117 124 131 140 148 202 Other Consumer Goods 2lk 125 134 142 158 167 224 Petroleum & Products 115 126 135 146 157 168 232 Other Intermedi4te Goods 118 127 135 146 157 168 238 Capital Goods 120 130 1J40 149 165 174 238 Total Merchandise 116 125 134 144 157 167 230 Nonfactor Services 118 125 134 14k 157 167 230 Total Goods & N.F.S. 116 125 134 1L4 157 167 230 Current Prices Food 24.2 28 32. 37 39 42 93 Other Consumer Goods 47.9 58 66 76 84 91 207 Petroleum & Products 48.3 47 68 79 91 104 206 Other Intermediate Goods 79.2 93 113 138 156 177 326 Capital Goods 36.7 41 51 69 100 121 113 Total Merchandise 236.3 277 330 399 470 535 945 Nonfactor Services 55.7 60 69 81 92 106 212 Total Goods & N.F.S. 292.0 337 399 480i 562 641 1157

Source: Mission estimates. Table 3.17: IVORT PROJECTIONTS, 1976-85, LOW GROWTII ALTERNATIVE (us$ millions)

Est. 1975 1976 1977 1978 1979 1980 1985 Constant (1974) Prices Food 22.0 23 25 27 28 29 41 Other Consumer Goods 42.0 45 47 52 53 54 76 Petroleum & Products 42.0 45 48 53 56 57 73 Other Intermediate Goods 67.1 73 83 94 97 100 130 Capital Goods 30.6 30 35 44 46 50 32 Total Merchandise 203.7 216 238 270 280 290 352 Nonfactor Services 44.6 46 49 52 56 61 75 Total Goods & N.F.S. 248.3 262 287 322 335 351 427

Price Indices (1974 = 100) Food 110 117 124 131 140 148 202 Other Consumer Goods 114 125 134 142 158 167 224 Petroleum & Products 115 126 136 146 157 168 232 Other Intermediate Goods 118 127 135 146 157 168 238 Capital Goods 120 130 140 149 165 174 238 Total Merchandise 116 125 134 144 157 167 230 Nonfactor Services 118 125 134 144 157 167 230 Total Go ds & N.F.S. 116 125 134 144 157 167 230 Current Prices Food 24.2 27 31 35 39 43 83 Other Consumer Goods 47.9 56 63 74 84 90 170 Petroleum & Products 48.3 57 65 77 88 96 169 Other Intermediate Goods 79.2 93 112 137 152 168' 309 Capital Goods 36.7 39 49 66 76 87 76 Total Merchandise 236.3 272 320 389 439 484 807 Nonfactor Services 55.7 57 67 76 87 101 174 Total Goods & N.F.S. 292.0 329 387 465 526 585 981

Source: Mission estimates. Table 4.1 - SURINAM

EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, 1975 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS)

D E B T O U T S T A N D I N G I N A R R E A F S TYPE OF CREDITOR ------_____ --- ______-_ CREDITOR COUNTRY OISBURSFD :UNDISB!JRSFD: TOTAL : PRINCIPAL INTEREST

SUPPLIERS, CREDITS NETHERLANDS 209 - 209 - TOTAL SUPPLIERS, CREDITS 209 - 209 _

LOANS FROM INTERNATIONAL ORG. EUROPEAN INVEST BANK 2,136 - 2,136 - TOTAL LOANS FROM INTERNATIONAL ORG. 2,136 - 2,136 -

LnANS FROM GOVERNMENTS UNITED STATES 4,378 25 4,403 - TOTAL LOANS FOOM GOVERNMENTS 4,378 25 4,403 -

TOTAL EXTERNAL PUBLIC DEBT 6,723 25 6,748 -

NOTES: (1) ONLY DEBTS WITH AN ORIGINAL OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABLF. (?I DFT ntJTSTANDING INCLUDES PRINCIPAL IN ARREARS RUT EXCLUDES INTEREST IN ARREARS. Table 4. 2 - SURI NAM Page 1 of 7

SERVICE PAYMENTS, COPMITMENTS9 DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED ON DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, 1975 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS) TYPE OF CREDITOR SUPPLIERS, CREDITS CREDITOR COUNTRY NETHERLANDS YEAR : DEBT OUTSTANOING AT : T R A N S A C T I O N S D U R I N G P E R I O D OTHER CHANGES : BEGINNING OF PERIOD : … _ - - - . ______- … _ - ____------…- DISBURSED : INCLUDING COMMIT- : DISBURSE- : S E R V I C E P A Y M E N T S : CANCEL- ADJUST- ONLY :UNDISBURSED: MENTS : MENTS :------: ---- : LATIONS MENT * : PRINCIPAL : INTEREST: TOTAL : 1) (2) : 31 14) (5) (6) (7) (8) 19)

1974 - - - _ _ _ _ _ 1975 - - 130 16 16 - 339 1916 Z09 209

* * * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * * * *

1976 209 209 - - 138 10 148 1977 71 71 - - 71 2 73

* THIS COLUMN SHOWS THE AMOUNT CF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS FROM ONE CATFGORY TC ANCTHER IN THE TABLE. Table 4. 2- SURINAN Page 2 of 7

SERVICE PAYMENTS, COMMITMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED ON DEBT OUTSTANDING INCLUDING UNDIS8URSED AS OF DEC. 31, 1975 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS$ TYPE OF CREDITOR SUPPLIERS, CREDITS TOTAL YEAR : DEBT OUTSTANDING AT : T R A N S A C T I 0 N S 0 U R I N G P F R I 0 D OTHER CHANGES : BEGINNING OF PERIOD :

DISBURSED : INCLUDING : COMMIT- : DISBURSE- : S E R V I C E P A Y N E N T S CANCEL- : ADJUST- ONLY :UNDISBURSED: MENTS : MENTS :------…-:------LATIONS : MENT * : PRINCIPAL INTEREST TOTAL ( {1) : (2) (3) (4) (5) (6 : (7) (8) (9)

1974 - - - - 1975 - - - - 130 16 146 - 339 1976 209 209

* * * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * * * *

1976 209 209 - - 138 10 148 197T 71 71 - - 71 2 73

* THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNOISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS FROM ONE CATEGORY TO ANOTHER IN THe TASLE. Table 4.2 - SURINAM Page 3 of 7

SERVICE PAYMENTS, COMMITMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED ON DEBT OUTSTANDING INCLUOING UNDISBURSED AS OF DEC. 31, 1975 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS) TYPE OF CREDITOR LOANS FROM INTERNATIONAL ORG. CREDITOR COUNTRY EUROPEAN INVEST BANK YEAR : DEBT OUTSTANDING AT : T R A N S A C T I 0 N S D U R I N G P E R I 0 D OTHER CHAN6ES : BEGINNING OF PERIOD :

: DISBURSED : INCLUDING COMMIT- : DISBURSE- S E R V I C E P A Y N E N T S CANCEL- : ADJUST- ONLY :UNDISBURSED: ENTS : DENTS :------:-----: LATIONS : MENT * PRINCIPAL: INTEREST: TOTAL II() : 2) : 31 : 41 : 5 (S6) : 7) : 8) : 9)

1974 - - - _ _ _ _ _ 1975 - - _ _ 144 59 203 - 2,280 1976 2,136 2,136

* * * * * * THE FOLLOWING FIGURES ARE PROJECTED * *** * *

1976 2,136 2,136 - - 142 52 194 - 1977 1,994 1,994 - - 144 49 193 - 2 1978 1,852 1,852 - - 148 45 193 - - 1979 19704 1,704 - - 152 42 194 - 1 1980 1,553 1,553 - - 154 39 193 - -2 1981 1,391 19397 - - 159 33 192 - - 1982 1,238 1,238 - - 163 30 193 - 1983 1,075 1,075 - - 167 26 193 - _ 1984 908 908 - - 171 21 192 - -1 1985 736 736 - - 175 18 193 - - 1986 561 561 - - 180 12 192 -- 1987 381 381 - - 184 9 193 - -1

1988 196 196 - - 196 2 198 -

* THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS FROM ONE CATEGORY TO ANOTHER IN THE TABLE. Table 4.2 - SURINAM Page 4 of 7 SERVICE PAYMENTS, COMMITMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT PROJECTIONS BASED ON OEBT OUTSTANDING INCLUDING UNDIS8URSED AS OF DEC. 31, 1975 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS) TYPE OF CREDITOP LOANS FROM INTERNATIONAL ORG. TOTAL YEAR : DEBT OUTSTANDING AT : T R A N S A C T I 0 N S D U R I N G P E R I 0 D OTHER CHANGES : BEGINNING OF PERloD : ______…______- _- _- _- _- _-… _ - _- _- _- _- _- _- _- _- _- _- _ _ _ DISBURSED : INCLtJDING COMMIT- : DISBURSE- : S E R V I C E P A Y H E N T S : CANCEL- : ADJUST- ONLY WUNOISBURSED: MENTS : MENTS :------:------…------: LATIONS : MENT * : PRINCIPAL : INTEREST : TOTAL (1) (2 : (3) (4) (5) : (6) (7) l8a (9) 1974 - - - - - _ _ _ 1975 - - - - 144 59 203 - 2,280 1976 2,136 2,136

