IMF Staff and Republic of South Sudan Hold Discussions on Second Review of Staff Monitored Program and Article IV Consultation
IMF News, March 28, 2022
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Bibliographic details
- Published: March 28, 2022
Mission and context
- Press Release No. 22/90
- Date of statement: March 28, 2022
- IMF staff mission led by Mr. Niko Hobdari visited South Sudan from March 14 to March 25, 2022.
- End-of-Mission press release: views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
Economic challenges and shocks
- South Sudan faces unprecedented challenges owing to the pandemic, rising international fuel and food prices from the war in Ukraine, and three consecutive years of extensive floods.
- This year’s flooding has caused large output losses in the oil and agricultural sectors and exacerbated the country’s difficult humanitarian situation.
- A record share of the population is expected to experience acute food insecurity during the coming lean season.
- The recent rise in global commodity prices from the war in Ukraine will increase South Sudan’s revenues from oil exports, while most of the population will experience the impact in the form of higher prices of everyday goods—especially food and fuel.
Monetary and exchange rate reforms and outcomes
- The SMP has underpinned key monetary and exchange rate reforms and seeks to support macroeconomic stability and reinforce fiscal discipline and budget transparency.
- Last year’s successful monetary and exchange rate reform eliminated the gap between parallel and official rates and stabilized the value of the South Sudanese pound (SSP).
- Removal of restrictions in the foreign-exchange market has enabled individuals and firms to buy and sell foreign currency at predictable and competitive rates.
- Prudent control of the money supply by the Bank of South Sudan (BoSS) resulted in an appreciation of the SSP which has mitigated some of the rises in global prices.
- Authorities reiterated commitments to:
- refrain from monetary financing of the deficit and keep money growth under control;
- continue conducting regular foreign exchange auctions to maintain a market determined exchange rate;
- expand the instruments available for foreign exchange and liquidity management.
Fiscal developments and budgetary guidance
- The recent approval of the 2021/22 budget by the Transitional National Legislative Assembly (TNLA) presents an opportunity to improve budget management for the remainder of the current fiscal year.
- Higher than anticipated oil prices and the good performance of non-oil revenue, in addition to the fulfillment of commitments under the Transitional Financial Agreement with Sudan, have increased fiscal space.
- Given the absence of social safety nets, the mission welcomed the authorities’ commitment to progressively reduce salary arrears and eliminate them by the end of the fiscal year.
- Recommended fiscal management actions:
- Use increased fiscal space to clear salary arrears as a matter of priority.
- Focus budget resources in a timely manner on priority spending, especially in health and education.
- Make budget releases in a timely fashion and in line with approved allocations, based on regular consideration by the recently established cash management committee.
- Increase transparency of government revenue and spending, including by publishing quarterly budget execution reports that include comprehensive information on oil production and associated government revenues.
- For the 2022/23 budget:
- Set a realistic resource envelope.
- Ensure the budget calendar allows presentation to the TNLA in time for its approval before the start of the fiscal year.
- Use indicative quarterly cash planning to ensure no further arrears are accumulated and priority spending is protected.
- If oil revenues prove more buoyant than forecast, build additional international reserves to insure against future shocks.
Performance under the Staff-Monitored Program (SMP)
- Performance under the SMP has been broadly in line with expectations.
- All but one of the quantitative targets have been met, with the clearance of arrears being the only exception.
- Progress has been made on a number of structural benchmarks.
- Mission encouragements and expectations:
- Complete and publish the audit of spending financed by disbursements under the Rapid Credit Facility and implement the recommendations of the Auditor General.
- Publish external debt data and ensure its integrity going forward.
- Ensure that any future external borrowing is screened by the Loan Committee and approved by the TNLA.
- Discussions on the completion of the SMP review to continue in the context of the forthcoming Spring Meetings.
Stakeholder engagement
- The IMF team met with:
- President Salva Kiir Mayardit;
- First Vice President Riek Machar;
- First Deputy Speaker of TNLA Honorable Oyet Nathaniel Perieno;
- Minister of Finance and Planning Mr. Agak Achuil Lual;
- Minister of Roads and Bridges Mr. Simon Mijok Mijak;
- Minister of Petroleum Mr. Puot Kang Chol;
- Minister of Education Ms. Awut Deng Acuil;
- Minister of Agriculture and Forestry Ms. Josephine Lagu Joseph;
- Governor of the Bank of South Sudan Mr Moses Makur Deng;
- Auditor General Mr. Steven Wondu;
- other high-level government officials and members of TNLA, and representatives of the diplomatic community, private sector and civil society.
- The IMF team thanked the authorities for their hospitality and the productive discussions.
IMF Communications Department — Media Relations; Press Officer: Nicolas Mombrial; Phone: +1 202 623-7100; Email: MEDIA@IMF.org