'Downgrading draagt het karakter van een ongekende
politieke manoeuvre'
-'Fitch analyse ging straal voorbij aan een aantal belangrijke verworvenheden'
- 'Het doel van de downgrading is om de oppositie in kaart te spelen'
De regering is van mening, dat de afgekondigde downgrading door ratingbureau Fitch onder zeer tegenstrijdige verklaringen plaatsvindt en het karakter draagt van een ongekende politieke manoeuvre.
Het een-voor-laatste rating rapport van Fitch van begin 2019 was toen reeds omstreden. Dit schrijft donderdag 16 januari 2020 het Nationaal Informatie Instituut.
Waar de regering, maar ook het IMF, de overige multilaterale organisaties en de andere rating agencies, een verbetering in de economie en de vooruitzichten zagen, heeft Fitch de outlook van neutraal naar negatief bijgesteld.
De Fitch analyse ging straal voorbij aan een aantal belangrijke verworvenheden. De zeer lage inflatie;
de stabiele wisselkoers;
de oneigenlijke interruptie in de contante valutaverschepingen die een kunstmatige ingreep buiten Suriname inhield, maar die wel was opgevangen door de CBvS en de banken;
het leningenbeleid dat gericht is op groei en ontwikkeling en een draagbare terugbetaalcapaciteit herbergt;
het ruime sociale vangnet waarmee de ergste klappen van de crisis zijn opgevangen voor huishoudens en ook bedrijven.
De regering wees er bovendien op, dat dergelijk stabilisatiebeleid was uitgevoerd zonder verslechtering van de staatsfinanciën, terwijl het monetair kader was versterkt. Het tekort was teruggedrongen van 9% BBP naar onder 7% in 2018. Het traject van afnemende begrotingstekorten voor de periode 2019-2024 toont bovendien dat de schuldquote ook neerwaarts gaat.
'Fitch heeft ons commentaar en dat van de CBvS totaal niet willen meenemen, dat ging over de geïnstitutionaliseerde aanpak van de financieel-monetaire vraagstukken en de bereikte en verdere versterking van de financiële wetgeving.
Frappant was dat de analyse van Fitch vrijwel het cliché was van de politieke analyse van de oppositie: alleen maar doem en onheil uitspreken over de toekomst van Suriname en haar huidige leiders. Fitch kondigde zelfs aan dat ze uit de verkiezingsprogramma’s van politieke partijen hun intenties zou analyseren en een oordeel zou vellen over hun geschiktheid voor bestuur.'
De regering heeft toen protest aangetekend, omdat geen enkele rating organisatie dit ooit als doelstelling had. Zij worden geacht onafhankelijke deskundige analyses te maken en geen politieke. Bovendien worden de agentschappen door de zittende regeringen betaald voor dit onafhankelijk onderzoek. Het kan nooit de bedoeling zijn en mag niet worden toegestaan, dat er partij politieke favoritisme wordt begaan door Fitch.
Fact finding en begrip over de Surinaamse werkelijkheid kan niet eenzijdig tot stand komen en niet zonder een gevoerde dialoog met de beleidsmakers. Fitch is na januari 2019 niet meer op missie naar Suriname gekomen.
In het najaar stuurden zij een zogeheten medium-term analyse de ether in die wederom zeer negatief was. Suriname had totaal geen inbreng daarin aangezien Fitch stelde, dat het geen rating betrof en het stuk daardoor op afstand kon worden geschreven.
'Inderdaad werden ook nimmer onze boodschappen overbracht. Suriname wees op de positieve vooruitzichten van de Afobakadam en het voordeel van het kunnen laag houden van de subsidiekosten in de energie.
Fitch argument dat enkel een rating besluit de inbreng van de beleidsmakers rechtvaardigt, verloochent zij door de recente werkwijze. Wederom opereert Fitch vanuit een afstand. Zij is niet ter plekke geweest en heeft geen gesprekken met de regeringsinstanties gevoerd.'
Zij heeft afgelopen woensdag een concept rapport opgestuurd waarin het rating downgrade besluit staat en gezegd dat er voor vrijdag kan worden gereageerd. De reactie volgens haar kan echter alleen bestaan uit een protestaantekening tegen het besluit, maar het besluit zelf is een eigen prerogatief van Fitch. Fitch dringt haar besluit dus op als een faite acompli.