* * * * * * THE FOLLOWING FIGURES ARE PROJECTED * C * * * *

1976 2,136 2,136 - - 142 52 194 - - 1977 1,994 1,994 - - 144 49 193 - 2 1978 1,852 1,852 - - 148 45 193 - - 1979 1,704 1,704 - - 152 42 194 -1 1980 1,553 1,553 - - 154 39 193 - -2 1981 1,397 1,397 - - 159 33 192 - - 1982 1,238 1,238 - - 163 30 193 - - 1983 1,075 1,075 - - 167 26 193 - - 1984 908 908 - - 171 21 192 - -1 1985 736 736 - - 175 18 i93 - - 1986 561 561 - - 180 12 192 - - 1987 381 381 - - 184 9 193 - -1 1988 196 196 - - 196 2 ,198 -

* THIS COLUMN SHOWS THE AMOUNT CF ARITHMETIC IM8ALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS FROM ONE CATEGORY TO ANOTHER IN THE TABLE. Table 4.2- SUPI NAM Page 5 of 7

SF'PVICF PAYMENTS, CC'M-ITMFNTS, DISBI.tRSr-"NTS AND 0'1TST ANDING AMOINTS nF EXTFRNAL PUB1LIC IJFqT

PRC!JFCTIUNS BASEL1 ON DEBT OUTSTANDING INCLUOI,NG UNOISBURSFE) AS 9'F DEC. 31, 1915 r--BT RFPAYABLr IN F.rFFIGN CIIRRFNCY AND Gr115S (IN THOUSANDS OF U.S. DOLLAPS) TYPc CF CREOITOR LCANS FRCM G0JVLKNMFNTS CFnDITnR CL3UNTRY liNITFO STATES y r- : ODEBT OUTSTANDING AT : T P A N S A (. T I U N S 0 U P T N G P F R I 1) OTHFP CHANG S BEGINNING OF PERIOD :

DISBURSED : INCLUDING CO ?MIMIT- : DISBUr&E- : S E R V I C F P A Y M F N T S CANCFL- : ADJUST- ONLY :UNDISBIPSED: MENTS : MlNTS ……………------:……------: LATIONS : MNTF : PRINCIPAL : INTEREST : TnTAL (1) (2) (3) (4) (5) : (7) 18) (9)

1974 -_ - - 1975 - - - 1,800 41S 221 636 - 4,818 1976 4,376 4,403

* 4 * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * 4 * *

1976 4,378 4,403 - 25 416 232 648 - 1 1977 3,988 3,988 - - 416 212 628 - -1 1978 3,571 3,571 - - 416 190 bO6 - 1979 3,156 3,156 - - 937 160 1,097 - -1 1980 2,218 29218 - 937 107 1,044 - - 1981 19281 1,281 - -7hZ 55 817 - 1982 519 519 - - 3?6 16 34? 1 1983 194 194 - - 65 6 71 - 1984 129 129 - - 65 4 69 - 1985 65 65 - - 65 2 67

THIS C7'LLJMt\ SHrWS THF awC]UNT CF ARITHMETIC IMHALANCE IN THE AMOtJNT OUTSTANDING INCLUDING UNDISBURSEO FPOM )NF TE Yr-AP THF NEXT. Trif ,ST CCMMON CAUSES DF IM±LANCES ARE CHANGES IN 'XCHANGF RATFS AND TRANSFEP 'ITrlFRTs FPO'm nNE CATPGCRY T" ANCTIEP IN THE TABLE. Table 4.2 - SUP INAM Page 6 of 7

SERVICF PAYMENTS, CIPMI TMFNTS, DI S'PSF-MENTS AND Ot TSTANOING XMf-lINTS OF EXTERNAL PUBLIC DC'T

PROJFCTIONS BASED ON nEBT OUTSTANDING INCLUOING UNDISBUJRSED AS IF mmC. 31, 1975 ODET REPAYABLE IN F1'PFIGN CURRCNCY AN) GIlDS (IN THUJSAN13S OF U.S. DOLLARS) TYPE rF CREDITOR LCANS FPrY G()Vt\NMENTS T'ITAt. YEAF : DEBT O'JTSTANDING AT : T P A N S i C T I U N S D U R I N G P E R I U THT P CHAIGFS : BEGINNING OF PERInD :

:DTSBURSED : INCLULING COMMIT- : DISRUPSE- S E R V I C Pp A Y M F N T S CANCEL- : ADJUST- ONLY :UNDISBURSED: MENTS : MENTC …:------:------LATIrNS : MeNT PRINCIPAL INTERFST : TOTAL :(1) : {(2) (33 : (4) (5 : (6) (7) (: ()

1974 - - - - - 1975 - - - 1,800 415 221 636 - 4,818 1976 4,378 4,403

* * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * * *

1976 4,378 4,403 - 25 416 232 648 - I 1977 3,988 3,988 - - 416 21Z 628 - -I 1978 3,571 19571 - - 416 190 606 - 1 1979 3,156 3,156 - - 937 160 1,097 - -I 1980 2,218 2,218 - - 937 107 1,044 1981 1,281 1,291 - - 762 55 817 - - 1982 519 519 - - 326 16 342 -1 1983 194 194 - - 65 6 71 - 1984 129 129 - - 65 4 69 -1 1985 65 65 - - 65 2 67

* THIS COL'JMN SHOWS THE AMOIJNT CF ARITHMFTIC IMBALAtICE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSEC, FROM ONF YEAR TO THE NFXT. THE MOST CCMMON CAUSES OF IM3ALANCFS ARE CHANGES IN EXCHANGE RATFS AND TRANSFE'< 2F DEBTS FROM ONE CATEGORY TO ANCTHFR IN THE TABLE. Table 4.2 - SIQ INAM Page 7 of 7

SERVICE PAYMENTS, CrIMMITMENTS, DIS9U0 F r-JTS AND OUTSTANDING AMMOUNTS OF EXTERIIAL PIBLIC D-E7

PROJFCTIONS BASE[) uN DEBT OUTSTANDIb5 I'iCLUOING UNDISBURSF) AS O]F DEC. 31, 1975 PDBT REPAYABLf IN F'W -IGN CURPQENCY AND GOlDS (IN THO'SANDS OF I.S. DOLLARS) TOTAL YEAR : DEBT OUTSTANOING AT : T R A N S A C T I C N S P IJ R I N G D F R I O D OTHER CHANGES : BEGINNING OF PERTOD :

DISBURSED : INCLUDING COMMIT- :1IS8J1FSF- : S F R V I C F P A Y M F N T S CANCFL- : ADJIIST- ONLY :UNDISBUPSEO: MENTS :MENS :…------:------:------: LATIONS : MENT : PRINCIPAL : INTFRFST : TOTAL ({1) ; (12) : 1(3) : 4) (51 (63 (7) (99(83

1974 - - - - _ _ _ _ 1975 - - - 1,800 689 296 985 - 7,437 1976 6,723 6,748

* * * * * * THE FOLLOWING FIGURFS ARE PROJECTFO * * * * * C

1976 6,723 6,748 - 25 696 294 990 - 1 1977 6,053 6,053 - - 631 263 894 - 1 1978 5,423 5,423 - - 564 235 799 - 1 1979 4,860 4,860 - - 1,089 202 1,291 - - 1980 3,771 3,771 - - 1,091 146 1,237 - -2 1981 2,078 2,678 - - 921 88 1,009 - - 1982 1,757 1,757 - - 489 46 535 - 1 1983 1,269 1,269 - - 232 32 2b4 - - 1984 1,037 1,037 - - 236 25 261 - - 1985 801 801 - - 240 20 260 - - 1986 561 561 - - 180 12 192 - - 1987 381 381 - - 184 9 193 -1 1988 196 196 - - 196 2 198 -

* THIS COLUMN SHOWS THE AMCUNT CF ARITHMFTIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FFQm nNrE YFAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCFS ARF CHANGES IN EXCHANGE RATES AND TRANSFER (IF DER-r FROM ONE CATEGOPY TC ANOTHFP IN THE TABLE. Table 5.1: CENTRAL GOVERNMENT OPERATIONS, 1970-75 (in current Sf millions)

1970 1971 1972 1973 1974 1975

Current Revenues 137.0 153.8 1614.9 158.6 18.2 294.4

Current Expenditures 123.8 145.3 149.4 172.4 198.7 24l9.8 (Wages and salaries) (80.0) (82.4) (89.6) (99-5) (113-3) (142-4) (Other) (43.6) (62.9) (59.8) (72.9) (85.4) (107.4)

Current Surplus/Deficit 13.3 8.5 15.5 -13.8 -10.5 44.6

Capital Revenue 0.9 1.5 1.0 0.8 0.3 0.3 1/ Capital Expenditures 47.0 43.3 49.0 52.3 57.6 109.9 (Central Government) (8.8) (8.1) (10.0) (7.7) (7.5) (46.6) (Development Account) (38.2) (35.2) (39.0) (44.6) (50-1) (63.3)

Overall Surplus/Deficit -32.8 -33.3 -32.5 -65.3 -67.8 -65.0 winancing 32.8 33.3 32.5 65.3 67.8 65.0

