International Monetary Fund (IMF) Staff Concludes Mission to South Sudan for Mid-Term Review of Staff Monitored Program with Board Involvement
An International Monetary Fund (IMF) staff team, led by Mr. Niko Hobdari, visited South Sudan during May 3-12, 2023. The team held discussions with the authorities on the 9-month Staff-Monitored Program with Board Involvement (PMB) that was approved by IMF management in February 2023. At the end of the visit, Mr. Hobdari issued the following statement:
“The authorities are implementing prudent fiscal and monetary policies. All but one end-March 2023 quantitative targets under the PMB were met. In particular, the Bank of South Sudan (BoSS) has continued to refrain from monetary financing of the budget since August 2022. As a result, the level of reserve money has remained broadly unchanged since end-August 2022, which will help stabilize the economy. The authorities have also met the end-March 2023 quantitative targets on international reserves, BoSS net credit to the government, the payment of salaries to central government workers, and the non-contracting and non-guaranteeing of new non-concessional debt by the central government.
“Humanitarian and macroeconomic conditions have deteriorated since the start of the fighting in Sudan in mid-April 2023. The return of tens of thousands of South Sudanese refugees from Sudan is exacerbating an already-dire humanitarian situation. Even before the Sudan crisis, two-thirds of the South Sudanese population was experiencing severe food insecurity. The spillovers from Sudan have also significantly affected cross border trade. As a result, the prices of fuel, medical goods, and essential food staples have spiked in the border areas. This has contributed to the continuing depreciation of the South Sudanese Pound, despite increased reserves and a tight monetary policy followed by the BoSS.
“The mission held discussions with the authorities on steps to address the negative effects South Sudan is already experiencing from the Sudan crisis and to prepare contingency plans in case of an even larger fallout. To that end, the mission is encouraged that a Memorandum of Understanding has already been signed with the World Food Programme and another is expected to be signed shortly with the International Organization of Migration, which would allow the release of the US$20 million from the Food Shock Window (FSW) disbursement of the IMF’s Rapid Credit Facility (RCF) allocated to these institutions under the PMB to provide immediate humanitarian assistance to those most in need. Nevertheless, dealing with the Sudan crisis spillovers will require a more determined response. The mission therefore urged the authorities to suspend non-critical spending to create a buffer to deal with the increasing costs from the spillovers and leave room for maneuver if the situation deteriorates further.
“The mission reached agreement with the authorities on steps to take forward key governance and transparency reforms targeted under the PMB. These include the adoption by the Transitional National Legislative Assembly of amendment to the BoSS Act that would strengthen BoSS independence in line with international best practices; the publication of oil revenue and budget execution reports; the adoption of timebound action plans to strengthen public debt management and initiate banking sector reform; and addressing the findings and recommendations of the Auditor General’s reports on the two RCF disbursements of November 2020 and March 2021.
“Discussion will continue in the coming weeks on a FY2023/24 budget that is consistent with a realistic resource envelope, with a view to supporting macroeconomic stability and maintaining public debt sustainability, enabling the completion of the first PMB review.
“The IMF mission met with the First Vice President Mr. Riek Machar, Minister of Finance and Planning Mr. Dier Tong Ngor, Minister of Petroleum Mr. Puot Kang Chol, Governor of the Bank of South Sudan Mr. Johnny Ohisa Damian, Minister of General Education and Instruction Ms. Awut Deng Acuil, Commissioner General of the National Revenue Authority Mr. Patrick Mugoya, and other high-level government officials, and representatives of the diplomatic community, private sector, and civil society. The IMF team thanks the authorities for their hospitality and the productive discussions.”
Distributed by APO Group on behalf of International Monetary Fund (IMF).