IMF Board Endorses Staff-Monitored Program for Sudan

IMF News, September 24, 2020

Source details

Press Release No. 20/298; Date: September 23, 2020.
The Executive Board endorsed Sudan’s Staff-Monitored Program (SMP), which was approved by the Managing Director on September 9, 2020, as meeting the Upper Credit Tranche Conditionality (UCT) standard.
Duration: 12-month SMP covering July 1, 2020 – June 30, 2021.
SMP nature: 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 COVID-19 pandemic has compounded Sudan’s difficulties.
Fiscal and external imbalances are described as large.
Inflation: 167 percent in August and rising.
Competitiveness: characterized as weak.
Humanitarian situation: dire, with large numbers of internally displaced people and refugees.
External debt: high with longstanding arrears that severely limit access to external borrowing.
Sudan remains unable to access IMF resources because of its continued arrears to the Fund.

Primary objective: establish a strong track record of policy and reform implementation—a key requirement for eventual debt relief.
The SMP will support the government’s home-grown program of reforms aimed at:
- stabilizing the economy,
- improving competitiveness,
- strengthening governance.
Fiscal measures and public spending:
- Continue the process of eliminating large fuel subsidies to make space for greater social spending, including for the Sudan Family Support Program and health spending.
- Broaden the tax base, including through the rationalization of tax exemptions.
- The resulting fiscal adjustment is key to reducing monetization and inflation.
Exchange rate policy:
- Authorities intend to take measures toward a unified market-clearing exchange rate.
Governance and competitiveness:
- 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 be important.
Addressing Sudan’s high debt overhang requires:
- A strong track record of macroeconomic performance and implementation of reforms,
- A comprehensive strategy of arrears clearance and debt relief supported by Sudan’s development partners.

Statement made by Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, following the Executive Board discussion.

IMF Press Release No. 20/298 — "IMF Board Endorses Staff-Monitored Program for Sudan" (September 23, 2020).