External (net) 48.1 32.5 41.8 31.1 63.6 65.8 Netherlvds 326.9 7;.9 375 31.3 59.9 2. Grants - (22.1) (19.9) (9-4) (16.0) (28.5) (31-5) Loans (13-8) (7.0) (26.4) (15-3) (31-4) (31.0) E.E.C. Development Fund 1.8 2.9 6.5 7.3 7.0 4.5 Other 10.4 2.7 -0.5 -7.5 -3.3 -1.2

Domestic (net) -5.5 3.2 -2.9 21.5 -3.9 -8.5 Central Bank -2.7 -. 0 -0 2 11 - v E ComnmercliBal nks -2.1 6.1 -02 9. 4.7 Other -0.7 -0.9 0.5 0.7 -0. -1.0 Residual -9.8 -2.4 -6.4 12.7 8.1 7.7

1/ Includes net lending 2/ Includes S.f. 12.5 million grant from Netherlands in 1975 for budgetary assistance 3/ Includes difference resulting from accrual of expenditures, i.e., "float," changes in each balance, etc. Source: Ministry of Finance, Central Bank, Planning Bureau and mission estimates. Table 5.2t CENTRAL GOVERNMENT CURRENT REVENUES, 1970-75 (in Sf millions)

1970 1971 1972 1973 1974 1975 (est)

Taxes on Income & Profit 51.1 58.4 64.5 56.3 74.8 167.7

Income Tax .: 58., 64t.5 56.1 55.4 49., (Personal) (6.6) (13.2) (13.9) (13.4) (13.7) (18.8) (Corporate) (4i.5) (45.2) (50.6) (42.7) (41.7) (30.2) Dividend Tax - 0.2 0.7 0.7 Bauxite Levy ------18.7 118.0

Taxes on Property 1.0 1.3 1.2 0.4 0.2 0.3

Taxes on Domestic Production and Consumption 12.5 14.2 15.5 18.9 21.0 21.9

Royalties 4.? 4.4 4.7 4.8 4.4 5.1 Excise on 1.1 1.2 1.8 2.6 2.9 3.3 Excise on Beer 2.1 2.3 2.6 3.7 5.0 3.F Excise on Tobacco 0.5 1.1 1.3 2.3 2.8 3.6 Motor Vehicle Tax 1.9 2.4 2.1 2.3 2.5 2.6 Stamp Tax 1.7 1.7 1.8 1.9 2.2 2.2 Other 1.0 1.1 1.2 1.3 1.2 1.3

Taxes on International Trade 44.8 47.9 51.5 56.6 70.9 78.5

Import Duties 40.5 43.0 46.6 50.9 63.6 70.6 Statistical Tax 4.2 4.8 4.8 5.6 7.2 7.8 Wood Export Tax 0.1 0.1 0.1 0.1 0.1 0.1

Total Tax Revenue 109.4 121.8 132.7 132.2 166.9 268.±4

Non-Tax Revenue 27.5 32.1 32.3 26.4 21.3 26.0

Central Bank Profits 3.0 5.1 l4.3 7.8 1.7 6.b Surplus of Government Dept_ 11.7 11.2 13.1 6.2 7.9 7.2 Profits from state Enterprices 1.3 1.3 1.2 1.0 1.1 1.1 Fees and Licenses 2.0 2.4 2.7 2.3 4.2 4.7 Other Revenues 9.5 12.1 11.0 9.1 6.4 6.6

Total Current Revenue 136.9 153.9 165.0 158.6 188.2 294.4

Source: Ministry of Finance and mission estimates. Table 5.3: CENTRAL GOVERNMXNT CURRENT EXPNDITURES, 1970-75 (in Sf millions)

1970 1971 1972 1973 1974 1975

FUNCTIONAL CLASSIFICATION

Total Current Eapenditures 123.8 145.3 149. 172.4 198.7 249.8

General Administration 42.0 46.1 47i4 53.8 5 9

Central Administration 26.9 29.7 30.1 33.8 33.6 36.7 Finance 5.4 6.1 6.4 6.9 7.1 8.5 Justice and Police 9.1 9.8 10.2 12.3 12.4 13.3 Other o.6 0.5 0.7 0.8 0.6 o.6

Social Services 51.1 63.6 67.9 61.6 78.4 83.5

Education and Training 26.6 35.9 39.0 40.6 42.6 44.8 Health 13.7 16.1 16.9 12.7 15.6 15.1 Other 10.8 11.6 12.0 8.3 20.2 23.6

Community Services 17.6 18.3 19.3 36.3 33.8 63.9

Transport 7.3 8.6 8.7 15.9 15.1 21.0 Energy 1.7 1.0 1.3 2.0 2.0 4.0 Communications 3.4 4.o 4.1 5.4 6.o 5.6 Other 5.2 4.7 5.2 13.0 10.7 33.3

Economic Services 7.0 9.3 10.1 9.5 11.0 10.9

Agriculture & Forestry 6.3 7.2 7.5 7.2 8.2 8.1 Trade & Industry 0.5 1.6 2.0 1.7 2.1 2.2 Other 0.2 0.5 0.6 o.6 0.7 o.6

Unallocated + extra -budgetary 6.1 8.0 4.7 11.2 21.8 32.4

EC ONOMIC CLASSIFICATION

Current Expenditures 123.8 145.3 149.4 172.4 198.7 249.8

Wages and Salaries 80.2 82.4 89.6 99.5 113.3 142.4 Other Goods and Services 26.8 35.2 35.5 23.7 38.9 53.3 Interest 0.7 2.0 0.5 2.8 3.1 3.5

Transfers 13.4 16.5 18.6 27.2 36.9 41.4 Public (0.2) (0.3) (0.2) (3.2) (8.1) (7.1) Private (13.2) (16.2) (1864) (24.0) (28.8) (34-3)

Other 2.7 9.2 5.2 19.2 6.5 9.2

Sources: Ministry of Finance and mission estimates. Table 5.4: CENTRAz. -OERNMEN T CAPr.AL. EXPENfIr3R2.' 1970-'> (in Cpmiljions1 Nf

1970 1971 3372 1973 1974 1975

FUNCTIONAL CL,ASSIFICATIO(

Total Capital Expenditures 47.0 43.3 49.' 52.3 51.( 109.9

Adxninistrative Servi.ces 1.1 1.6 1.7 2.4 2.' 2.9

Social Services 4.5 4.4 6.2 3.1 2.7 6.9 Education 3.9 3.7 -.9 -217 ; Health 0.6 0.7 0.3 0.3 .Q 1.0

Coumnity Services 24.5mi3 19.8 25. 2i2.3 35.1 63.6 Transport -, 12.? T671770 19.3

Energy ------1.8 Communications 1.1 0.9 1.0 5.6 0.3 12.8. Housi-ng & Urban Development 3.6 2.1 2.4 1.3 1-.8 7.8 Water Supply & Sewege 0.5 o.4.~ 0.2 0.7 0.6 3.8 Irrigation & Drainiage 0.3 0.9 1.7 i.6 0.7 3.9 Sea Defenses 0.1 0.1 0.1 0.3 0.3 2.1 Other 2.1 ~~~~~~~~~~~3.24.6 6.2 23.6 12.1 Economic Services 16.9 17.5 15.8 24.5 17.1 36.5 Agriculture & Forestry T1T9720.1 12.3 20.3

Mining --- -- 2.9 2.6 4.9 Trade, Industry & Tourism 1.0 0.6 0.4 1.5 2.2 11.3

ECONOMIC CLASSIFICATION Fixed Thvestment 34.3 33.9 40.4 43.5 491.7 86.2

Surveys and Research 5.8 6.3 5.8 5.6 5.3 7.7

Financial Investment 2.4 0.6 0.4 0.3 0.5 13.0

Capital Transfers 4.5 2.5 2.4 2.9 2.1 3.0 Rest of the Public Sector (2.0) (0.2) (0.2) (0.3) (0.6) (0.3) Private Sector (2.5) (2.3) (2.2) (2.6) (1.5)(2?

