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 pros- pects 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 A~~~~~~~~~~~~ cf)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C Ml 7~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ O~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. A. a E!2~~~~~~~~~~~~~~ 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.