2009 Index of Economic Freedom

Quick Facts

Population:

• 0.5 million

GDP (PPP):

• $3.6 billion
• 4.8% growth
• 5.2% 5-year compound annual growth
• $7894 per capita

Unemployment:

• 9.5%

Inflation (CPI):

• 6.4%

FDI Inflow:

• $322.7 million

Suriname's economic freedom score is 54.1, making its economy the 125th freest in the 2009 Index. Its score is 0.2 point lower than last year despite improvements in three of the 10 economic freedoms. Suriname is ranked 22nd out of 29 countries in the South and Central America/Caribbean region, and its overall score is lower than the world average.

Privatization has made little progress, and the state is still directly involved in many areas of the economy. The labor market is flexible, and non-salary costs of employment are low. Inflation is high, and government price controls and regulations need to be reformed.

Suriname is weak in business freedom, trade freedom, fiscal freedom, investment freedom, financial freedom, property rights, and freedom from corruption. Almost half of these scores are nearly 20 points below corresponding world averages. Despite some liberalization, tariffs remain high. The investment code and surrounding bureaucracy are non-transparent, burdensome, and prone to corruption. Government influence in financial markets continues to impede growth. Corruption is present in many sectors.

Background Back to the top

Democracy was re-established in 1991 after more than a decade of military rule. In 2005, incumbent President Ronald Venetiaan of the economic reform–oriented New Front Coalition defeated a strong challenge by former military dictator Desi Bouterse's National Democratic Party. Exports of natural resources, especially timber, gold, nickel, and silver, as well as rice, bananas, shrimp, and other fish, dominate the economy. Bauxite deposits are among the world's richest, and alumina accounts for nearly half of exports. Prospects for the onshore oil industry are positive. Suriname remains one of South America's poorest and least-developed countries, although strong commodity prices have boosted GDP growth and tax revenues in recent years. Shortages of affordable energy hamper industrial expansion. Protecting natural resources from illegal exploitation is difficult. Suriname's porous borders also attract drug smugglers.

Business Freedom 41.5 Back to the top

The overall freedom to conduct a business is very limited by Suriname's regulatory environment. Starting a business takes 694 days, compared to the world average of 38 days. Obtaining a business license takes much more than the world average of 225 days. Bankruptcy proceedings are difficult and often prolonged.

Trade Freedom 64.2 Back to the top

Suriname's weighted average tariff rate was 12.9 percent in 2000. The government has made progress toward liberalizing the trade regime, but non-transparent regulations and standards, import and export taxes, import fees, and import and export restrictions add to the cost of trade. Ten points were deducted from Suriname's trade freedom score to account for non-tariff barriers.

Fiscal Freedom 67.7 Back to the top

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, a tax on dividends, and an excise tax on tobacco and alcohol. In the most recent year, overall tax revenue as a percentage of GDP was 22.1 percent. Tax administration has been streamlined.

Government Size 75.5 Back to the top

Total government expenditures, including consumption and transfer payments, are moderate. In the most recent year, government spending equaled 28.6 percent of GDP. Privatization is slow and uneven. Direct state involvement in the economy through ownership and control remains considerable.

Monetary Freedom72.2 Back to the top

Inflation is high, averaging 7.9 percent between 2005 and 2007. The government influences prices through regulations and state-owned enterprises and utilities, and prices of basic food items are controlled. Ten points were deducted from Suriname's monetary freedom score to account for policies that distort domestic prices.

Investment Freedom30.0 Back to the top

Foreign investors are not subjected to specifically discriminatory treatment, but both foreign and domestic investors negotiate with the government for approval and concessions. Investment is conducted on an ad hoc, case-by case basis. There are no limits on foreign ownership in a company. The investment code and bureaucracy are non-transparent, burdensome, and prone to corruption. Residents and non-residents may hold foreign exchange accounts subject to some restrictions and approval. Payments and transfers face various quantitative limits or approval requirements. Capital transactions involving outward remittances of foreign exchange require the Foreign Exchange Commission's approval.

Financial Freedom30.0 Back to the top

Suriname's financial system remains underdeveloped and vulnerable to government influence. Financial regulations are antiquated, and supervision is poor. There are eight banks, three of which control more than 80 percent of deposits. The state owns a majority stake in two of the three major banks. Non-performing loans, which are about 12 percent of total loans, stem primarily from small state-owned banks. The state also owns three minor commercial banks that are to be consolidated, with their bad loans assumed by the government. The non-banking financial sector, including insurance and pension funds, is also small and underdeveloped. Capital markets are limited, consisting primarily of the small stock market, which has about a dozen companies listed.

Property Rights40.0 Back to the top

Private property is not well protected. There is a severe shortage of judges, and dispute settlement can be extremely time-consuming. Although Suriname has signed key international intellectual property rights treaties, IPR protection is nonexistent in practice because it has not been incorporated into domestic law. Suriname is a member of the World Trade Organization but has not ratified the World Trade Organization's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

Freedom From Corruption35.0 Back to the top

Corruption is perceived as widespread. Suriname ranks 72nd out of 179 countries in Transparency International's Corruption Perceptions Index for 2007. There is extensive corruption in the executive branch, and a shortage of police personnel hampers investigations of fraud cases.

Labor Freedom84.8 Back to the top

Suriname's flexible labor regulations enhance overall employment and productivity growth. The non-salary cost of employing a worker is low, but dismissing a redundant employee can be difficult. There is no minimum wage.