%~ur-ces: MinirFtry of Finan-ce mnd mission estimates. Table 5.5: PLANNED AND ACTUAL INVESTMENT FROM DEVELOPMENT AID, 1970-76

(in Sf millions)

Actual Planned Actual 1970 1971 1972 1973 1974 1975 1971/75 1972/76 1972/75

Agriculture, Livestock, Fishing 4.7 7.2 5.6 9.6 6.9 5.5 34.8 34.2 27.6 Forestry 4.5 4.1 5.4 8.3 5.0 10.4 33.2 ].3.9 29.1 Mining 2.0 2.5 2.7 2.3 2.8 2.9 13.2 12.5 10.7 Industry 0.1 - - - 2.4 11.3 13.7 6.0 13.7

Total Directly Productive Activities 11.3 13.8 13.7 20.2 17.1 30.1 94.9 66.6 81.1

Transport, Water Works 12.6 8.0 8.6 8.3 7.5 11i0 43.4 41.1 35.4 Mapping Inventory of Natural Resources 3.7 4.7 4.0 1.1 2.6 2.5 14.9 2.8 10.2 Education 1.4 1.0 2.3 2.2) Public Housing 2.9 0.9 3.4 4.1) Public Health 0.9 0.7 0.6 0.8) 22.9 19.7 79.0 77.1 70.3 Administration 1.8 1.7 1.8 1.6) Other 3.6 4.4 4.6 6.3)

Total Social Overhead Capital 26.9 21.4 25.3 24.4 33.0 33.2 137.3 121.0 115.9

Total Investment 38.2 35.2 39.0 44.6 50.1 63.3 232.2 187.6 197.0

Percent of Total

Directly Productive Activities 29.6 39.2 35.1 45.3 34.1 47.6 40.9 35.5 41.2

Social Overhead Capital 70.4 60.8 64.9 54.7 65.9 52.4 59.1 64.5 58.8

Source: Planning Bureau. Table 5.6: CEN'T'RAl. GVERNMENT OPERATIONS - A(CIIAIA1974, ESTIMATED 1975 AND PROJECTIONS 1976-85 (HIGH GROWTH ALTERNATIVE)

(in current Sf millions)

Act. Est. PROJECTED 1974 1975 1976 1977 1978 1979 1980 1985

Current Revenue 188.2 294.4 282.2 311.0 371.0 433.0 503.0 981.0

Current Expenditure 198.7 249.8 273.5 300.0 340.0 389.0 446.0 834.0 (Wages and Salaries) (113.3) (142.4) (155.4) (172.0) (198.0) (228.0) (267.0) (518.0) (Other) (85.4) (107.4) (118.1) (128.0) (142.0) (161.0) (179.0) (316.0)

Current Surplus/Deficit -10.5 +44.6 8.7 11.0 31.0 44.0 57.0 147.0

Capital Revenue 0.3 0.3 0.5 1.0 1.0 1.0 1.0 3.0

Capital Expenditures 57.6 109.9 154.3 239.0 302.0 383.0 421.0 366.0 (Central Government) (7.5) (46.6) (55.3) (65.0) (77.0) (91.0) (106.0) (148.0) (Development Account) (50.1) (63.3) (99.0) (174.0) (225.0) (292.0) (315.0) (218.0)

Overall Surplus/Deficit -67.8 -65.0 -145.1 -227.0 -270.0 -338.0 -363.0 -216.0

Financing 67.8 65.0 145.1 227.0 270.0 338.0 363.0 216.0

External 63.6 65.8 99.0 174.0 225.0 292.0 315.0 218.0 Netherlands 59.9 62.5 90.0 120.0 160.0 240.0 261.0 (of which grants) (28.5) (31.5) (72.0) (96.0) (128.0) (192.0) (209.0) EEC Development Fund 7.0 4.5 10.0 10.0 20.0 2 .0 25.0 Other -3.3 -1.2 -1.0 4-4.0 45.0 32.0 29.0

Internal -3.9 -8.5 46.1 53.0 45.0 46.0 48.0 -2.0 1/ Residual 8.1 7.7 ------

Percent of GDP

Current Revenue 20.6 32.0 26.5 25.1 25.3 24.9 24.5 23.8

Current Expenditure 22.5 27.1 25.7 24.2 23.2 22.4 21.7 20.3

Current Surplus/Deficit -1.2 4.8 0.8 0.9 2.1 2.5 2.8 3.6

Capital Expenditure 6.5 11.9 14.5 19.3 20.6 22.0 20.5 8.9

Overall Surplus/Deficit -7.7 -7.1 -13.6 -18.3 -18.4 -19.4 -17.8 -5.2

Financing 7.7 7.1 13.6 18.3 18.4 19.4 17.8 5.2

External 7.2 7.1 9.3 14.0 15.4 16.8 15.4 9.3

Internal -0.4 -0.9 4.3 4.3 3.1 2.6 2.3 -0.1

Other 0.9 0.8 ------

1/ Includes difference arising from the fact that expenditures are on an accrual basis and revenues are on a cash basis.

Sources: Ministry of Finance, IMF, and mission estimates. Table 5.7: CENTRAL GOVERNMENT REVENUE - ACTUAL 1974, ESTIMATED 1975, AND PROJECTIONS 1976-80 (HIGH GROWTH ALTERNATIVE)

(in current Sur. F. million)

Act. Est. Projected 1974 1975 1976 1977 1978 1979 1980 1985

Taxes on Income and Profit 74.8 167.7 155.8 167.5 201.0 234.0 271.0 515.0 Income Tax 55.4 49.0 60.0 69.3 81.0 96.0 111.0 213.0 (Personal) (13.7) (18.8) (20.0) (23.5) (28.0) (34.0) (40.0) (82.0) (Corporate) (41.7) (30.2) (40.0) (45.8) (53.0) (62.0) (71.0) (131.0) Dividend Tax 0.7 0.7 0.8 0.8 1.0 1.0) 1.0 3.0 Bauxite Levy* 18.7 118.0 95.0 97.4 119.0 137.0 159.0 299.0

Taxes on Property 0.2 0.3 0.3 0.4 1.0 1.0 1.0 1.0

Taxes on Domestic Production and Consumption 21.0 21.9 23.5 25.1 29.0 32.0 36.0 73.0 Royalties 4.4 5.1 5.1 5.4 6.0 6.0 7.0 10.0 Excise on Liquor 2.9 3.3 3.5 3.8 4.0 5.0 6.0 12.0 Excise on Beer 5.0 3.8 5.0 5.4 6.0 7.0 9.0 17.0 Excise on Tobacco 2.8 3.6 3.2 3.4 4.0 5.0 5.0 11.0 Motor Vehicle Tax 2.5 2.6 3.0 3.2 4.0 4.0 5.0 10.0 Stamp Tax 2.2 2.2 2.3 2.4 3.0 3.0 4.0 8.0 Other 1.2 1.3 1.4 1.5 2.0 2.0 2.0 5.0

Taxes on International Trade 70.9 78.5 76.1 88.9 106.0 127.0 150.0 312.0 Import Duties 63.6 70.6 68.0 79.9 95.0 114.0 135.0 281.0 Statistical Tax 7.2 7.8 8.0 8.9 11.0 13.0 15.0 31.0 Wood Export Tax 0.1 0.1 0.1 0.1 - - - -

Total Tax Revenue 161.9 268.4 255.7 281.9 337.0 394.0 458.0 901.0

Nontax Revenue 21.3 26.0 26.5 29.5 34.0 39.0 45.0 80.0 Central Bank Profits 1.7 6.4 5.0 6.0 7.0 8.0 9.0 17.0 Surplus Government Depts. 7.9 7.2 7.8 8.5 10.0 11.0 13.0 24.0 Profit from State Enterprises 1.1 1.1 1.3 1.4 2.0 2.0 3.0 6.0 Fees and Licenses 4.2 4.7 5.1 5.5 6.0 8.0 9.0 17.0 Other Revenue 6.4 6.6 7.3 8.1 9.0 10.0 11.0 16.0

Total Current Revenue 188.2 294.4 282.2 311.4 391.0 433.0 503.0 981.0

* Most of the bauxite levy pertaining to 1974 was not collected until 1975.

Sources: Ministry of Finance and mission estimates. ALTERNATIVE) Table 5.8: CENTRAL COVERNMENT OPERATIONS - ACTUAL 1974, ESTIMATED 1975 AND PROJECTIONS 1976-85 (LOW GROWTH

(in current Sur. f. million)

Act. Est. ProJected 1974 1975 1976 1977 1978 1979 1980 1W5

469.0 825.0 Current Revenue 183.2 294.4 282.2 311.0 365.0 418.0 424.0 722.0 Current Expenditures 198.7 249.8 273.5 294.0 335.0 379.0 (407.0) (Wages and Salaries) (113.3) (142.4) (155.4) (162.0) (185.0) (209.0) (234.0) (190.0) (315.0) (Other) (85.4) (107.4) (118.1) (132.0) (150.0) (170.0) 103.0 Current Surplus/Deficit -10.5 44.6 8.7 7.0 30.0 39.0 45.0 1.0 3.0 Capital Revenue 0.3 0.3 0.5 1.0 1.0 1.0 329.0 309.0 Capital Expenditures 57.6 109.9 154.3 169.0 225.0 288.0 (132.0) (Central Government) (7.5) (46.6) (55.3) (62.0) (72.0) (82.0) (94.0) (235.0) (177.0) (Development Account) (50.1) (63.3) (99.0) (107.0) (153.0) (206.0)

Overall Surplus/Deficit -67.8 65.0 -145.1 -161.0 -194.0 -248.0 -283.0 -203.0

Financing 67.8 65.0 145.1 161.0 194.0 248.0 283.0 203.0 250.0 163.0 External 63.6 65.8 99.0 140.0 172.0 227.0 Netherlands 59.9 62.5 90.0 97.0 129.0 193.0 209.0 177.0 (of which grants) (28.5) (31.5) (72.0) (78.0) (103.0) (155.0) (167.0 (142.0) EEC Development Fund 7.0 4.5 10.0 10.0 15.0 15.0 20.0 20.0 Other -3.3 -1.2 -1.0 33.0 28.0 19.0 21.0 -34.0

Internal -3.9 -8.5 46.1 21.0 22.0 21.0 33.0 40.0 I/ Residual 8.1 7.7 ------Percent of GDP

