Press Release No. 21/63

IMF Management Completes First Review of Staff-Monitored Program with Sudan

March 8, 2021

• The IMF Managing Director approved the first review of Sudan’s Staff-Monitored Program (SMP), which supports the government’s home-grown program of reforms aimed at stabilizing the economy, strengthening social protection, boosting the private sector, and strengthening governance.
• The Sudanese authorities have made tangible progress toward establishing a strong track record of policy and reform implementation—a key requirement for eventual debt relief.
• It will be important to make sustained progress under the SMP over the coming months, and for donors to provide Sudan with sufficient support through its transition.

Washington, DC: The Managing Director of the IMF, Kristalina Georgieva, approved the first review of Sudan’s Staff-Monitored Program on March 5, 2021 and issued the following statement: [1]

“The Sudanese authorities have made tangible progress on their IMF-supported reform program despite difficult economic conditions compounded by the COVID-19 pandemic, and a challenging humanitarian situation.

The recent exchange rate unification, removal of fuel subsidies, tax measures taken as part of the 2021 budget, and increase in electricity tariffs will reduce distortions in the economy and facilitate fiscal consolidation. This should reduce monetization, help bring down the current high rate of inflation, and create fiscal space for much-needed social spending. Such measures should also boost central bank independence by reducing fiscal dominance, incentivize financial flows through the financial system, and minimize opportunities for rent-seeking activities.

The economic situation in Sudan still remains extremely fragile, with low growth, high inflation and a weak external position posing a threat to macroeconomic stability and poverty reduction. To sustain progress and fulfill the requirements for HIPC debt relief, the authorities should implement the reform of the customs exchange rate in a timely fashion to lift revenue and competitiveness, and avoid a return to distortionary policy measures, including multiple currency practices and fiscal subsidies. Enhanced transparency and management of State-Owned Enterprises operations is vital to mitigate fiscal risks and bring more revenue on-budget. The timely adoption of the Central Bank Act and establishment of an independent anti-corruption commission will help strengthen institutional independence and governance.

Significant financial assistance from the international community will be needed to incentivize reform and to support the Sudanese population through the difficult transition to a well-functioning market-based economy. This must be accompanied by strong coordination among donors and IFIs on financial and technical assistance.”