September 23, 2020
PRESS OFFICER: Nadya Saber
Phone: +1 202 623-7100Email: MEDIA@IMF.org
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.
