Need to Know

April 14, 2023

On the Precipice

Suriname

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Suriname’s gross domestic product (GDP) plunged by 16 percent during the coronavirus pandemic – the second worst dip in South America after the economic basket case of Venezuela. The country defaulted on its debt three times, leading the International Monetary Fund in 2021 to give the former Dutch colony a loan nearing $700 million.

That’s when the problems started.

In February, protesters stormed Suriname’s parliament in the capital of Paramaribo to decry President Chan Santokhi’s austerity measures, set up to reorganize the country’s economy and repay the loan, including cuts to subsidies that help keep energy and water costs down. After “initially being taken aback by the fury and size of the crowd,” wrote the Associated Press, police arrested at least 126 people.

Santokhi called for restraint. “We believe that the economic situation, the main reason for the protest, should be normalized as quickly as possible,” he said, according to Telesur, the Venezuelan state-owned news service.

The president is not necessarily the root of the problem. His predecessor, Dési Bouterse, oversaw an incompetent, free-spending, mismanaging, and corrupt administration that didn’t prepare Suriname for tough times, argued Global Americans, a think tank.

But Santokhi is the head of state, so he takes the blame. And late last month, the protesters took to the capital again. This time, they called for Santokhi to resign because they say he has been dragging his feet on new election laws for the 2025 presidential election.

These incidents are important because they highlight how many developing countries are struggling to regain their economic, political, and social footing in a post-pandemic world where inflation, financial crises, and anger are mixing into a combustible mix – while a looming global recession has not even technically taken hold yet.

Suriname’s creditors, for example, are not necessarily prepared to endure haircuts on their investments to be nice to the country of 600,000 people, wrote Financial Policy magazine, saying that the “world lacks an effective framework for dealing with post-pandemic debt crises.”

Santokhi and many citizens of Suriname likely hoped oil would help. The discovery of black gold in the region has triggered an economic boom in neighboring Guyana, where GDP increased by a whopping 58 percent last year as oil prices spiked. But now oil companies have delayed their investments in the region for a variety of factors, including the civil unrest in the unstable nation, Oilprice.com reported.

Could Suriname become a failed state? Only if the government, protesters, and international financiers only pursue their narrow interests.

This story originally appeared in the April 14, 2023 newsletter, On the Precipice.