June 12, 2024

IMF Urges Swift Action to Address South Sudan’s Economic Challenges

President Salva Kiir Mayardit of South Sudan
President Salva Kiir Mayardit of South Sudan

An International Monetary Fund (IMF) staff team, led by Mr. Niko Hobdari, completed their visit to South Sudan on May 12, 2023, with a clear message: urgent action is needed to address the country’s economic challenges.

The IMF team held discussions with South Sudanese authorities regarding the spillover effects of the conflict in neighboring Sudan, which have exacerbated the country’s economic difficulties. Tens of thousands of refugees and disruptions in cross-border trade of essential commodities such as food, medical supplies, fuel, and oil-related inputs have taken a toll on the economy.

Recognizing the authorities’ implementation of prudent fiscal and monetary policies, the IMF team expressed concerns about the deteriorating humanitarian and macroeconomic conditions caused by the Sudan crisis. The return of South Sudanese refugees and the impact on cross-border trade have intensified the country’s already dire humanitarian situation.

In light of these challenges, the IMF team emphasized the need for immediate action. They urged the suspension of non-critical spending and the creation of buffers to mitigate the increasing costs and uncertainties arising from the spillover effects. The team also called for swift agreements with international organizations, such as the World Food Programme and the International Organization for Migration, to provide essential humanitarian assistance to the most vulnerable populations.

Furthermore, the IMF team reached an agreement with South Sudanese authorities on key governance and transparency reforms. These reforms aim to strengthen the independence of the Bank of South Sudan, enhance public debt management, initiate banking sector reforms, and address recommendations from the Auditor General’s reports.

Looking ahead, discussions will continue on the FY2023/24 budget, with a focus on supporting macroeconomic stability and maintaining public debt sustainability. The completion of the first review is crucial to establish a track record and pave the way for future IMF-supported financing.

The IMF team expressed gratitude for the productive discussions held with high-level government officials, including the First Vice President, the Minister of Finance and Planning, the Minister of Petroleum, and the Governor of the Bank of South Sudan. They also met with representatives from the diplomatic community, private sector, and civil society.

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