The Sudanese authorities have requested a 12-month Staff-Monitored program (SMP) to support their efforts to restore macroeconomic stability, lay the foundation for strong and inclusive growth, mobilize external financing, make progress toward debt relief under the Heavily Indebted Poor Country (HIPC) initiative, as well as cope with the impact of COVID-19. An IMF mission led by Mr. Daniel Kanda held virtual meetings with the authorities from June 8-21, 2020 to discuss their reform package. At the end of the mission, Mr. Kanda issued the following statement:
“The Sudanese authorities and IMF staff have reached a staff-level agreement on policies and reforms that can underpin an SMP, subject to approval by the IMF’s management. An and Executive Board discussion is envisaged in August. The SMP aims at narrowing large macroeconomic imbalances, reducing structural distortions that hamper economic activity and job creation, strengthening governance and social safety nets, and making progress towards eventual HIPC debt relief.
“The Sudanese economy is facing daunting social and economic challenges. The economy contracted by 2.5 percent in 2019 and is projected to shrink by 8 percent in 2020 as the COVID-19 pandemic weighs heavily on the economy. Inflation is very high and rising—114 percent in May—and the Sudanese Pound continues to depreciate rapidly. Sudan’s debt burden remains unsustainable, at over 190 percent of GDP in 2019, the bulk of which was in arrears.
“The authorities have presented a homegrown reform package to stabilize the economy and foster strong and inclusive growth. The focus is on reducing fiscal and external deficits to contain inflation, strengthening social programs to mitigate the impact of adjustment and address the fallout of COVID-19, and improving the business environment and governance. In support of these objectives, the reform package envisages increasing domestic revenue and reforming energy subsidies to create room for increased spending on social programs (including for the health sector and cash-transfers to families). Prudent monetary policy and exchange rate reform will help reduce inflation, bolster external competitiveness, and support economic recovery. Tackling corruption and improving the business environment, to stimulate growth and job creation, are also key elements of the program.
“IMF staff continue to support the authorities’ efforts to reach out to international partners to mobilize adequate financing for the reform program and support progress toward debt relief under HIPC.
“The IMF team met with Finance Minister Elbadawi, Central Bank Governor Zeinelabdin, and other officials from the Ministries of Finance and Economic Planning, Energy and Mining, Justice, and the Central Bank of Sudan, Bureau of Taxation, Customs, the Central Bureau of Statistics, and other officials. In addition, the team met representatives from development partners.
“The team would like to thank the Sudanese authorities for their cooperation and the open and productive discussions.”
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