Current Revenue 20.6 32.0 27.0 26.0 26.3 26.0 25.5 25.3

Current Expenditures 22.5 27.1 26.1 24.6 24.2 23.6 23.0 22.2

Current Surplus/Deficit -1.2 4.8 0.8 0.6 2.2 2.4 2.4 3.2

Capital Expenditures 6.5 11.9 14.8 11.7 16.2 17.9 17.9 9.5 -15.4 -15.4 -6.2 Overall Surplus/Deficit -7.7 -7.1 -13.9 -13.5 -14.0

Financirs 7.7 7.1 13.9 13.5 14.0 15.4 15.4 6.2

ExtEtrnal 7.2 7.1 9.5 11.7 12.4 14.1 13.6 5.0

Int!rrnal -0.4 -0.9 4.4 1.8 1.6 1.3 1.8 1.2

Other 0.9 0.8 ------

on a cash basis. 1/ In-eludes difference arisfsg from the fact that cxrcnritures are on an accrual basis and revenues are

Source: Ministry of Finance and mission estimates. Table 5.9: CENTRAL GOVERNMENT REVENUES - ACTUAL 1974, ESTIMATED 1975 AND PROJECTIONS 1976-85 (LOW GROWTH ALTERNATIVE)

(in current Sur. f. million)

Act. Est. Projected 1974 1975 1976 1977 1978 1979 1980 1985

Taxes on Income and Profit 74.8 167.7 158.8 167.5 199.0 229.0 250.0 441.0 Income Tax 55.4 49.0 60.0 69.3 79.0 91.0 103.0 178.0 (Personal) (13.7) (18.8) (20.0) (23.5) (27.0) (32.0) (37.0) (68.0) (Corporate) (41.7) (30.2) (40.0) (45.8) (52.0) (59.0) (66.0) (110.0) Dividend Tax 0.7 0.7 0.8 0.8 1.0 1.0 1.0 2.0 Bauxite Levy* 18.7 118.0 95.0 97.4 119.0 137.0 146.0 261.0 Taxes on Property 0.2 0.3 0.3 0.4 - - 1.0 1.0 Taxes on Domestic Production and Consumption 21.0 21.9 23.5 25.1 29.0 31.0 37.0 60.0 Royalties 4.4 5.1 5.1 5.4 6.0 6.0 7.0 9.0 Excise on Liquor 2.9 3.3 3.5 3.8 4.0 5.0 6.0 10.0 Excise on Beer 5.0 3.8 5.0 5.4 6.0 7.0 8.0 14.0 Excise on Tobacco 2.8 3.6 3.2 3.4 4.0 4.0 5.0 9.0 Motor Vehicle Tax 2.5 2.6 3.0 3.2 4.0 4.0 5.0 8.0 Stamp Tax 2.2 2.2 2.3 2.4 3.0 3.0 4.0 Other 6.0 1.2 1.3 1.4 1.5 2.0 2.0 2.0 4.0 Taxes on International Trade 70.9 78.5 76.1 88.9 103.0 120.0 139.0 256.0 Import Duties 63.6 70.6 68.0 79.9 93.0 108.0 125.0 230.0 Statistical Tax 7.2 7.8 8.0 8.9 10.0 12.0 14.0 26.0 Wood Export Tax 0.1 0.1 0.1 0.1 - - - - Total Tax Revenue 166.9 268.4 255.7 281.9 531.0 380.0 427.0 758.0 Nontax Revenue 21.3 26.0 26.5 29.5 34.0 38.0 42.0 67.0 Central Bank Profits 1.7 6.4 5.0 6.0 7.0 8.0 9.0 14.0 Surplus from Government Depts. 7.9 7.2 7.8 8.5 10.0 11.0 12.0 20.0 Profit from State Enterprises 1.1 1.1 1.3 1.4 2.0 2.0 2.0 3.0 Fees and Licenses 4.2 4.7 5.1 5.5 6.0 7.0 8.0 14.0 Other Revenues 6.4 6.6 7.3 8.1 9.0 10.0 11.0 16.0 Total Current Revenue 188.2 294.4 282.2 311.4 365.0 418.0 469.0 825.0

* Most of the bauxite levy pertaining to 1974 was not collected until 1975.

Sources: Ministry of Finance and mission estimates. Table 6.1: SUMMARY ACCOUNTS OF THE BANKING SYSTEM, 1970-75 (Sur. f. million; at end of period)

Nov. 1970 1971 1972 1973 1974 1975

v/ I. Central Bank

Foreign Assets 69.1 75.1 83.2 110.6 130.4 180.9 Gold 16.2 1 7 11.0 11.0 11.0 Foreign Fxchange 53.1 58.5 66.6 2/ 99.7 119.5 170.0 Foreign Liabilities -0.2 - - -0.1 -0.1 -0.1

Domestic Credits 2.2 0.1 -3.9 13.0 4.9 -9.8 Government (net) 1.0 -0.1 -4.9 12.1 W7 -10.6 Current Accounts (-3.6) (-5.9) (-9.5) (1.0) (-6.9) (-21.4) Long-term (-) (_) (3.0) (5.1) (4.6) (4.2) Contra-Entry for Treasury Currency (4.6) (4-9) (5.4) (6.0) (6.3) (6.6) Contra-Entry for Government Deposits Abroad (-) (-) (-3.8) (-) (-) (-) Private Sector Long-Term 1.2 1.1 1.0 0.9 0.9 o.8

Liabilities to Banks (net) 11.2 12.6 10.3 24.1 18.3 34.5 Central Bank 3/ 11.1 12.7 10.2 23.9 17.9 34. Holdings of Treasury Currency 0.3 0.3 0.4 0.5 o.6 0.6 Central Bank Claims on Commercial Banks (-) -0.2 -0.4 -0.3 -0.3 -0.2 -0.3

Money and Quasi Money 49.2 54.1 59.1 74.9 80.2 87.4 Currency in Hands of Public 53.2 7 3.5 7.7 Central Bank Currency (44.3) (48.4) (53.3) (68.0) (73.0) (78.8) Treasury Currency (4.3) (4.6) (5.0) (5.5) (5.7) (6.o) Private Sector Deposits o.6 0.9 0.8 1.4 1.5 2.6 Other Items (net)4/ 10.9 8.5 9.9 24.6 36.8 49.2 Capital and Reserves 7.5 .5 7.0 7.0 7.0 Unclassified Liabilities 5/ 4.1 1.0 3.6 18.2 30.9 35.4 Unclassified Assets (-) -0.7 -0.5 -0.7 -o.6 -1.1 -0.7 Table 6.1 (cont.d): SUMMARY ACCOUNTS OF THE BANKING SYSTEM, 1970-75 (Sur. f. million; at end of period)

Nov. 1970 1971 1972 1973 1974 1975

II. Commercial Banks

Foreign Assets (net) 18.4 18.3 19.3 22.2 13.2 22.2 Assets 23.9 17.0 24.2 2775 0 _3057 Liabilities (-) -5.8 -6.7 -4h4 -5.6 -4.8 -8.6

Domestic Credit 90.6 111.0 119.9 133.9 163.4 171.5 Government (net) -. _727CTTh _-75 9.9 6.4 short-term (-2.2) (-0.2) (-3.1) (5.6) (5.2) (-2.5) long-term (1-7) (5.8) (5.5) (4.2) (4.7) (8.9)

Private Sector 91.1 105.4 117.5 124.1 153.5 165.1 short-term (85-3) (97.7) (104.3) (106.9) (123.1) (130.4) long-term (5.8) (7.7) (13.2) (17.2) (30.4) (34.7)

Claims on Central Bank (net) 11.2 12.6 10.3 24.1 18.3 34.5

Money and Quasi Money 97.1 112.0 128.6 153.9 165.2 188.3 Demand & Short-term deposits6/ 3T T73 7Fh.W 77.2 90.0 Long-term deposits 7/ 5.4 12.4 22.9 27.2 32.8 37.9 Genuine Savings deposits 8/ 36.6 41.3 47.6 52.3 55.2 60.4

Other Items (net) 4/ 22.8 21.9 21.4 26.3 29.7 39.9 Capital & Reserves 15.2 16.1 BT. 19.3 Other long-term means 8.0 7.8 5.4 8.5 8.5 8.8 Unclassified liabilities 3.7 4.0 4.6 7.6 10.9 14.5 Unclassified Assets (-) -4.1 -6.0 -6.7 -9.1 -11.6 -10.0 Table 6.1 (cont.d): SUMMARY ACCOUNTS OF THE BANKING SYSTEM, 1970-75 (Sur. f. million; at end of period)

Nov. 1970 1971 1972 1973 1974 1975

III. Consolidated Banking System

Foreign Assets (net) 87.2 85.4 10390 132.8 143.6 203.1 Assets 92.1 107.14IT .57 Tq97I Liabilities -6.o -6.7 -4.4 -5.7 -4.9 -8.7

Domestic Credit 92.8 111.1 116.0 146.9 168.3 161.7 Government (net) O7 21.9 13.9 -1T7 short-term (-1.2) (-1.2) (-11.0) (12.6) (4.6) (-17.3) long-term (1.7) (5.8) (8.5) (9.3) (9.3) (13.1)

Private Sector 92.3 106.5 118.5 125.0 154.4 165.9 short-term (85.3) (97.7) (104.3) (106.9) (123.1) (130.4) long-term (7.0) (8.8) (14.2) (18.1) (31.3) (35.5)

Money & Quasi Money 146.3 166.1 187.7 228.8 245.4 275.7 Money & short-term deposits6/ 104.3 112.4 T7T 149.3 157.14 177. Long-term deposits 7/ 5.4 12.4 22.9 27.2 32.8 37.9 Genuine Savings deposits 8/ 36.6 41.3 47.6 52.3 55.2 60.4

Other items (net) 4/ 33.7 30.4 31.3 50.9 66.5 89.1 Capital & Reserves 22.7 214.1 25.1 2 797 13 Other Long-term means 8.0 7.8 5.4 8.5 8.5 8.8 Unclassified Liabilities 7.8 5.0 8.2 25.8 41.8 49.9 Unclassified Assets (-) 5/ -4.8 -6.5 -7.4 -9.7 -12.7 -10.6

1) Including currency issuing operations of the Treasury and foreign exchange held by the Government with a commercial bank in The Netherlands. 2) Including Sur. f 3.8 million held by the Government with a commercial bank in The Netherlands. 3) Deposits and holdings of Central Bank currency. 4) Liabilities positive. 5) Includes profits and losses on exchange rate changes and sale of gold. 6) Short-term deposits include term deposit with less than one year to maturity and ten per cent of savings deposits. 7) Term deposits with more than one year to maturity. 8) Ninety percent of savings deposits.

