## IMF Executive Board Approves Extended Credit Facility Arrangement for Sudan

_IMF News, June 29, 2021_

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## Bibliographic details
- Published: June 29, 2021

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### Board decision and financing package
- Executive Board approved a 39-month Extended Credit Facility (ECF) arrangement for Sudan in the amount of SDR1,733.051 million (about US$2,472.7 million or 275 percent of quota).
- The decision enables an immediate disbursement equivalent to SDR 991.551 million (about US$1,414.7 million).
- The three-year financing package is intended to support implementation of the authorities’ transformational reform agenda and to catalyze concessional donor financing.

### Objectives and intended outcomes
- Support the authorities’ implementation of their ambitious reform agenda anchored between the Heavily Indebted Poor Countries (HIPC) Decision and Completion Points to support inclusive growth and poverty reduction.
- Help Sudan build greater economic resilience, promote higher and more inclusive growth, and reduce poverty and raise living standards.

### Key policy and reform priorities (from the ECF and Ms. Georgieva’s statement)
- Strengthen public finances and target social safety nets; reduce spending on regressive and distortionary energy subsidies while channeling new resources toward social and infrastructure spending.
- Increase domestic revenue through additional tax measures and administrative improvements, including public financial management (PFM) reforms and actions to strengthen the Large Taxpayer Office.
- Improve debt management to avoid re-accumulation of unsustainable debt.
- Increase central bank independence and supervisory capacity; enact a revised Banking Regulation Act including a comprehensive resolution regime for the banking sector in line with international best practice.
- Implement a dual banking system and re-introduce conventional banking to foster development of more effective monetary instruments.
- Support exchange rate flexibility and adoption of a reserve money targeting regime; guard against reemergence of multiple currency practices.
- Improve governance to foster private sector-led growth: reduce the role of the state, mobilize private investment, establish an independent Anti-Corruption Commission, and design a strategy for the SOE sector to determine privatization and state retention decisions.
- Complete and implement a Poverty Reduction Strategy Paper (PRSP) reflecting stakeholder consensus on a national roadmap to alleviate poverty and identify priority sectors for progress toward the Sustainable Development Goals (SDGs).
- Increase international community provision of financial and technical assistance to support reforms and PRSP implementation.
- Sudan’s request for interim HIPC Initiative assistance on the debt service due to the Fund has been approved; progress in securing commitments from other creditors for HIPC debt relief is noted as welcome.

### Recent economic developments (Annex)
- The economy contracted for a third consecutive year in 2020, though less than expected; growth is expected to pick up gradually starting in 2021 as economic stability is restored.
- Fiscal deficit has come down and is expected to narrow further in 2021, facilitating a reduction of inflation, but both it and the current account deficit remain large.
- Inflation is very high: 379 percent y/y in May 2021.
- Competitiveness is weak.
- Policy actions taken: removal of retail gasoline and most fuel subsidies in December 2020; electricity tariffs increased; progress on bank stress tests and AML/CFT inspections of banks.

### Program summary (reform focus areas coordinated with donors and HIPC floating Completion Point triggers)
- Fiscal sustainability via increased domestic revenue mobilization and reduced expenditure on regressive energy subsidies.
- Increase spending on health, education and other critical services to improve living standards and raise long-term growth.
- Support exchange rate flexibility and adoption of a reserve money targeting regime.
- Increase central bank independence, strengthen the financial sector by implementing a dual banking system, and reform the bank resolution regime.
- Strengthen governance and transparency, especially in the SOE sector.

*IMF Press Release No. 21/198 — June 29, 2021 — IMF Communications Department*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/06/29/pr21198-sudan-imf-executive-board-approves-extended-credit-facility-arrangement_