Washington, DC:
The Executive Board of the International Monetary Fund (IMF) endorsed the
Staff-Monitored Program (SMP) approved by the Managing Director on
September 9, 2020 as meeting the Upper Credit Tranche Conditionality (UCT)
standard.
[1]
Following the Executive Board discussion, Ms. Antoinette Sayeh, Deputy
Managing Director and Acting Chair, made the following statement:
“With the move to a transitional government, Sudan now has a window of
opportunity for fundamental reforms to address major macro imbalances and
lay the groundwork for inclusive growth. The transitional government has
laid out a home-grown program of reforms aimed at stabilizing the economy,
removing distortions, improving competitiveness, and strengthening
governance. The authorities have requested an IMF Staff-Monitored Program
to establish a track record on policy and reform implementation, which is a
requirement for eventual debt relief visa-vis official creditors.
“The COVID-19 pandemic has compounded the challenges facing the country.
Fiscal and external imbalances are large, inflation is high at 167 percent
in August and rising, and competitiveness is weak. The humanitarian
situation is dire with large numbers of internally displaced people and
refugees.
“Under the 12-month SMP covering July 1, 2020 – June 30, 2021, the
authorities plan to continue the process of eliminating large fuel
subsidies making space for greater social spending, including for the Sudan
Family Support Program and health spending; the tax base will also be
broadened, including through the rationalization of tax exemptions. The
resulting fiscal adjustment is key to reducing monetization and inflation.
The authorities also intend to take measures toward a unified
market-clearing exchange rate. The 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 also be important.
“Sudan’s external debt is high and with longstanding arrears which severely
limit access to external borrowing. In particular, Sudan remains unable to
access IMF resources because of its continued arrears to the Fund. A strong
track record of macroeconomic performance and implementation of reforms,
together with a comprehensive strategy of arrears clearance and debt relief
supported by Sudan’s development partners, is required for addressing
Sudan’s high debt overhang.”
[1]
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.