Eckhorst: zonder institutionele versterking zullen olie-inkomsten niet helpen - ABC

Indexed: 2026-05-21

[00:00:02]This is EBC Current Affairs, and Suriname is insufficiently prepared for oil revenues in 2028. That is what the IMF says in a report last week. We talk about that with Karel Eckhors. Mr. Eckhors, good morning.

[00:00:21]Good morning, Mrs. Gayadin.

[00:00:22]Good morning, listeners.

[00:00:24]Mr. Uh, what, uh, what can you tell us about this IMF report, even though you no longer work at the IMF?

[00:00:33]Um well, the report, uh... although I am actually going to present the context to you. So technical assistance, uh, technical assistance, uh, a solution. And this technical assistance has been requested by the Ministry of Finance. It was carried out in March, and it is a follow-up to previous technical assistance.

[00:01:02]uh missions that have been to Suriname in the past 2 years, which all looked at how the institutional framework works regarding the management of uh government finances, and how to strengthen it.

[00:01:21]And uh, that also involves uh, the legal framework that uh goes with it. And an assessment is conducted, an evaluation is carried out, and a report results from it. The report is a technical report. Um, the report uh is actually meant for the people on the floor who do the work, uh the technical people. But of course, it also has political implications in the sense that, uh, emphasis is placed on the political will to carry things out.

[00:01:59]And you will also, we have also noticed in recent years that at the workshops, uh, the technical workshops, space is always made for the authorities to participate because, uh, they need to buy in.

[00:02:21]So what I mean by that is that they are going to have to take ownership of the outcomes and implement that in their policy. Um, of course, it has been portrayed in the press as if it is, uh, already almost too late. It is not too late. It will of course depend on us as a country, uh, on the authorities, to hurry up. I already said it two or three weeks ago in a presentation at the VSB that we actually have 18 months to prepare all these matters. It is a lot. We are currently only talking about public financial management, but it is more than that. In all policy areas, preparations must be made to properly manage the developments that will soon come our way. Yes.

[00:03:23]And uh the IMF uh talks about institutional weakness, for example. Um, what would need to happen then?

[00:03:35]strengthening the institutions. And there are also, uh, there are also, uh, recommendations about that. Uh, one of the matters she mentions in the report is accelerating the implementation of government financial policy, particularly the execution of the Savings and Stabilization Fund.

[00:03:58]But she also mentions other uh institutions that uh need to be strengthened, such as the Anti-Corruption Commission, uh the Anti-Corruption Act that has been amended and still needs to be passed. Uh, procurement legislation that needs to be implemented. And so you have, uh, that legal and law, that legal and institutional framework that you are going to have to strengthen through the implementation and execution of these matters. And that needs to happen very quickly, because in fact, if you pass the date of 28, 2028, you are essentially already late, since that pressure is already coming at you, and it is then very difficult to get things in place. And by pressure, I mean we all know that there is a lot of this and that, that there are many needs. There are a great many needs regarding development. There are significant backlogs in maintenance, backlogs in... backlogs in bringing purchasing power up to par.

[00:05:14]So that pressure will come your way in 2028 and later. And then it becomes a bit more difficult to think, uh, to discuss, to deliberate about these institutions.

[00:05:28]But uh, what exactly do they mean when they talk about the new financial framework?

[00:05:35]It is what I just explained. Uh, the new financial framework has to do with uh has to do with the uh with the with the institutional framework, under which we are now also going to have to prepare government financial policy in the medium term. So far, uh, we produce a budget every year. Uh, you know the budget process that starts soon in 2026.

[00:06:08]But what actually needs to happen is that we don't just look at one budget, but start making forecasts for five future budgets. And why are you doing calculations for five budgets in the future? Because you already want to have a picture of the direction the economy is heading if you adjust certain things now, and what outcomes you can expect. If you tackle matters now, if you start tightening spending ceilings now, what kind of outcome you can expect in the next 5 years and/or at the end of the next 5 years. The same applies to income.

[00:06:55]If you increase your income, what will the outcome be? And that is why targets are set, goals are set at the end of, uh, such a, uh, medium-term period. And how are we going to achieve the goals then? So it is, it is a new thing.

[00:07:12]It is new in the sense that we have never done it this way before, and uh, but it is going to have to be done this way now because dealing with large revenues, large capital in your government budget, your public finances requires good planning. And that is why you are now, uh, because if you don't plan well, the money can disappear just like that, evaporate into, um, into actions and deeds that were not planned, but which also do not ensure, uh, the sustainable development that you actually want.

