IMF Management Completes First Review of Staff-Monitored Program with Sudan

IMF News, March 8, 2021

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Press Release No. 21/63 dated March 8, 2021.
The Managing Director of the IMF, Kristalina Georgieva, approved the first review of Sudan’s Staff-Monitored Program (SMP) on March 5, 2021.
The SMP supports the government’s home-grown program of reforms aimed at:
- stabilizing the economy,
- strengthening social protection,
- boosting the private sector,
- strengthening governance.
Footnote definition: An 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 Sudanese authorities have made tangible progress toward establishing a strong track record of policy and reform implementation—a key requirement for eventual debt relief.
Specific policy actions taken:
- recent exchange rate unification,
- removal of fuel subsidies,
- tax measures taken as part of the 2021 budget,
- increase in electricity tariffs.
Expected effects of these measures:
- reduce distortions in the economy,
- facilitate fiscal consolidation,
- reduce monetization,
- help bring down the current high rate of inflation,
- create fiscal space for much-needed social spending,
- boost central bank independence by reducing fiscal dominance,
- incentivize financial flows through the financial system,
- minimize opportunities for rent-seeking activities.

The economic situation remains extremely fragile with:
- low growth,
- high inflation,
- a weak external position.
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,
- avoid a return to distortionary policy measures, including multiple currency practices and fiscal subsidies,
- enhance transparency and management of State-Owned Enterprises operations to mitigate fiscal risks and bring more revenue on-budget,
- timely adopt the Central Bank Act,
- establish an independent anti-corruption commission to help strengthen institutional independence and governance.

Significant financial assistance from the international community will be needed to:
- incentivize reform,
- support the Sudanese population through the difficult transition to a well-functioning market-based economy.
Such assistance must be accompanied by strong coordination among donors and IFIs on financial and technical assistance.

Imf Press Release No. 21/63, March 8, 2021.