Sources: IMF and Central Bank of Surinam. Table 6.2: CHANGES IN MONETARY AGGREGATES (in %)

1970 1971 1972 1973 1974

Money 6.8 14.3 5.1 28.8 5.2 Currency in hands of public 6.8 9.5 9.6 26.1 7.1 Demand deposits 6.9 20.6 -0.2 32.4 2.9

Short-term Deposits 67.9 -23.0 -1.4 16.5 7.4 Money and short-term deposits 14.1 7.8 4.3 27.4 5.4

Long-term Deposits -30.8 129.6 84.7 18.8 20.6

Genuine savings deposits 11.9 12.8 15.3 9.9 5.5 Long-term and genuine savings deposits 3.7 27.9 31.3 12.8 10.7 Money and quasi money 10.9 13.5 13.0 21.9 7.3

Domestic credit 11.8 19.7 4.4 26.6 14.6 of whic-: 18.8 15.4 11.3 5.5 23.5 Private sector

Foreign assets (not) 16.9 -2.1 20.6 28.9 8.1

Source: Table 6.1 l/ Table 6.3: DISTRIBUTION OF LENDING BY COMMERCIAL BANKS (End of Period)

Nov. 1970 1971 1972 1973 1974 1975

(In millions of Surinam guilders)

Agriculture, Fishing, and Forestry 5.1 7.1 6.6 8.2 10.8 16.0 Mining 3.3 7.3 10.2 13.1 11.5 10.2 Manufacturing 14.2 114.9 14.3 15.3 28.6 32.8 Construction 2.6 2.0 0.5 5.5 3*7 4.6 Services 2/ 5.4 9.4 11.6 10.7 15.8 17.6 Trade 45.4 52.1 57.8 49.7 52.9 58.1 Other 16.8 18.4 22.0 31.8 40.9 36.6

Total 92.8 111.2 123.0 134.3 164.2 175.9

(In % of Total)

Agriculture, Fishing, and Forestry 5.5 6.4 5.4 6.1 6.6 9.1 Mining 3.6 6.6 8.3 9.8 7.0 5.8 Manufacturing 15.3 13.4 11.6 11.4 17.4 18.7 Construction 2.8 1.8 0.4 4.1 2.3 2.6 Services 2/ 5.8 8.5 9.4 8.0 9.6 10.0 Trace 48.9 46.9 47.0 37.0 32.3 33.0 Other 18.1 16.5 17.9 23.7 24.9 20.8

Total 100.0 100.0 100.0 100.0 100.0 100.0

1/ Includes gross lending to the Government which is mainly included in the item "Other."

L/ Including electricity, gas, water, transportation, storage and comnunications.

Source: Central Rank of Surinam. Table 6.4: LIQUIDITY OF THE COMMERCIAL BANKS (End of period)

Nov. 1970 1971 1972 1973 1974 1975

(In millions of Surinam guilders)

Foreign Assets (net) 18.1 10.3 19.8 22.2 13.2 22.2 Claims on Central Bank 11.2 12.6 10.3 24.1 18.3 34.5

Liquid assets (net) 29.3 22.9 30.1 46.3 31.5 56.7

Claims on Government (net) -0.5 5.6 2.4 9.8 9.9 6.4

Liquid assets (net) plus claims on governnent (net) 28.8 28.5 32.5 56.1 41.1 63.1

Total deposit liabilities 97.1 112.0 128.6 153.9 165.2 188.3 of which Demand and short-term deposits 55.1 58.3 58.1 74.4 77.2 90.0

(Liquid assets (net) as % of)

Total deposit liabilities 30.2 20.4 23.4 30.1 19.1 30.1

Demvand and short-term deposits 53.2 39.3 51.8 62.2 40.8 63.0

(Liquid assets (net) plus claims on Government (net) as % of)

Total deposit liabilities 29.7 25.4 25.3 36.5 21.5 33.5

Demand and short-term deposits 52.3 48.9 55.9 75.4 53.6 70.1

Source: Table 6.1 Table 6.5: INTEREST RATE STRUCTURE

(In percentages)

End of Beginning J ne End of 1970 of 1972 1973 1974

Debit interest rates

Loans 5-9 6-9 6-9 6-9

Mortgages 8 8 8 8-9

Creditor interest rates

Long-term deposits 4.5-6.5 4-6.2 4-7 4-7

Savings deposits 3 3 3 3

Demand deposits 0.5-1.0 0.5-1.2 1.2 1.2

Source: Central Bank of Surinam Table 7.1: VALUE CF MAJCIR AGRICULTURAL PRODUCTS, 1955-73

(Sur. f.millions)

1955 1960 1965 1970 1973

CROPS Rice 7.1 7.3 8.8 16.8 29.6 Bananas & Plantains 0.4 0.8 2.0 2.8 4.3 Sugar 2.7 4.4 6.7 4.6 3.8 Citrus 0.9 0.8 1.4 1.9 3.3 Vegetables 0.8 0.7 1.4 1.9 1.5 Root Crops 0.2 0.3 0.3 0.4 0.7 Peanuts 0.2 0.2 0.3 0.2 0.5 Coconuts 0.7 0.5 0.5 0.4 1.1 Other Crops 1.2 1.4 0.9 0.3 o.6

TOTAL CROPS 14.2 16.4 22.3 29.3 45.4

LIVESTOCK Chicken 0.2 0.5 2.3 5.2 n.a. Beef 0.8 1.2 1.3 2.3 n.a. Pork 0.2 0.5 o.4 1.1 n.a. Eggs 1.2 1.4 1.3 3.8 n.a. Yilck 1.2 1.8 1.9 2.4 n.a. Shrimp 0.1 0.2 1.8 4.2 n.a. Fish 1.0 2.4 3.2 2.2 n.a.

TOTAL LIVESTOCK 4.7 8.0 12.2 21.2 n.a.

TOTAL CROPS & LIVESTOCK 18.9 24.4 34.5 n.a.

Source: Ministry of Agriculture. Table 7.2: PRODUCTION OF'MAJOR AGRICULTURAL CROPS, 1955-73

1955 1960 1965 1970 1973

Output in '000 MT Rice 64.5 80.7 89.8 145.4 164.1 Bananas & Plantains 4.4 6.5 20.4 42.6 41.6 Sugar 7.4 10.2 18.7 13.0 9.0 Citrus 47.1 61.9 58.3 59.3 74.2 Vegetables 2.4 1.8 1.8 2.9 3.3 Root Crops 2.3 2.3 2.1 1.8 2.0 Peanuts 0.4 0.4 0.7 0.3 0.3 Coconuts 8.7 6.9 6.5 7.6 7.6

Index of Production, 1955 = 100

Rice 100.0 125.1 139.2 225.4 254.4 Bananas & Plantains 100.0 147.8 463.6 968.2 945.5 Sugar 100.0 137.8 252.7 175.7 121.6 Citrus 100.0 131.4 123.8 125.9 157.5 Vegetables 100.0 75.0 75.0 120.8 137.5 Root Crops 100.0 100.0 91.3 78.3 87.0 Peanuts 100.0 100.0 175.0 75.0 75.0 Coconuts 100.0 79.3 74.7 87.14 87.4

Source: Ministry of Agriculture. Table 7.31 IMPRTS (F A(RICULTMRAL PRODUCTS ALSO PRODUC IN SURINAM, 1969-73 (Metric tons)

1969 1970 1971 1972 1973

Maize 11,000 1U,500 12,000 13,000 28,030 Peanuts 2,900 2,660 2,970 3,120 2,1420

Cabbage 130 80 110 100 170

Tomatoes 390 410 340 520 60 Other Vegetables 1,020 870 550 860 880 Sugar 110 2,070 1,790 2,,440 1,900 Cocoa 120 90 110 90 90

Beef 920 990 960 1,060 950 Pork n.a. 475 432 456 n.a.

