IMF worried about covert subsidies for state enterprises in Suriname

PARAMARIBO – The International Monetary Fund (IMF) is critical of the way Suriname subsidizes some of its state enterprises, including the energy company EBS. IMF staff report “a complex system of cross-subsidization and arrears accumulation” within the public sector. The IMF country report was released yesterday.

The IMF notes that EBS has built up an arrear for purchased energy from the Afobakka power station. Last year those arrears amounted US$ 47 million. Suralco, owner of the power station, sells the energy to the state at market value. The state in turn sells the energy to EBS, which failed to make reimbursements in the past years.                                

In addition state oil company Staatolie provides EBS with free diesel for EBS’s own power station. As a compensation the state allows Staatsolie to subtract the cost of the diesel imports from the dividend it pays to the treasury. Last year that sum was US$ 37 million. EBS also receives energy from the Staatsolie power station for which it does not pay a cent. The entire debt of unpaid bills amounted to US$ 24 million in 2011, the IMF estimates.

Although this financial construction is not harmful to the economy, the IMF concludes that it masks the extent of the government subsidy to the public sector. The IMF estimates that government subsidies topped US$ 84 million in 2011.

EBS director Kenneth Vaseur could not respond in detail to the IMF report. He said that the debt was a social debt. Minister of Natural resources Jim Hok says that “everyone can see for himself that the EBS will not be able to stay operational with the rates it charges”. He promises that the government will publish the extent of the government debt.

An accountantancy firm KPMG had conducted a research in EBS’s books, Hok confirms. The minister is certain that EBS can be made healthy again. He did not divulge on the measures ahead, however. Neither did he want to disclose whether the water company SWM is getting a similar treatment from the government.

Outlines of the IMF report were made public last month by the Suriname’s Central Bank. The IMF is generally optimistic about the economical outlook of Suriname.

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