Het Fitch besluit om de ratingverlaging te bespoedigen zonder naar Suriname te komen en door te drukken volgt bovendien nadat de regering haar service contract reeds heeft opgezegd. Waarom zij doorzet op de rating downgrading is dus de vraag. Het vermoeden is niet ver te zoeken. Het doel is om de oppositie in kaart te spelen.
Vandaar dat de regering aan Fitch heeft laten weten, dat zij transparant over hun doelstelling moeten zijn. Fitch is aangegeven om hun rapport van een publieke disclaimer te voorzien dat er geen relatie meer met de Surinaamse overheid bestaat waardoor noch de overheid betrokken is geweest, noch betrokken heeft hoeven te zijn. Fitch dient verantwoordelijkheid te nemen voor wat ze zelf schrijven en wiens doel zij dient.
https://www.fitchratings.com/site/pr/10107790
Fitch Downgrades Suriname's Ratings to 'CCC'
16 Jan 2020 04:17 PM ET
Fitch Ratings - New York - 16 January 2020:
Fitch Ratings has downgraded Suriname's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'CCC' from 'B-'.
Fitch typically does not assign Outlooks or apply +/- modifiers for sovereigns with a rating of 'CCC' or below.
The downgrade of Suriname's rating
reflects a sharp increase in government debt, reduced financing
flexibility evident in the stressed terms of recent external sovereign
borrowing and declining external liquidity, which increase risks to the
government's capacity to service its foreign-currency (FC) liabilities.
The large government deficit coupled with the widening current account
deficit, in advance of May 2020 parliamentary elections, are
inconsistent with the stabilized exchange rate, increasing risk of macro
instability.
Public debt sustainability risks have risen.
Suriname's general government (GG) debt/GDP is now estimated by Fitch
to have risen to 80.9% at YE 2019 (up from 72.1% in 2018) well above the
current 'B' median of 49.7%. The parliament increased the debt limit to
95% of GDP from 60% in November 2019. Three-quarters of government debt
is FC-denominated, underscoring public debt sensitivity to
exchange-rate adjustments. Banking system vulnerabilities (low
capitalization and high financial dollarization) are a contingent
liability to the sovereign.
Suriname's government deficit
has remained structurally large during 2015-1H2019, averaging 8.5% of
GDP on a cash basis. Fitch forecasts the deficit at 10% of GDP (cash
basis) for 2019 and 2020 (in line with our view at August 2019). We
expect that election-related spending will offset declining recorded net
government arrears in 2H19-2020. The 3Q19 government operations results
scheduled for release Dec. 20, 2019 have not been published.
A
fiscal adjustment is unlikely until 2H20 or 2021 following the
elections. The outcome of the elections is uncertain. Whether there is a
win for the incumbent NDP or a (potential coalition) VHP or ABOP-led
government, prospects for reducing the large structural deficit are
uncertain (the commitment deficit exceeded 7% of GDP in 2018). Our
baseline projects the 2020 deficit (cash basis) to narrow to 8.7% of GDP
as election-related spending ebbs. Prospects for any IMF program are
equally uncertain. The current NDP government rescinded electricity
subsidy reduction measures (2016, amid public protests and macro
instability) and introduction of a value-added tax (2018).
The
government's financing gap is difficult to assess reflecting the weak
budget credibility, statistical lags, history of arrears (although the
incurrence of new reported arrears declined 2017-2018, a backlog of
electricity payments was disclosed during 2H19), and uncertain timing of
China's disbursements. The central bank increased monetary financing by
1.3% of GDP in October 2019 (a total of 4% of GDP during 2019). Our
baseline makes a key assumption that greater project-financing in
4Q19-2020 reduces part of Suriname's fiscal and external financing gap.
In late November 2019, China announced USD300 million new
project-finance lines during President Bouterse's visit to China. For
the government's net financing requirement of 13.4% of GDP in 2019 and
11.1% of GDP in 2020, our baseline assumes China net disbursements and
one-off capital market issuances provide net foreign financing near 6%
of GDP per year and the domestic market provides 7.3% of GDP in 2019 and
4.4% of GDP in 2020.
