WASHINGTON, DC (Sudanow) — The Managing Director of the IMF, Kristalina Georgieva, approved the first review of Sudan’s Staff-Monitored Program (SMP) on March 5, 2021.
SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail financial assistance or endorsement by the IMF Executive Board.
The IMF official issued the following statement on Monday:
“The Sudanese authorities have made tangible progress on their IMF-supported reform program despite difficult economic conditions compounded by the COVID-19 pandemic, and a challenging humanitarian situation.
The recent exchange rate unification, removal of fuel subsidies, tax measures taken as part of the 2021 budget, and increase in electricity tariffs will reduce distortions in the economy and facilitate fiscal consolidation. This should reduce monetization, help bring down the current high rate of inflation, and create fiscal space for much-needed social spending. Such measures should also boost central bank independence by reducing fiscal dominance, incentivize financial flows through the financial system, and minimize opportunities for rent-seeking activities.
The economic situation in Sudan still remains extremely fragile, with low growth, high inflation and a weak external position posing a threat to macroeconomic stability and poverty reduction. To sustain progress and fulfill the requirements for HIPC debt relief, the authorities should implement the reform of the customs exchange rate in a timely fashion to lift revenue and competitiveness, and avoid a return to distortionary policy measures, including multiple currency practices and fiscal subsidies. Enhanced transparency and management of State-Owned Enterprises operations is vital to mitigate fiscal risks and bring more revenue on-budget. The timely adoption of the Central Bank Act and establishment of an independent anti-corruption commission will help strengthen institutional independence and governance.
Significant financial assistance from the international community will be needed to incentivize reform and to support the Sudanese population through the difficult transition to a well-functioning market-based economy. This must be accompanied by strong coordination among donors and IFIs on financial and technical assistance.”
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