China Eximbank provides RMB 300 million government concessional loan loan for Phase 1 of Low-Income Housing Project (Linked to Project ID#89505)

On July 27, 2012, China Eximbank and the Government of Suriname signed an RMB 300,000,000 government concessional loan (GCL) agreement for Phase 1 of the Low-Income Housing Project. The GCL carried the following borrowing terms: a 19.2 year maturity, a grace period of 4.7 years, and an interest rate of 2%. The borrower was expected to use the proceeds of the GCL to partially finance a $70 million commercial contract between Surinamese Postal Savings Bank (Surinaamse Postspaarbank or SPSB), Dalian International & Technical Cooperation Group Co Ltd. (CDIG) and the Housing Construction Fund for Lower Income Groups (Fonds Woningbouw Lager Inkomensgroepen). The project involved the construction of 1,000 low-income housing units in the hamlet of Richelieu within Commewijne District and the estate of Oldenburg. It appears to have been part of a larger agreement to construct 5,000 low-income housing units. CDIG was the contractor responsible for project implementation. Construction began on October 3, 2012 and the project was handed over to the local authorities on October 17, 2015. However, there are some indications that the China Eximbank loan issued for Phase 1 of Low-Income Housing Project may have underperformed vis-a-vis lender expectations. The Government of Suriname defaulted on its sovereign debt obligations three times during the COVID-19 pandemic. In December 2021, the International Monetary Fund (IMF) announced that ‘Suriname owes arrears to China and India, which have provided assurances, although less specific than those provided by the Paris Club creditors, that they intend to work with Suriname towards a debt restructuring that will restore sustainability. China has consented to [IMF] financing notwithstanding these arrears. [...] An update will be circulated to the [IMF] Executive Board not later than one week prior to the scheduled Board consideration. On the basis of the Surinamese authorities’ commitment noted above, staff expect that debt to China and India will be treated on comparable terms with other bilateral creditors. The arrears constitute a form of financing contribution to the program. China and India have acknowledged that Suriname will continue to run arrears on their official debt until a debt treatment can be agreed.’ The IMF also disclosed in December 2021 that ‘[t]he stock of external arrears is estimated to be at 11 percent of GDP by end-2021, including arrears of USD 61 million to China.’ Then, in May 2023, the IMF announced the ‘[a]n agreement was reached with Paris Club (PC) creditors for a two-step debt treatment in June 2022, and bilateral agreements with most of the PC creditors have been completed. An agreement-in-principle with bondholders was reached on May 4, 2023. The authorities are actively negotiating in good faith with China and India on a debt restructuring agreement.’

Additional details

1. This project is also known as the 1000 Housing Units Project. The Chinese project title is 司苏里南住房項. 2. Some sources suggest that Phase 1 was rescoped to involve the construction of 550 rather than 1,000 low income housing units (due to an increase in construction costs). This issue warrants further investigation. 3. Surinamese Postal Savings Bank (Surinaamse Postspaarbank or SPSB) is a state-owned bank in Suriname. 4. ICBC also provided a loan in 2018 for Phase 2 of the Low-Income Housing Project (as captured via Project ID#89505). 5. It appears that the China Eximbank loan (captured via Project ID#36772) for Phase 1 of the Low-Income Housing Project and the ICBC loan (captured via Project ID#89505) for Phase 2 of the Low-Income Housing Project may have been jointly used to finance the $70 million commercial contract between Surinamese Postal Savings Bank (Surinaamse Postspaarbank or SPSB), Dalian International & Technical Cooperation Group Co Ltd. (CDIG) and the Housing Construction Fund for Lower Income Groups (Fonds Woningbouw Lager Inkomensgroepen). However, this issue requires further investigation.

Number of official sources

13

Number of total sources

25