[00:07:54]But that is, uh, if I may put it simply, Mr. Eek, that is desirable, but as the situation stands now, annual budget and such, surely that country can also be governed based on oil revenues.

[00:08:10]Yes, but then you aren't planning for when the oil revenues are there.

[00:08:15]That data is at their disposal. We know how much oil has been found. We know how much oil is going to be extracted from the ground. We can make forecasts using oil price predictions. Why are you doing it? Why don't you do that? Why are you going to stick, uh, stick with the old ways when you know that a completely new situation will emerge in 2028, and you won't be prepared anyway if you don't start making those forecasts now, right?

[00:08:51]So that is why we are talking about a new approach. Uh uh uh uh making policy is about foresight, and this helps you. This framework, this new framework which we call the MTFF, medium-term fiscal framework, helps you look ahead in the medium term to where you are going, so that I can get things in order now that will help me be in a better position later on to process those revenues, to manage those revenues. Because at this moment our budgets, the budgets we have now, are not able to do that. That is why you a new, that is why you must, uh, uh, carry out that reform.

[00:09:44]Could you explain to us briefly, Mr. Eckhors, what the IMF's recommendations are in that report? As I said before, accelerating the uh uh implementation of essentially a rules-based uh uh government policy, what is called role-based fiscal policy, and implementing the Savings and Stabilisation Fund.

[00:10:08]You know that the Spar Stabilisation Fund is not only going to ensure the storage of the large revenues from oil and gas, but the Savings and Stabilisation Fund is also an instrument to implement what we call countercyclical policy.

[00:10:28]What do we mean by countercyclical policy?

[00:10:31]We have always pursued procyclical policy up to now. that is to say, if revenues from natural resource prices rise, and revenues rise, we also let expenditure rise accordingly. While we know that the rise in prices is often not sustainable. Prices rise for a certain period and then fall. The problem is, what do you do with the expense if income falls? That is where the problem has always originated for Suriname. In public finances, the moment prices fall, you notice that spending does not, uh, you notice that spending does not stabilize.

[00:11:13]And uh, such a savings and stabilization fund ensures that major income is better spread over time. So of course it has a save function. It is for future generations that we also ensure that our children and grandchildren will have a better life. Uh, but it also has a function for the current generation, namely it stabilizes government finances, so that we also get a bit of stability in the macroeconomy. prices will stabilize, the currency exchange rate will stabilize, so that the cooking power of current generations also improves.

[00:11:54]But only one of them, so that is one of the recommendations; another recommendation, pardon Mr. Ek, the savings stabilization fund.

[00:12:00]What is the issue, then? After all, that law has already been passed. Well, it's not just about the law. This concerns implementing decisions that must be adopted. One implementing decree is the State Decree on sustainable public finances. Uh, that must, that must be assumed. But in addition, there are even more government decrees that need to be adopted in this context. The structure of the fund must be set up. The board uh of the fund must be uh must be prepared.

[00:12:35]Um, I think that internal discussions still need to be held within the government regarding that. And furthermore, you also need to check the current state of public finances to fill the fund. Can we start filling the fund now with the income we currently have? Essentially, we have stated in the law: "We are setting up the fund now, but we know that we will only be able to fill it starting in 2028."

[00:13:03]But what I am advocating, and what I will continue to advocate to policymakers, is that we finally set up the fund as soon as possible.

[00:13:15]Because I have been dealing with legislation, working groups, and fund boards since 2012, I deal with that. I was involved in drafting the first law.

[00:13:28]I was chairman of the working group when we that law, uh, when that law was written.

[00:13:33]I worked together with another person on building the mathematical model for the savings and stabilization fund.

[00:13:43]And it wasn't until 2017 that it was adjusted, or not. It was accepted.

[00:13:50]In 2019, we got a board, of which I became chairman. The board could not really work because there was not a cent in the fund. No account had been opened for the fund at the central bank either.

[00:14:03]And we received a mandate by presidential resolution in 2019 for 5 years.

[00:14:09]Um, in 2019 we had that discovery of a lot of oil offshore. So we knew that the structure of that law would have to change because that had not been taken into account. And that change only came in 2024 following a request from IDB and the Oppenheimer Bondholders, when they wanted to see their VRI anchored in that law. So that has been the whole process. That law was then passed on December 30 and ratified by the president on December 31, 2024. And now we finally have to implement it. It is just that that law does not stand alone. It must be implemented together with the Accounting Act.

