China Eximbank provides RMB 1.4 billion government concessional loan for J.A. Pengel International Airport Expansion Project

On November 27, 2019, China Eximbank and the Government of Suriname signed an RMB 1.4 billion government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2019) 16 TOTAL NO (687)] for the J.A. Pengel International Airport Expansion Project. The borrowing terms of the GCL are as follows: a 20-year maturity, a 5-year grace period, an interest rate of 2%, a commitment fee of 0.25%, and a management fee of 0.25%. The proceeds of the loan were to be used by the borrower to finance a $199 million USD commercial contract with China Harbour Engineering Corporation (CHEC). The purpose of the project is to construct a new terminal at J.A. Pengel International Airport (exact locational coordinates: 5.4527, -55.1873) that connects the arrival and departure facilities, and doubling the current airport size. CHEC is the contractor responsible for implementation. In February 2021, the Suriname Ministry of Public Works announced that the project was halted for the time being and under evaluation. No other reasons were were provided about the halting of the project. However, there are some indications that the China Eximbank loan issued for the .A. Pengel International Airport Expansion 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. The Chinese project title is 彭戈尔国际机场扩建项目 or 苏里南机场项目. This project is also known as the Johan Adolf Pengel International Airport Expansion Project. 2. It is unclear if the China Eximbank loan agreement has been suspended or is being renegotiated. This issue warrants further investigation.

Number of official sources

10

Number of total sources

14