Chicken 636 581 513 647 191

Sources Ministry of Agriculture. Table 7.4: NUMBER OF HOLDINGS, TOTAL AREA OF HO.DINGS CULTIVATED AREA, BY SIZE OF HOLDING

(Area in Hectares)

Area Cultivated Number of Total Area Number of Size of Holdings Holding Parcels Cropland Grassland Total Holding 1959 1969 1959 1969 1959 1969 1959 1969 1959 1969 1959 1969

0 - 0.5 1144 1461 345 407 1262 1558 245 177 2 9 247 186

0.5- 5.0 12041 11901 24551 24900 18230 16413 13870 11780 762 2415 14632 14195

5.0-20.0 2654 2365 22044 19027 6574 5585 9760 7654 1687 3263 11447 10917

20.0 + 400 351 58892 49499 999 945 14013 18561 3271 3143 17284 21704

Total 16239 16078 105832 93833 27065 24501 37888 38172 5722 8830 43610 47002

Source: Third Census of Agriculture, Statistics Division, Department of Agriculture. Table 7.5: GOVERNMENT PARTICIPATION IN AGRICULTURLAL PRODUCTION

Govt. parti- Name (abbreviated) cipation Activity Tp

1. Marienburg 100% * Sugar production on 2200 hectares Share Co.

2. Surland 100% * Banana production on 1900 hectares

3. Victoria 72% Oil palm on 1600 hectares planted and additional 800 hectares out growers planned

4. SUGAM 30% Shrimp fishing

5. SNI Vageningen 100% Rice production on 7000 hectares Foundation

6. Alliance 100% * Citrus on 300 hectares Govt. Co.

7. L A K 100% * Production of vegetables on " 250 hectares. Also purchases vegetables for resale.

8. S E L 100% Research and production of Foundation rice on 500 hectares.

9. State Forestry 100% * Recently engaged in production Govt. Co. of roundwood and sleepers

10. Tropica 100% * Processing of fruit Share Co.

11. Dairy Factory 100% Milk processing t

120 State Livestock Farm. 100 * Livestock production on 400 hec- Govt. Co. tares

130 Bruyhzeel 70% * Wood processing, 60% of total domestic production

14. Agric. Credit Bank 66% Provides about one third of all Share Co. agricultural credit.

* Also wholly or partly Government managed. Table 8.1: BAUXITE/ALUMlNA/ALUMINUM PRODUCTION AND EXPORTS, 1955-75

1955 1960 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Froduction (1,000 metric tons)

Bauxite 3100.0 3455.0 4360.0 5563.0 5466.0 5660.0 6236.0 6011.0 6719.0 6778.0 6718.0 6863.0 4751.0

Alumina - - 115.0 407.0 742.0 813.0 949.0 998.0 1069.0 1352.0 1346.0 1184.0 1134.0

Aluminum - - 2.2 27.E 32.2 43.2 53,3 54.5 53.8 43.7 54.7 57.0 35.0

Exports (1,000 ietric tons)

Bauxite 3100.0 3635.0 4369.0 4585,0 3806,0 3786.0 3678.0 3419.0 3597.0 3476.0 3666.0 3974,0 2437.0

Alumina - 557.0 347.0 684.0 702.0 856,0 893.0 1149.0 1279.0 1209,0 1077.0 1123.0

Aluminum - - 1.3 25.5 30.4 43.2 53.1 52.8 47.0 53.0 54.0 54.0 26.0

Exports (Values in million Sf.)

Bauxite 40.0 66.3 80.6 91.9 77.4 77.3 78.4 76.2 83.4 82.1 85.0 127.9 92.7

Alumina - 6.2 26.8 71.9 76.5 94.1 106.3 138.3 147.8 143.6 171.2 213.1

Aluminum - 0.9 19.2 23.8 34.2 48.1 48.6 45.5 47.6 44.6 67.9 39.2

Total Value of Exports 40.0 66.3 87.7 147.9 173.1 188.0 220.6 231.1 267.2 277.5 273.2 367.0 345.0

Sources: Bureau of Statistics, Central Bank of Surinam and bauxite companies. Table 8,2: PROJECTED OUTPUT AND EXPORTS OF BAUXITE, ALUMINA AND ALUMINUM, 1975-85

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

Production (1,000 metric tons)

Bauxite 4751 5000 5500 6200 6600 7100 8100 9100 9400 9600 9600 Alumina 1134 1191 1310 1350 1404 1460 1519 1580 1743 1913 1990 Aluminum 35 37 47 57 59 61 64 66 69 72 75

Exports(1,O00 metric tons)

Bauxite 2437 2617 2880 3500 3791 4181 5062 5941 5914 5775 5620 Alumina 1123 1111 1186 1226 1276 1327 1380 1436 1593 1756 1827 Aluminum 26 42 57 57 59 61 64 66 69 72 75

Exports (In 1974 US$ Millions)

Bauxite 43.6 47.1 51.8 63.0 68.2 75.3 91.1 106.9 106.5 104.0 101.2 Alumina 99.2 100.8 105.6 109.1 113.6 118.1 122.8 127.8 141.8 156.3 162.6 Aluminum 18.2 29.8 40.5 40.8 41.9 43.3 45.4 46.9 49.0 51.1 53.3

Total Value of Exports 161.0 175.7 197.9 212.6 223.7 236.7 259.3 281.6 297.3 311.4 317.1

Source: Mission estimates. Table 8.3: WORLD PRODUCTION, CONSUMPTION AND TRADE OF BAUXITE, 1960-85

(in million tons)

1960 1972/74 1975 1976 1980 1985

PRODUCTION Advanced Countries (ACs) 6.42 27.74 28.40 31.56 42.00 62.00 of which Australia 0.08 17.33 19.00 21.00 29.00 44.00 Developing Countries (DCs) 16.07 36.37 32.80 39.14 60.00 93.00 of which IRA members 14.81 33.05 30.00 35.83 50.50 74.80 World (including centrally planned economies CPEs) 27.62 74.02 70.90 82.20 115.00 175.00 CONSUMPTION AC's 19.24 56.60 50.12 61.26 89.00 129.36 of which USA 9.49 28.65 22.07 28.00 38.81 51.13 Europe 1/ 7.88 17.12 17.52 19.10 29.08 42.27 DC's 0.70 4.07 5.00 5.24 8.62 13.54 World (including CPE's) 25.67 74.02 70.70 82.20 115.00 175.00 EXPORTS AC's 2.11 8.70 8.50 9.00 14.00 18.00 DC's 19.23 21.30 18.40 21.00 34.00 52.00 of which IBA members 13.64 20.30 17.50 20.00 31.50 47.00 World (including CPE's) 16.34 30.05 26.95 30.00 48.00 70.00 IMPORTS AC's 15.91 27.98 24.40 26.00 42.00 62.00 DC's ------negligible amounts ------World (including CPE's) 16.34 30.05 26.95 30.00 48.00 70.00

1/ Includes Turkey and Yugoslavia, excludes centrally planned economies.

Source: IBRD, CommDdities & Export Division. Table 8.4: WCRLD ALUMINA PRODUCTION AND CONSUMPTION, 1972/85

(in million metric tons)

Centrally Advanced Developing Planned Economies Economies Economies World

1972/74 Consumption 20.12 0.04 5.22 26.84 Production 17.39 4.68 _ _4.17 26.84 Balance -2.73 +7.;4 -1.05 0.0 1980 Consumption 27.50 3.50 8.20 39.20 Production 26.30 6.76 6.14 39.20 Balance -1.20 +3.26 -2.06 0.0 1985 Consumption 39.00 5.00 11.00 55.00 Production 35-50 11.50 8.00 55.00 Balance 3-55 +6.50 3.00 0.0

Source: IERD, Commodities & Export Division. Table 8.5s SUPPLY OF AND DEMAND FOR PRIMARY ALUMINUM, 1973-85

(in million tons)

Smelter Potential 1/ Excess Supply (+) Year Capacity Supply Demand or Demand (-)

1973 11.6 11.1 11.4 -0.3 1974 12.2 11.7 10.9 +0.8

1975 12.9 12.3 8.7 +3.6

1976 13.1 12.5 10.7 +1.8 1977 13.9 13.5 12.5 +1.0/+0.7

1978 14.7 14.1 14.0 +0.6/-0.3

1979 15.3 15.0 14.9 +0.4/-0.4

1980 15.9 15.2 15.8 +0.1/-1.0 1985 24.0 23.6 24.9 +0.3/-1.6

1/ After 1977 the demand figures are mid-point projection ranges. The balances show the lower and upper limits ot the demand estnwiates.

