China Eximbank provides $235 million government concessional loan for Dalian IV Road Infrastructure Project (Linked to Project ID#36735, #55908 and #36690)

On December 14, 2016, China Eximbank and the Government of Suriname signed a $235 million government concessional loan (GCL) agreement [China Eximbank GCL NO (2016) 11 TOTAL NO. (581)] for the Dalian IV Road Infrastructure Project. The GCL carried the following borrowing terms: a 2% interest rate, a 15-year maturity, and a 5-year grace period. The proceeds of the GCL were to be used by the borrower to finance a commercial contract between the Government of Suriname and Dalian International & Technical Cooperation Group Co Ltd. (CDIG), which was signed in August 2013. The purpose of the project was to add a layer of asphalt to 110 km of existing roads and construct or renovate four bridges. In particular, the project supported the Beekhuizen Bridge, Van Het Hogerhuysstraat Bridge, a bridge over the Saramacca Canal (Saramaccadoorsteek) near Beekhuizen as an extension of the Industrieweg-Zui, New Zanderij-Highway (also known as the 10.3 km Afobakaweg-Zanderij Highway and the Afobakaweg-Johan Adolf Pengel Airport Highway), a 42.5 km East-West connecting road to Wanhati-Tamarin, and Martin Luther Kingweg (Highway). CDIG was the contractor responsible for implementation. The project, which was divided into two lots (Lot A and Lot B), entered implementation on October 11, 2017 and was completed on August 31, 2019. However, there are some indications that the China Eximbank loan issued for the Dalian IV Road Infrastructure 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 Dalian IV Project or Phase IV Road Project. The Chinese project title is 大连四期项目. 2. This project is the fourth phase in China Dalian International Economic & Technical Cooperation Group Co., Ltd ongoing efforts to rehabilitate roads in Suriname. It is linked to Dalian III (captured via Project ID#36735) and Dalian I (captured via Project ID#55908) and II (captured via Project ID#36690). 3. Sources that do not have a language specified are in Dutch. 4. The GCL from China Eximbank was denominated in RMB, but only its USD equivalent is known. This issue warrants further investigation. 5. One official source (https://www.rekenkamer.sr/rapporten-en-statistieken/rekenkamer-jaarverslagen?download=20:rekenkamer-verslag-2017) indicates that the loan agreement (official commitment) date is January 26, 2017 rather than December 14, 2016. This issue warrants further investigation.

Number of official sources

14

Number of total sources

29