A recent sovereign external bond
issue demonstrated worsening terms of access to financing and adds to
the debt burden. The government issued USD125 million 2023 notes (3.4%
of GDP) in December 2019 to refinance electricity arrears and acquired a
hydroelectric facility (a presidential campaign pledge). However, the
terms convey stressed market access conditions. The four-year bond
amortizes semi-annually, was discounted to offer a 12.5% yield while
containing the coupon at 9.875%, and contains mandatory redemption
covenants in most instances of future government foreign issuance. The
yield on Suriname's other USD550 million 2026 notes breached 16%
temporarily on subordination concerns. As a result, investors agreed to
the depositing of certain gold royalties, proceeds from electricity
sales to a gold company, and dividends of Staatsolie, if any, into the
same escrow account for servicing the 2023 and 2026 bonds, supporting
pari passu treatment among the bondholders. The 2023 coupon rises to
12.875% if the gold and oil companies generating these FC streams fail
to agree the depositing of these funds to a collection account.
Debt
service on the 2023 and 2026 bonds totalling USD94 million in 2020
exceeds the 2017-2018 levels of relevant gold royalties (USD22 million
average) and Staatsolie dividends (USD41 million average). According to
the 2023 bond terms, the government is responsible for supplying any
residual FX and debt service requirements.
Restructuring
risks have risen for Suriname's creditors since our August review.
Opposition members of parliament protested the transaction financing law
approved along party lines in September 2019 and the increase of the
government debt limit, citing public debt sustainability concerns. The
pledging of the government's more robust FC revenue streams to foreign
bondholders in December subordinates other FC debt. The accrual of large
electricity payment arrears during a related negotiation with a foreign
investor sends a negative signal for creditor rights.
Suriname's
current account deficit ballooned during April-September registering an
8.3% of annual GDP (USD308 million) deficit for 1Q-3Q19, driven by
increased goods and services imports. Proceeds from gold and oil exports
were stable in 2019 (expected to continue through 2020). At this pace
we expect the current account deficit/GDP to rise to 11.0% in 2019,
sharply up from the deficits of 3.4% in 2018 and above the 8.1% we
initially expected for 2019. The wider deficit and net FX sales have
been financed by central bank purchases of gold from artisanal miners
and commercial banks' repatriation of USD387 million foreign assets
during January-October 2019 in response to a central bank directive to
centralize a larger share of their required reserves on FC deposits at
the monetary authority.
Suriname's unencumbered
international reserves (IR) are declining. The central bank reports
USD662 million in gross international reserves. By Fitch's calculation,
unencumbered international reserves are far lower at USD331 million
including monetary gold at November 2019, down from USD510 million in
December 2018. Unencumbered IR exclude deposits of commercial banks,
mainly required reserves on FC deposits held at the central bank, which
Fitch does not expect would be available to defend the exchange rate.
Restricted government accounts for foreign debt service totalled USD2.8
million at November 2019. Suriname's net external debt is estimated by
Fitch to have jumped to 59.6% of GDP at YE 2019 (up from 42.5% in 2018)
more than triple the current 'B' median (17.6%), driven by rising public
external indebtedness.
Fitch forecasts Suriname has USD316
million external debt service in 2020, including USD230 million
scheduled government liabilities (excluding state-oil-and-gold company,
Staatsolie) plus an estimated USD86 million private-sector debt service.
Domestic FC government debt to private creditors represents a further
USD337 million (9.1% of GDP) at September 2019 having risen from 5.4% of
GDP in 2017. The amount of domestic FC maturities in 2020 is not
publicly disclosed but we estimate 55% of non-concessional domestic
government debt is short-term.
Pressure on the stabilized
exchange rate has increased. The parallel market premium on the SRD-USD
exchange rate rose to 16% in January 2020 from 12% in August 2019. In
response, the authorities have rationed FX. The central bank sold net
USD236 million IR during January-October 2019 (excluding one-time
measures). In view of declining reserves, the central bank has limited
policy tools to maintain exchange-rate stability through the May 2020
parliamentary elections. Authorities could however draw on a China swap
line of RMB1 billion (USD144 million equivalent, tested in 2015) or
demand commercial banks' repatriation of the remainder (Fitch estimates
USD285 million at November 2019) of their required reserves on FC
deposits.
Suriname's IDRs also reflect:
GDP
per capita is above the 'B' range median. However, Suriname is a small
undiversified economy, with a high dependence on commodity exports.
Five-year average inflation is high (19.2%) and growth has been
relatively volatile.
