## IMF Executive Board Concludes 2016 Article IV Consultation with Sudan

_IMF News, October 4, 2016_

## Source details

**Canonical URL:** [IMF Executive Board Concludes 2016 Article IV Consultation with Sudan](https://www.imf.org/en/news/articles/2016/10/04/pr16444-sudan-imf-executive-board-concludes-2016-article-iv-consultation)

## Other formats

- [Markdown version](/en/news/articles/2016/10/04/pr16444-sudan-imf-executive-board-concludes-2016-article-iv-consultation/index.md)
- [Structured JSON version](/en/news/articles/2016/10/04/pr16444-sudan-imf-executive-board-concludes-2016-article-iv-consultation/index.json)
- [Bundle manifest](/en/news/articles/2016/10/04/pr16444-sudan-imf-executive-board-concludes-2016-article-iv-consultation/bundle-manifest.json)

## Bibliographic details
- Published: October 4, 2016

---

### Overview
- Date of press release: October 4, 2016.
- On September 7, 2016, the Executive Board of the IMF concluded the Article IV consultation with Sudan.
- Sudan characterized as a low-income fragile country facing significant domestic and international constraints and large macroeconomic imbalances.
- Key structural constraints: loss of three-quarters of oil exports following South Sudan’s secession, weak policies, internal conflicts, U.S. sanctions, withdrawal of correspondent banking relationships, and absence of progress toward debt relief.
- Humanitarian situation described as difficult.

### Recent macroeconomic developments
- Recovery and stabilization since 2011 secession: policy adjustments helped contain the fiscal deficit, slow money growth, reduce inflation, support economic recovery; institutional reforms strengthened tax collections and public financial management; social spending increased.
- Growth and production:
  - Good harvests boosted growth to close to 5 percent in 2015.
  - Oil sector contraction and non-oil dynamics described as binding constraints on growth prospects.
- External imbalances and reserves:
  - Terms-of-trade shock widened the current account deficit to 6 percent of GDP in 2015.
  - Foreign exchange reserves dropped to 1½ month of imports despite external financial support.
  - Parallel exchange rate continued to depreciate; parallel market premium soared to 165 percent as official rate remained virtually fixed.
- Fiscal and price developments:
  - Budget deficit widened to 1.9 percent of GDP owing to shortfalls in oil revenue.
  - Inflation: 12.6 percent at end-2015 (from 25.7 percent a year before), rising to 16.5 percent in July 2016.

- IMF arrears and payments:
  - Sudan remains in debt distress and eligible for debt relief under the HIPC Initiative.
  - Sudan’s arrears to the Fund declined to about SDR 969 million at end-June 2016 following payments of $10 million each in 2014 and 2015, and $5 million in the first half of 2016.
  - Authorities intend to engage with international partners to secure debt relief and lifting of sanctions and are committed to strengthening cooperation with the IMF on policies and payments.

### Outlook and risks
- Growth projection and risks:
  - Growth expected to remain modest at 3–3½ percent in 2016 and beyond.
  - Downside risks: low commodity export prices, absence of policy buffers, economic sanctions, withdrawal of foreign correspondent banking relationships, weak business environment, internal conflicts.
- Fiscal and external financing risks:
  - Fiscal framework faces risks due to low tax revenues and uncertain oil revenues.
  - Large external financing gaps are likely to persist.
- Debt relief and financing:
  - Large external debt and arrears hinder access to external financing and weigh on development prospects.
  - Garnering international support for debt relief seen as critical to pave the way for foreign investment and financing for growth and poverty reduction.

### Executive Board Assessment — Policy recommendations and priorities
- Fiscal policy:
  - Importance of continued fiscal consolidation.
  - Encourage containing spending on goods and services while protecting social spending and prioritizing capital spending.
  - Accelerate ongoing revenue administration reforms.
  - Stronger domestic revenue mobilization deemed essential given low tax revenues.
- Monetary policy and financial sector:
  - Call for tightening monetary policy to keep inflation in check.
  - Adhere to limits on central bank advances to the government and limit quasi‑fiscal activities to levels consistent with monetary targets.
  - Develop liquidity management instruments and strengthen central bank capacity to mitigate financial stability risks.
  - Welcome Sudan’s removal from the Financial Action Task Force’s “gray list”; call for continued strengthening of the AML/CFT framework.
- Exchange rate and external sector:
  - Emphasized need to adjust the exchange rate and move toward greater flexibility to improve competitiveness and reduce the parallel market premium.
  - Encourage preparing a timetable for removal of foreign exchange restrictions and multiple currency practices as soon as possible.
- Structural reforms and social policy:
  - Advance structural policies to foster sustained and inclusive growth: improve business environment, financial inclusion, quality of spending to support human capital.
  - Expand social safety nets and improve targeting to reduce poverty; note initial preparations of a Poverty Reduction Strategy.
- Debt relief and external relations:
  - Recognized importance of garnering international support for comprehensive debt relief.
  - Call to minimize non‑concessional borrowing and avoid selective servicing of bilateral debt.
  - Encourage extension of the “zero option” agreement with South Sudan before it expires in October 2016 and strengthening joint outreach for debt relief by the two countries.
- Cooperation with the IMF:
  - Encourage authorities to continue to strengthen cooperation with the Fund on policies and payments.
  - Advise making regular payments to the Fund at least sufficient to cover Sudan’s obligations falling due and to increase them in line with improvement in Sudan’s payment capacity.

