Four years ago, Suriname was in the midst of one of the largest financial crises since its independence. Its public debt, as a result of external events such as the Covid pandemic and unwise policy decisions, had reached unsustainable levels.
There was no other option than bringing the International Monetary Fund on board, putting in place a painful but inevitable adjustment plan, and obtaining from all our various creditors — from China to bondholders — some debt relief. It was a long and difficult, but ultimately successful process, which concluded in December 2023.
Suriname is in the unusual position of being a carbon sink — our forests absorb more carbon dioxide than the country’s population emits.
While being a good citizen of the world in absorbing a bit of the carbon that others are emitting in large quantities, it proved impossible for Suriname in our debt restructuring to use our plentiful natural assets to offset some of our financial liabilities. No matching was possible.
The wheel has turned, and this month Suriname welcomes a massive investment decision by TotalEnergies to produce oil — in a way that minimises emissions, and not compromising our status as a carbon sink. The fate of the country has changed and now our challenge is to competently manage affluence, after having successfully managed financial distress.
The lesson of this experience is that the international community can certainly do better in helping those many poor countries, endowed with plentiful and precious natural assets, but plagued with large debt burdens.
There is no lack of studies and speeches on carbon or biodiversity credits. Practical solutions, at scale, are missing.
Countries like Suriname, with limited capacities but very large natural assets, are left trying to produce good quality carbon assets and sell them to buyers, largely in ignorance of the depth and breadth of the global demand. A very difficult task...
Another approach is needed. Multilateral development banks such as the World Bank and the Inter American Development Bank are truly committed to helping the climate transition.
They have financial clout, superior technical expertise and connection with global companies willing to purchase high quality carbon or biodiversity assets. And they are creditors of countries like Suriname.
The quid pro quo seems straightforward: these institutions should help their clients — the debtor countries — produce high quality carbon or biodiversity credits. They should put their money where their mouth is by accepting that their loans, at least partially, can be repaid with such carbon credits.
The institutions could then monetise the carbon credits with international corporations, for instance, which are buyers of those assets.
Turning green natural assets into dollars via multilateral development banks is one promising solution to help high debt but natural resource-rich countries find a way out of their predicament.