Suriname's governance indicators -
ranking at the 44th percentile (2018) are above the current 'B' median
(38th percentile, 2018). A domestic military court convicted President
Bouterse in November 2019 for the execution of 15 political dissidents
under the military government in 1982. The decision can be appealed.
Social protests have not resulted, the president remains in office, and
the result of the long-running case may not diminish his NDP party's
election prospects.
Fitch affirmed the LT Local Currency
IDR at 'B-'. The current one notch uplift above the LT FC IDR reflects
Fitch's view of lower restructuring and default risk for Suriname's
SRD-denominated debt than government's FC-denominated liabilities. This
reflects the reduced weight of external finance constraints, the smaller
25% share of SRD-denominated debt and the central bank's demonstrated
willingness to monetize government obligations.
Fitch's
affirmation of the Country Ceiling at 'B-', opening up a one notch
uplift above the LT FC IDR, reflects our view that the probability of
the sovereign imposing capital or exchange controls that impede the
private sector's ability to access foreign exchange and make debt
service payments is less than the sovereign's probability of
restructuring or default. The sovereign did not block private external
debt service during the 2015-2016 balance-of-payments crisis.
In accordance with its rating criteria
for ratings of 'CCC+' and below, Fitch's sovereign rating committee has
not utilized the SRM and QO to explain the ratings, which are instead
guided by the relevant ratings definitions for the 'CCC'-'D' categories.
Fitch's
SRM is the agency's proprietary multiple regression rating model that
employs 18 variables based on three-year centered averages, including
one year of forecasts, to produce a score equivalent to a LT FC IDR.
Fitch's QO is a forward-looking qualitative framework designed to allow
for adjustment to the SRM output to assign the final rating, reflecting
factors within our criteria that are not fully quantifiable and/or not
fully reflected in the SRM.
The main factors that could lead to a positive rating action, individually or collectively include:
--Marked
reduction of the government deficit and financing needs that reduce
risks to government debt sustainability, for example due to substantial
fiscal consolidation after the elections that is consistent with a
stabilization of government debt/GDP.
--Improved external
liquidity, for example a build-up in net foreign exchange reserves, and
strengthening of the current account balance.
The main factor that could lead to a negative rating action is:
--Increased
likelihood of a probable default event or restructuring of sovereign
market debt, for example due to a critical weakening in the external
liquidity position or capacity of the government to access financing.
--Fitch assumes global economic growth
and international oil prices evolve according to our quarterly Global
Economic Outlook forecasts and that international gold prices remain
near current levels during 2020-2021.
--Fitch's baseline forecasts
excludes the impact of Apache Corp. and Total S.A.'s find of
significant, but as yet unquantified, oil reserves in Suriname waters on
Suriname's balance of payments (given the discovery's early nature) as
well as the first oil production (which has a roughly three to five year
development timeline).
--Fitch analyses government operations
on a cash basis (which includes net payments of supplier arrears) using
published Ministry of Finance statistics on arrears flows because this
treatment better explains the scale of the government's financing needs
and change in government debt/GDP during 2015-2019, in our view, than
the government commitment balance also published by the Ministry of
Finance.
--Fitch values government debt at reference
period-end market exchange rates; this differs from valuation according
to Suriname's National Debt Law.
--The stock of government arrears to
suppliers is not publicly disclosed. However, the flows of arrears
incurred and payments thereof are publicly disclosed.
--Financial
soundness indicators of the banking system are released periodically
for the IMF Article IV reports, but not published on a regular basis.
Suriname has an ESG Relevance Score of
5 for Political Stability and Rights as World Bank Governance
Indicators have the highest weight in Fitch's Sovereign Rating Model and
is therefore highly relevant to the rating and a key rating driver with
a high weight.
Suriname has an ESG Relevance Score of 5
for Rule of Law, Institutional and Regulatory Quality and Control of
Corruption as World Bank Governance Indicators have the highest weight
in the Sovereign Rating Model and are therefore highly relevant to the
rating and a key rating driver with a high weight.
Suriname
has an ESG Relevance Score of 4 for Human Rights and Political Freedoms
as the Voice and Accountability pillar of the World Bank Governance
Indicators is relevant to the rating and a rating driver.
Suriname
has an ESG Relevance Score of 4 for Creditor Rights as willingness to
service and repay debt is relevant to the rating and is a rating driver
for Suriname, as for all sovereigns.
