IMF approves Sudan’s reform programme heading for debt relief
Khartoum, Sudan (PANA) - The Executive Board of the International Monetary Fund (IMF) has endorsed Sudan’s Staff-Monitored Programme (SMP) which was approved by the IMF Managing Director on 9 September 2020 as meeting the Upper Credit Tranche Conditionality (UCT) standard.
A statement from the IMF on Thursday said the 12-month SMP will support the government’s home-grown programme of reforms aimed at stabilising the economy, improving competitiveness, and strengthening governance in Sudan.
Following the Executive Board discussion in Washington, DC, IMF Deputy Managing Director and Acting Chair, Ms. Antoinette Sayeh, remarked that with the move to a transitional government, Sudan now has a window of opportunity for fundamental reforms to address major macro imbalances and lay the groundwork for inclusive growth.
She said the transitional government has laid out a home-grown programme of reforms aimed at stabilising the economy, removing distortions, improving competitiveness, and strengthening governance.
“The authorities have requested an IMF Staff-Monitored Programme to establish a track record on policy and reform implementation, which is a requirement for eventual debt relief visa-vis official creditors.
“The COVID-19 pandemic has compounded the challenges facing the country. Fiscal and external imbalances are large, inflation is high at 167 percent in August and rising, and competitiveness is weak. The humanitarian situation is dire with large numbers of internally displaced people and refugees,” Ms. Sayeh pointed out. .
Under the 12-month SMP covering July 1, 2020 – June 30, 2021, the Sudanese authorities plan to continue the process of eliminating large fuel subsidies making space for greater social spending, including for the Sudan Family Support Programme and health spending; the tax base will also be broadened, including through the rationalisation of tax exemptions.
According to the IMF Board, the resulting fiscal adjustment is key to reducing monetisation and inflation. The authorities also intend to take measures toward a unified market-clearing exchange rate.
The removal of economic distortions together with measures to improve governance will reduce opportunities for corruption and help strengthen the business environment and competitiveness.
“A key element to the success of the program is sufficient donor funding to support the population through the difficult transition to a well-functioning market-based economy. Strong coordination among donors and IFIs on technical assistance to Sudan will also be important,” Ms. Sayeh said.
Sudan’s external debt is high and with longstanding arrears which severely limit access to external borrowing. In particular, the country remains unable to access IMF resources because of its continued arrears to the Fund.
“A strong track record of macroeconomic performance and implementation of reforms, together with a comprehensive strategy of arrears clearance and debt relief supported by Sudan’s development partners, is required for addressing Sudan’s high debt overhang,” Ms. Sayeh added.
-0- PANA AR 24Sept2020
