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Fitch revises Suriname's outlook to negative on increasing government debt

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Fitch revises Suriname's outlook to negative on increasing government debt

Fitch Ratings revised its outlook on Suriname to negative, citing an increased government debt-to-GDP ratio due to large fiscal deficits stemming from rising financing needs.

Suriname's May 2020 elections may lead to an increase in government debt, and uncertain financing options add further to downside risks, Fitch said.

The nation's government deficit rose more than expected to 12.3% of GDP in 2018, and will continue to remain elevated, near 10% of GDP through 2020, as rising election expenditure offsets the easing of arrears payments linked to prior periods, Fitch said.

Suriname's government debt-to-GDP ratio is expected to rise to 79% in 2019 from 72% in 2018. The government faces the risk of currency shocks as three quarters of its debt is in foreign currency. However, the absence of external amortization pressures allays the risk.

Fitch estimates the South American economy to expand 3.3% during 2019-2020, similar to 2018, on expectations that government infrastructure investment and household consumption will balance a decline in mining investment.

Fitch affirmed its long-term foreign-currency issuer default rating on Suriname at B-.