Source: IBRD, "Aluminum Metal Market: Current Situation and Prospects," 1975. Table 8.6: ESTIMATED BAUXITE PRICES, PRODUCTION AND TAX REVENUES, 1976-85

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

Aluminum Prices USo per lb. 44 45.5. 49 53 57 61 65 70 75 80 International Price Index 100 108 119 129 139 149 159 171 183 195

Producers: 1) Billiton Production of Bauxite (in mil. tons) 2.4 2.5 2.8 3.0 3.0 3.0 3.0 3.0 3.0 3.0 (conversion factor 4) 1/ Bauxite Levy(US$ per ton of bauxite) 10.65 13.65 14.70 15.90 17.10 18.30 19.50 21.00 22.50 24.00

Total Levy (in Sf mil.) 2/ 45.7 61.0 73.3 84.9 91.3 97.7 104.1 112.1 120.2 128.2 2) SURALC0 - Production of Bauxite (in mil. tons) 2.6 3.0 3.4 3.6 3.6 3.6 3.6 3.6 3.6 3.6 (conversion factor 4.7) Bauxite Levy (US$ per ton of bauxite) 10.85 11.62 12.51 13.53 14.55 15.57 16.59 17.87 19.15 20.42

Total Levy (in Sf mil.) 50.5 62.4 75.7 86.7 93.2 99.8 106.3 114.5 122.7 130.9

3) GRASSALCO, et. al. 3/ Production of Bauxite a) 0.5 1.5 2.5 2.8 3.0 3.0 (conversion factor 4.3) b) (1.0) (1.5) (2.0) (2.0) (2.0) Bauxite Levy (US$ per ton of bauxite) a) 15.91 12.02 18.14 19.53 20.93 22.32 b) (8.51) (9.07) (9.77) (10.47) (11.16) Total Levy (in Sf mil.) a) 14.2 45.4 80.7 97.3 111.8 119.2 b) (15.1) (24.2) (34.8) (37.7) (39.7)

Total Bauxite Production (in mil. tons) a) 5.0 5.5 6.2 6.6 7.1 8.1 9.1 9.4 9.6 9.6 b) (6.6) (7.6) (8.1) (8.6) (8.6) (8.6)

Total Bauxite Levy (in Sf mil.) a) 96.2 123.4 149.0 171.6 198.7 242.9 291.1 323.9 354.7 378.3 b) (184.5) (212.6) (234.6) (261.4) (280.6) (298.8)

1/ Whereajs the bauxite levy in general is 6% of the aluminum spot price, Billiton's bauxite levy for 1976 is stipulated at a base of 36, per pound although - the o fic al pr ce has risen to 4 . 2/ Exchange rate: US$1 = Sf 1.78

3/ GRASSALCO's production depends on several factors, which are not easily to forecast. Whereas the high growth alternative is used in the first row (a), the low growth alternative (b) assumes a later start, a lower production, and a smaller tax levy (50%).

Source: Mission estimates. Table 8.7: BAUrITE-ALUM¢NA-ALUMINJM - MAJOR INDICATORS IN SURINAM AND OTHER CARIBBEAN COUNTRIES

Exports of Mining Gross Value Added of Bauxite Taxes from Bauxite in Employment in Bauxite Products in % of Mining & Processing in % of % of Total Tax Mining and Processing in Year Total Exports GDP at factor prices Revenue % of Total Employment

SURINAM 1960 81.6 32.4 n.a. 7.3 a

1965 80.6 28.0 28.3 7.8 L2

1970 86.9 33.1 31.8 7.0

1974/75 84.4 37.0 41.3 7.3 Projected 1980 81.9 37.0 34.7 6.9

1985 72.0 35.0 33.2 6.3 GUYANA

1960 28.4 11.1 n.a. 3.8

1974 33.0 13.4 n.a. 3.3

JAMAICA

1960 44.7 7.5 n.a. 0.7

1974 52.1 15.9 31.2 1.2

/1 1964. a 1968.

Sources Tables, 8.1, 8.2, 2 1, 1.5, 5.3, Economic Reports of Jamaica and Guyana. Table 8.8: DATA ON PRIVATE HIOUSING CONSTRUCTION, 1970-75

(Sur f . M-illi.ons)

Year Niumber of Houses Amount Involved

1970 113S 12.3

1971. 1075 15 .0

1972 1491 18.0

1'973 1398 13.6

1974 1225 n.a.

I9 75 1055 n.a.

/1 Based on the number of licenses issued y 'the authorities.

Souxce: Tfinistry of Lpbor and Housing. Table 8,9 SOURCES OF A,1ORTGAGE C.'EDlT, 1970-75)

(Sux f. 1H1illions)

Comr,ercial Insurance Pension Funds Post Banks _ Companies of Enterprises Office

1970 5.3 6.9 12.2 11.0

1971 7.3 7.0 14 .S 12.5

1972 12.6 7.8 16.8 13.8

1973 16.5 7.6 20.3 1.

197h 29.7 n.a. n.a. 17.1

I,ov. 19 75 34.0 n.a. n.. 18i.9

1/ End of' period. Data for Surinam, 1Ior i;g3,e 1 ar; re onlyr -'v:,il^:ble for 1972: Sur f. millions O.784.

Source: 11inistry of Labor and THousin,. Table 8,10 NUMBER OF REGISTERED MOTOR VEHICLES, 1970-75

1969 1970 1971 1972 1973

Passenger Cars 12,917 14,897 17,092 19,865 21,459

Buses 552 732 785 820 1,027

Trucks 2,669 3,200 3,616 4,184 4,586

Powered Bicycles 26,027 21,989 31,828 32,066 32,999

Motor Cycles 3,424 3,484 4,345 4,354 4,354

Tractors 550 637 709 794 888

Source: Annual Report of Armed Polic Force. Table 8.11: PRODUCTION AND VALUE INDICES OF SOME DOMESTICALLY PRODUCED ITEMS, 1970-1975

Unit of Production 1970 1971 1972 1973 1974 1975

Wheat Flour tons 8,624 8,780 9,050 9,900 4,401 N.A. Sugar " 12,512 10,i480 11,082 9,123 8,677 N.A. Butter " 77.7 25.5 15.0 N.A. 11.1 N.A. Milk 1,000 litres 4,961 4,832 4,799 4,460 5,436 N.A. Alcohol 3,859 3,600 4,000 2,342 2,588 N.A. Beer 58,230 7,940 8,774 8,864 7,840 7,988 Particle Board cubic meters 16,022 9,246 10,736 17,518 14,251 9,421 Plywood " 18,139 17,796 19,000 19,147 17,415 14,013 Cattle Fodder tons 17,024 18,073 20,877 21,659 21,550 N.A. Cement " 46,700 48,600 53,800 62,200 44,800 N.A.

VALUE INDICES (1970-100)

Wheat flour 100 150 117 NI.A. 112 N.A. Sugar 100 N.A. N.A N.A. 131 N.A. Butter 100 N.A. N.A. N.A. 62 N.A. Milk 100 N.A. N.A. 94 109 N.A. Alcohol 100 N.A. N.A. 151 179 N.A. Beer 100 99 109 157 171 163 Particle Board N.A. N.A. N.A. 106 100 61 Plywood N.A. N.A. N.A. 84 100 88 Cattle Fodder 100 126 145 206 261 N.A. Cenent 100 113 126 121 105 N.A.

Source: Bureau of Statistics. Table 9.1 CONSUMER PRICE INDICES FOR PARAMARIBO AND SURROUNDING AREA, 1972-75

1972 1973 1974 1975 March June Sept. Dec.

Annual Average 1975 - 1975 1975 1975

April 1968 - March 1969 = 100.0

Foodstuffs and Beverages 108.4 133.3 155.8 167.3 161.8 167.0 168.7 172.7

Housing and Furnishings 107.3 111.0 137.5 149.6 144.1 149.0 154.8 159.6

Clothing and Footwear 97.6 108.2 121.7 137.4 136.1 136.5 137.2 142.2

Other Expenses 112.5 120.1 13504 146.6 140.6 147.6 151.2 155.8

TOTAL 108.0 122.0 142.6 154.6 149.4 154.5 157.5 162.0

Percentage Change

Foodstuffs and Beverages 3.5 23.0 16.9 7.4 1.1 3.2 1lO - 2.4

Housing and Furnishings 3.4 3.4 23.9 8.8 1.5 3.4 3.9 3.1

Clothing and Footwear 0.4 10.9 12.5 12.9 2.3 0.3 0.5 3.6

Other Expenses 3.8 6.8 12.7 8.3 0.4 5.0 2.4 3.0

TOTAL 3.2 13.0 16.9 8.4 0.9 3.4 1.9 2.9

I/ The percentage change for March 1975 is the percentage change over December, 1974. Source: General Bureau of Statistics. Table 9.2 INDICES OF NOMINAL AND REAL WAGES, 1971-75

Index of Index of Index of Nordnal Wages Consumer Prices Real Wages

Indices for lowest wages (scale 1)

Jan. 1971 100 100 100

June 1973 119 116 103

June 1974 156 134 116

May -X975 156 143 109

Indices for highest salaries (scale 20)

Jan. 1971 100 100 100 June 1973 102 116 88

June 1974 115 134 86

May 1975 115 143 80

Indices for average wages/salaries

Jan. 1971 100 100 100 June 1973 107 116 92

June 1974 130 134 97 May 1975 130 143 91

Source: Table 14 of "Loonontwikkeling and Nationaal Loonbeleid", a publication of the Ministry of Labor and Housing. Table 9.3: WAGE INCREASES IN LARGE ENTERPRISES, 1972-75

1972-1973 1973-1974 1974-1975

Agriculture and FisheriBs 1% 16% 11%

Forestry and Wood Processing 11% 28% 11%

Mining and Bauxite Processing 6% 8% 35%

Manufacturing 3% 21% lo%

Commerce 15% 5% 8%

Water, Electricity & Gas 9% 30% 9%

Transport 13% 12% 7%

Banking and Insurance 13% 16% 11%

Source: Ministry of Labor and Housing.