IMF, Sudan Reach Reform Deal

Sudanese customers queue to access money services at the Faisal Islamic Bank (Sudan) in Khartoum, Sudan June 11, 2019. REUTERS/Mohamed Nureldin Abdallah
Sudanese customers queue to access money services at the Faisal Islamic Bank (Sudan) in Khartoum, Sudan June 11, 2019. REUTERS/Mohamed Nureldin Abdallah
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IMF, Sudan Reach Reform Deal

Sudanese customers queue to access money services at the Faisal Islamic Bank (Sudan) in Khartoum, Sudan June 11, 2019. REUTERS/Mohamed Nureldin Abdallah
Sudanese customers queue to access money services at the Faisal Islamic Bank (Sudan) in Khartoum, Sudan June 11, 2019. REUTERS/Mohamed Nureldin Abdallah

The International Monetary Fund (IMF) said Wednesday it reached an agreement with Sudan on a reform deal that would back the 12-month Staff-Monitored Program (SMP).

An IMF mission led by Daniel Kanda held virtual meetings with the authorities from June 8-21 to discuss their reform package.

At the end of the mission, Kanda issued a statement revealing that "the Sudanese authorities and IMF staff have reached a staff-level agreement on policies and reforms that can underpin an SMP, subject to approval by the IMF's management and Executive Board.”

"The SMP aims at narrowing large macroeconomic imbalances, reducing structural distortions that hamper economic activity and job creation, strengthening governance and social safety nets, and making progress towards eventual HIPC debt relief.

“In support of these objectives, the reform package envisages increasing domestic revenue and reforming energy subsidies to create room for increased spending on social programs,” the statement read.

The new financing, however, has been held up by the need to settle decades of arrears to the IMF and Sudan’s listing, while under Omar al-Bashir’s rule, by the United States as a state sponsor of terrorism.

The Sudanese government pins hope on a conference of potential donors in Berlin this week.

Meanwhile, the economy is on the verge of collapse with inflation exceeding 100 percent and a shortage of bread and drugs.

Prime Minister Abdalla Hamdok finds himself desperate for foreign support.

“You have an unfinanced transition which is being hammered by a pandemic and a potential plague” of locusts, said a Western diplomat. “It puts pressure on the international community to put more money upfront quickly to ameliorate the degradation.”

Inflation topped an annual 100 percent last month as the government printed money to fund bread and fuel subsidies. Sudan’s currency has fallen to 150 to the dollar on the black market compared to 55 at the official rate, due to hard currency shortages.

Analysts and diplomats say Khartoum needs to deliver more substantial steps to overhaul an economy where key companies earning foreign currency such as gold exporters are controlled by military figures.

The government needs an estimated USD1.9 billion to cover the cash payment program. A preparatory document for the conference calls for “a pathway for Sudan’s re-engagement with international institutions” leading to eventual debt relief.

“The government is bankrupt effectively,” said Magdi el-Gizouli, a Sudanese academic and a fellow of the Rift Valley Institute. “They don’t have the funds for the cash program.”

The Berlin conference describes participants as “partners” rather than donors, to recognize that Sudan has its own resources and needs political and economic support rather than financial handouts, said Aisha al-Barir, a Sudanese government coordinator for the conference.

“Sudan is working on economic reform to take advantage of its own resources,” she said, pointing to a gold sector reform announced last week. Sudan also plans to liquidate or privatize many dysfunctional state firms.



Russia's Economy Minister Says the Country is on 'the Brink of Recession'

People gesture as they shop in a supermarket in Moscow, Russia June 26, 2024. REUTERS/Maxim Shemetov/File Photo
People gesture as they shop in a supermarket in Moscow, Russia June 26, 2024. REUTERS/Maxim Shemetov/File Photo
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Russia's Economy Minister Says the Country is on 'the Brink of Recession'

People gesture as they shop in a supermarket in Moscow, Russia June 26, 2024. REUTERS/Maxim Shemetov/File Photo
People gesture as they shop in a supermarket in Moscow, Russia June 26, 2024. REUTERS/Maxim Shemetov/File Photo

Russia's economy is “on the brink of going into a recession,” the country's economy minister said Thursday, according to Russian media reports.

Economy Minister Maxim Reshetnikov delivered the warning at the St. Petersburg International Economic Forum, the annual event in Russia's second largest city designed to highlight the country's economic prowess and court foreign investors, The AP reported.

Russian business news outlet RBC quoted the official as saying “the numbers indicate cooling, but all our numbers are (like) a rearview mirror. Judging by the way businesses currently feel and the indicators, we are already, it seems to me, on the brink of going into a recession.”

The economy, hit with a slew of sanctions after the Kremlin sent troops into Ukraine in February 2022, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation. At the same time, wages have gone up to keep pace with inflation, leaving many workers better off.

Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country’s poorer regions. But over the long term, inflation and a lack of foreign investments remain threats to the economy, leaving a question mark over how long the militarized economy can keep going.

Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.

Speaking at a forum session, Reshetnikov said Russia was “on the brink,” and whether the country would slide into a recession or not depends on the government's actions.

“Going forward, it all depends on our decisions," Reshetnikov said, according to RBC.

RBC reported Russia's Finance Minister Anton Siluanov and Central Bank Gov. Elvira Nabiullina gave more optimistic assessments.

Siluanov spoke about the economy “cooling” but noted that after any cooling “the summer always comes," RBC reported.

Nabiullina said Russia's economy was merely “coming out of overheating," according to RBC.