[00:14:51]It is the mother law of public finance.

[00:14:54]And the Savings and Stabilization Fund is a sovereign wealth fund. It is not a private fund. It is not a non-binding fund.

[00:15:01]It is a sovereign wealth fund. Manages state resources.

[00:15:05]So those are all things, institutions that we need to have in place when that big money comes in.

[00:15:14]Kuyana has started a savings and stabilisation for us. But they were ready for us before they sold the first oil in 2019. So we are 13 years down the line, 14 years down the line. It it it I I think that now is the time for it to get off the ground.

[00:15:36]But if there is no money, then surely we don't have to rush and wait for the money in 2028. It does not absolve you of the obligation to at least start setting up the structure. I just said that. We know that the fund will probably start filling in 2028, but it takes a very long time.

[00:15:57]Sometimes I feel like that sense of urgency isn't there. We think that 2038 is very far removed from us. The dynamics and speed at which we do business compel me to say that 18 months is even too short to properly set up such a fund. But we have to start. We have to start. Let's look at, uh, let's look at the structure of the fund. What should it look like?

[00:16:23]Which committees are, uh, which committees are important? Let's start identifying people. Let's look at investment rules. We need to start thinking about those kinds of things as well.

[00:16:35]What are we going to invest that money in?

[00:16:37]But we have, excuse me, Mr. Eckhors.

[00:16:39]Uh, surely we don't need the IMF to explain that to us. Surely we know that ourselves?

[00:16:45]We don't need the EMF to explain that to us. That is why we had already started with this in 2013 without the EMF.

[00:16:52]No, I mean to hurry up with the fund, I mean. Yes. Yes.

[00:16:57]So that is why, that is why I repeat, I say: "We do not need the IMF for that. It is a necessity that we must feel ourselves."

[00:17:03]And that is why we started in 2013 without the EMF, because we felt the necessity.

[00:17:09]That is one recommendation. What other recommendations? There are recommendations regarding. That is why I say they are, they are not, they are not like that, yes, they are very technical, because it is a technical report. It is at a technical level, not at a real policy level.

[00:17:26]And another has to do with the operationalization of what we call budgetary rules, or fiscal rules. I already said: "Savings and stabilization fund... uh, you have to read that law in conjunction with the legality."

[00:17:40]Because in the Accountability Act—as I said before, the mother law of public finances— regulations and provisions have been made for how to adequately manage state finances. And two new budget rules have now been included that we did not have before. One has to deal with a ceiling for primary government expenditure, and that must apply for 5 years. That says that if we keep primary government expenditure at a certain ceiling, maintain a certain level, then at the end of those five years—and that is the second rule—we must arrive at a stable debt position. And we talk about a stable debt position when it is around 60% or lower. So those five years of, uh, spending ceilings are supposed to help us have a stable, sustainable debt position at the end. Those are those two lines. So it is not the case that the government submits a budget and says, "I want to spend billions," without substantiating how it is going to do so. And even if she can substantiate it.

[00:18:52]Those two rules in the Accounting Act are going to restrict her. Those two rules are based on the new financial framework that is being drawn up.

[00:19:02]Those two rules are based on calculations related to the absorption capacity of that economy.

[00:19:08]How much can that government absorb?

[00:19:11]How much can the economy absorb? And that is quite limited when we look at the execution capacity of that economy. I've been watching World Bank programs and IDB programs for 20 or 30 years, and you notice that we get tons of money, but we ca n't spend it. So why do we have the illusion that when we start receiving billions, we will suddenly spend it all if we haven't planned? how to prepare it. So that is why you need these kinds of frameworks. Um, there will probably be secondary uh secondary uh legislation needed and transitional arrangements needed uh to for this kind of for these what is that called? uh to implement these budgetary rules. As I said, the the uh the government decrees that need to be issued.

[00:20:10]All those kinds of things need to happen in the coming 18 months. I can also reveal that next week already the same sorry, next week already the same team that has, uh, written this report. So that, uh, that, uh, Tam, that technical assistance team, the same team will be present in Suriname again. And that is, that is how it should be with technical assistance, that you don't just say what needs to be done, but that you also come and help. So the same team will be in Suriname next week, uh, and the week after that, to look into, together with the technician and, uh, the policymakers at the Ministry of Finance and, uh, and other agencies, how to help implement what is stated herein and those recommendations.

[00:21:07]Sir, and then we hope that things pick up speed. Yes. And then we hope to speak to you again.

