SURINAME
Rank: 133 Regional Rank: 26 of 29
uriname’s economy is 52.6 percent free, according to our 2007 assessment, which makes it the world’s 133rd freest economy. Its overall score is 0.6 percentage point lower than last year, partially reflecting new methodological detail. Suriname is ranked 26th out of 29 countries in the Americas, and its overall score is lower than the regional average.
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The economy is 52.6% free
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Suriname scores well in only one area: labor freedom. The country’s labor market is flexible, and the combination of no minimum wage and low non-salary costs of employment gives Suriname a high labor freedom score. Corruption is present in the civil service, although not as extensively as it is in other developing countries. Most economic freedoms are weak in Suriname. Opening a business takes almost 15 times the world average time, and commercial operations are hamstrung by red tape. The government dominates economic activities. One central authority has been set up to coordinate foreign investment, but foreign investors still do not receive equal treatment under the law. Tax rates, inflation, and government spending are all high. Suriname’s financial system is small, and the regulations that exist are antiquated. Banking is subject to substantial political interference. The judicial system is understaffed, and case backlogs are extensive. BACKGROUND: Suriname has gone through five peaceful changes of government since becoming a presidential democracy in 1991. Ronald Venetiaan won the presidency in September 2005. Suriname is rich in natural resources, especially timber and minerals, and has reserves of bauxite, gold, nickel, and silver. However, it remains one of the region’s poorest and least-developed countries. Agriculture accounts for 8.6 percent of gross domestic product, and mining accounts for over 10 percent of GDP. The public sector is the primary employer, with half of the labor force on its rolls. Fiscal budget deficits remain the most pressing economic problem. How Do We Measure Economic Freedom? See Chapter 3 (page 37) for an explanation of the methodology or visit the Index Web site at heritage.org/index.
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Americas Average = 62.3 World Average = 60.6
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2007
QUICK FACTS
Population: 0.5 million GDP (PPP): $2.8 billion (2005 estimate) 7.8% growth in 2004 4.1% 5-yr. comp. ann. growth $4,100 per capita (2005 estimate) Unemployment: 9.5% Inflation (CPI): 9.1% FDI (net inflow): –$60 million (gross) Official Development Assistance: Multilateral: $8 million Bilateral: $40 million (3% from the U.S.) External Debt: $503.4 million (2005 estimate) Exports: $923.5 million Primarily alumina, crude oil, lumber, shrimp, fish, rice, bananas Imports: $1.0 billion Primarily capital equipment, petroleum, food, cotton, consumer goods
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SURINAME’S TEN ECONOMIC FREEDOMS
Business Freedom Trade Freedom Fiscal Freedom Fdm fm Government Monetary Freedom Investment Freedom Financial Freedom Property Rights Fdm fm Corruption Labor Freedom 42 55 76.3 65.3 69.1 30 30 50 32 75.9
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disputes, and help investors. Foreign companies do not receive equal treatment. Residents may hold foreign exchange accounts provided that the funds did not come from sales of real estate in Suriname. Non-residents may open foreign exchange accounts in U.S. dollars and with the approval of the Foreign Exchange Commission. Payments and transfers face various quantitative limits and approval requirements. Capital transactions involving outward remittances of foreign exchange require the approval of the Foreign Exchange Commission.
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100 = most free,
= world average
FINANCIAL FREEDOM — 30%
Suriname’s financial system is underdeveloped and subject to extensive government influence. Financial regulations are antiquated, and supervision is poor. Of the country’s eight banks, three controlled over 85 percent of banking deposits as of 2004. The state owns a majority of two of the three major banks. The financial health of these banks is poor, and non-performing loans are a problem. The third major bank is owned by a parent company in Trinidad and Tobago. The non-banking financial sector, including insurance and pension funds, is small and underdeveloped. Capital markets are slight and focused on the small stock market, which listed 11 companies as of May 2006.
BUSINESS FREEDOM — 42%
Starting a business takes an average of 694 days, compared to the world average of 48 days. To maximize entrepreneurship and job creation, it should be easier to start a company. Closing a business is very difficult. The overall freedom to start, operate, and close a business is seriously restricted by the national regulatory environment.
TRADE FREEDOM — 55%
Suriname’s weighted average tariff rate was 12.5 percent in 2000. The government has made progress toward liberalizing the trade regime, but non-transparent regulations and standards, import and export taxes, and import and export restrictions add to the cost of trade. Consequently, an additional 20 percent is deducted from Suriname’s trade freedom score to account for these non-tariff barriers.
PROPERTY RIGHTS — 50%
Private property is not well protected in Suriname. There is a severe shortage of judges, and dispute settlement can be extremely time-consuming.
FISCAL FREEDOM — 76.3%
Suriname has high tax rates. The top income tax rate is 38 percent, and the top corporate tax rate is 36 percent. Other taxes include a property tax and a tax on dividends. In the most recent year, overall tax revenue as a percentage of GDP was 28.5 percent.
FREEDOM FROM CORRUPTION — 32%
Corruption is perceived as significant. Suriname ranks 78th out of 158 countries in Transparency International’s Corruption Perceptions Index for 2005.
LABOR FREEDOM — 75.9%
The labor market operates under relatively flexible employment regulations that could be improved to enhance overall productivity growth. The non-salary cost of employing a worker is low, but dismissing a redundant employee can be costly. There is no minimum wage legislation in Suriname.
FREEDOM FROM GOVERNMENT — 65.3%
Despite some reforms, the state still dominates economic activity in Suriname. Total government expenditures in Suriname, including consumption and transfer payments, are high. In the most recent year, government spending equaled 37.1 percent of GDP, and the government received 7.8 percent of its revenues from state-owned enterprises and government ownership of property.
MONETARY FREEDOM — 69.1%
Inflation in Suriname is high, averaging 10.9 percent between 2003 and 2005. Highly unstable prices explain most of the monetary freedom score. The government is able to influence prices through regulation and stateowned enterprises and utilities, and prices of basic food items are controlled. Consequently, an additional 10 percent is deducted from Suriname’s monetary freedom score to account for these policies.
INVESTMENT FREEDOM — 30%
The government has created a new institute, InvestSur, to process applications for investment requests, settle
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2007 Index of Economic Freedom