ICBC provides $30 million loan for Phase 2 of Low-Income Housing Project (Linked to Record ID#36772)

Project narrative

On March 27, 2018, the Industrial and Commercial Bank of China (ICBC) and the Surinamese Postal Savings Bank (Surinaamse Postspaarbank or SPSB) — a state-owned bank in Suriname — signed a $30 million loan agreement for Phase 2 of the Low-Income Housing Project. The loan carries a 3-year (36-month) maturity. The other borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds of the loan to partially finance a $70 million commercial contract between SPSB, Dalian International & Technical Cooperation Group Co Ltd. (CDIG) and the Housing Construction Fund for Lower Income Groups (Fonds Woningbouw Lager Inkomensgroepen). The Government of Suriname issued a sovereign guarantee in support of the ICBC loan to SPSB on March 27, 2018. The purpose of this project is to construct 700 low-income housing units in the locality of Morgenstond (Dutch: Morgenstaat). CDIG is the contractor responsible for implementation. The project officially commenced on or around March 16, 2018. It has reportedly employed 100 Chinese workers and 300 Surinamese workers. However, as of March 2022, AidData had not identified any evidence of project completion. There are some indications that the ICBC loan issued for Phase 2 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.’