[00:21:12]We must leave it at this. Mr Ehors, finally, why are you so harping on that corruption law?

[00:21:19]That anti-corruption law is part of that that anti-corruption anti-corruption law is part of uh of that institutional institutional framework that uh must protect the revenues uh of the state.

[00:21:37]And that anti-corruption law in it, it was part of the IMF program that we implemented, in which we made recommendations. It started with the ratification of the United Nations uh Convention uh uh Against Corruption, the UNAK, sometime in November 2021, I think. It started with practices being adopted that are used worldwide, uh, worldwide, when it comes to anti-corruption.

[00:22:10]One of the matters is the recording and administration of salaries, wages, and assets of politically sensitive positions.

[00:22:24]Um, what you want to do with that is you want to prevent people from doing something that isn't, uh, I can't say isn't legal, but yeah, I think that's the best way to do it.

[00:22:37]Illegal way of generating income because they are in a position to do so. And that is why, uh, you implement these measures requiring people to register and administer their assets at the beginning of their career with the government or during their career with the government, so that this can be tracked. The development in this regard can be monitored. That does not mean that one is not allowed to accumulate wealth. That does not mean that people are not allowed to receive high salaries. However, it must take place in a transparent, visible, and efficient manner.

[00:23:15]But what is the current status of this anti-corruption law? Don't know. I think that, uh, I do n't think that it is on the table at the National Assembly yet. So it will still have to be with the government somewhere.

[00:23:30]But you know yourself, Mr. Eckhorst, that if someone wants to steal, nothing stops them.

[00:23:37]Oh yes, I know. I am not naive.

[00:23:39]In presentations, when I often give the example of the old construction industry in the late 1990s in the Netherlands, with very strong institutional legislation and strong antitrust legislation in place. But once again, it does not absolve you of the obligation to set up that first line of defense. It is dynamic.

[00:24:02]It does not remain, it is not static.

[00:24:04]It is not like those violations are taking place and you have to go back and see how to handle it. That also happened in the Netherlands. People are going to tighten anti-trust legislation towards the building owner, and you continue to do so because you know that man is becoming increasingly ingenious and technology is advancing. So you have to keep tinkering with that framework. It is not the case that you set it up and do not maintain it.

[00:24:29]But what is the importance?

[00:24:29]But you have to have it. But you have to have it, because right now we don't have it.

[00:24:33]But what is the importance? That is what I am working for.

[00:24:35]Was the importance very brief, Mr. Ekhors?

[00:24:38]Was the importance of that anti-corruption law in relation to those oil revenues? Once again, what is the importance of that anti-corruption law in relation to those oil revenues?

[00:24:49]What I just explained. In economic theory, you have something we call resource rent.

[00:24:57]And you have rent seeking and rent siphening. These are concepts related to gaining access to the substantial revenues derived from that natural resource sphere. Whether legally or illegally. That is why you try to protect the people who are capable of doing that, the people who can do that because of their position, from themselves. Hello, are you still there? Yes, I am still here.

[00:25:29]Yes, you are trying to protect yourself from itself, but you are also trying to protect state finances against, uh, against, against burglary.

[00:25:42]uh in the flows intrusion into government revenue in an unauthorized manner. That is why that anti-corruption is important. I often tell people that if you want to see oil thieves, real oil thieves, driving around Paramaribo in a few years, don't protect those state revenues. You have to protect them, otherwise people will—and we have seen this in the past as well— do everything they can to weaken institutions so that they can get to the revenue. To destroy institutions, so that one has access to those revenues.

[00:26:22]But we're not going to... And that's what you want... But we're not going to... uh... assume, for example, that people are going to steal, right?

[00:26:29]No, that is, of course, if only, but our nature is such that we assume that man is good.

[00:26:39]Yes, but where nothing really happens? We also look around us in the world at what has happened, and we also look at our own history, our own economic history, at what has happened. And you don't want it to repeat itself on a larger scale. Because the higher the revenue, the larger the scale can be. of uh of that rent of that rent thing of uh of uh of that corruption. Yes.

[00:27:06]So that is why you say you prepare in all kinds of ways. For I have n't heard you ask about the Public Procurement Act, but that should be fine too.

[00:27:14]Yes, but we will have to do that another time. Mr. Ekhors, we have reached the end of the program.

[00:27:20]Shall we meet again in two weeks, when those EMF people leave, for you to explain a few things to us? Um, check in with me around that time.

[00:27:31]I will do that. Thank you, Karel Ekhors. Have a nice day.