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Fitch raises Suriname's outlook to stable on economic recovery

Fitch Ratings revised Suriname's outlook to stable from negative, citing the improving economy and public finances of one of the smallest South American nations. The long-term foreign and local currency issuer default ratings were affirmed at B-.

After two years of recession, Suriname's economy grew 1.2% in 2017 and was forecast to expand 2.5% in 2018 and 2.7% in 2019, according to Fitch. Inflation eased to 9.2% year over year in December 2017.

Suriname ran a current account surplus of 9.2% of GDP in 2017 after a 19.4% deficit in 2015. The surplus was projected to continue this year and in 2019.

"Fitch expects the current account to remain in surplus, supported by higher commodity prices and production volumes, and international reserves to accumulate slowly," the rating agency said.

Fitch also sees Suriname trimming its government deficit to 4.6% and 2.2% of GDP in 2018 and 2019, respectively, from 7.3% in 2017, through revenue gains including a new value-added tax, along with goods, services and transfers spending cuts.

"We expect the resulting primary fiscal surplus in 2019 will lower the government's large financing needs, put government debt on a downward trajectory, and enable it to reduce the stock of relatively short-term domestic treasury securities," Fitch said.

The rating agency said it could upgrade Suriname's rating due to consolidation of public finances and stronger investment and economic growth prospects.