### Key economic indicators (2012–17)
- Output and prices (Annual change in percent)
  - Real GDP (factor cost): 2012: -2.2; 2013: 5.3; 2014: 1.6; 2015: 4.9; 2016: 3.0; 2017 (Proj.): 3.5
  - Oil: 2012: -59.0; 2013: 57.8; 2014: -13.2; 2015: -10.0; 2016: -7.6; 2017 (Proj.): 0.4
  - Non-oil: 2012: 4.6; 2013: 2.8; 2014: 2.7; 2015: 5.8; 2016: 3.6
  - Consumer prices (end of period): 2012: 44.4; 2013: 41.9; 2014: 25.7; 2015: 12.6; 2016: 16.5; 2017 (Proj.): 13.7
  - Consumer prices (period average): 2012: 35.4; 2013: 36.5; 2014: 36.9; 2015: 16.9; 2016: 13.5; 2017 (Proj.): 16.1

- Central government finances (In percent of GDP)
  - Revenue and grants: 2012: 9.9; 2013: 11.0; 2014: 12.0; 2015: 9.8; 2016: 9.6; 2017 (Proj.): (not listed)
  - Of which: Nonoil revenues: 2012: 6.9; 2013: 8.3; 2014: 9.0; 2015: 8.6; 2016: 8.2
  - Of which: Oil revenues: 2012: 2.6; 2013: 2.0; 2014: 2.4; 2015: 1.7; 2016: 0.8; 2017 (Proj.): 1.1
  - Expenditure: 2012: 13.3; 2013: 13.4; 2014: 12.9; 2015: 11.9; 2016: 11.7
  - Overall balance: 2012: -3.3; 2013: -2.3; 2014: -1.4; 2015: -1.9; 2016: -2.1
  - Primary balance: 2012: -1.8; 2013: -0.5; 2014: -1.1; 2015: -1.3; 2016: -1.5

- Monetary sector (Annual changes in percent)
  - Broad money: 2012: 40.3; 2013: 13.0; 2014: 17.0; 2015: 19.8; 2016: 25.5; 2017 (Proj.): 22.8
  - Credit to the economy: 2012: 34.1; 2013: 23.2; 2014: 17.6; 2015: 20.8; 2016: 18.7

- Balance of payments (In percent of GDP, unless otherwise indicated)
  - Exports of goods (in US$, annual percent change): 2012: -53.7; 2013: -4.4; 2014: -9.0; 2015: -28.8
  - Imports of goods (in US$, annual percent change): 2012: 2.3; 2013: -7.0; 2014: 3.2; 2015: -2.8; 2016: 7.5
  - Current account balance (cash basis): 2012: -6.7; 2013: -6.2; 2014: -4.8; 2015: -5.9; 2016: -4.2; 2017 (Proj.): -3.6

- External debt and reserves
  - External debt (percent of GDP): 2012: 68.9; 2013: 68.7; 2014: 65.8; 2015: 61.4; 2016: 55.9; 2017 (Proj.): 49.5
  - External debt (in billions of US$): 2012: 43.2; 2013: 45.0; 2014: 46.8; 2015: 50.0; 2016: 52.6; 2017 (Proj.): 55.6
  - Gross international reserves (in billions of US$): 2012: 1.5; 2013: 1.0; 2014: 0.9
  - In months of next year's imports of G&S: 2012: 1.9; 2013: 1.2
  - Exchange rate (official SDG/US$, period average): 2012: 4.8; 2013: 5.7; 2014: 6.0; 2015: …

*IMF Press Release No. 16/444 — IMF Communications Department, October 4, 2016.*

---


## References

- [Read the Report](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44323.0)
- [Sudan and the IMF](http://www.imf.org/external/country/SDN/index.htm)
- [Republic of South Sudan and the IMF](http://www.imf.org/external/country/SSD/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2016/10/04/pr16444-sudan-imf-executive-board-concludes-2016-article-iv-consultation_