he International Monetary Fund’s executive board has approved plans to monitor a 12-month economic program by Sudan as it seeks to demonstrate its ability to implement reforms and move toward eventual debt relief, the Fund said on late Wednesday.
IMF Deputy Managing Director Antoinette Sayeh said on Thursday that Sudan’s move to a transitional government gave it a “window of opportunity for fundamental reforms to address major macro imbalances and lay the groundwork for inclusive growth.”
Sudan’s high external debt and longstanding arrears continue to limit its access to external borrowing, including from the IMF, Sayeh said, emphasizing the need for Sudan to shore up its economy, implement reforms and clear arrears.
Khartoum is in desperate need of financial help to reorganize its economy. Inflation hit 167% in August and the currency has been tumbling as the government prints money to subsidize bread, fuel and electricity, Reuters reported.
Sudan asked IMF staff to monitor its reforms and help Khartoum establish “a strong track record of policy and reform implementation - a key requirement for eventual debt relief,” the IMF said in a statement.
The Fund’s executive board on Wednesday agreed the staff-monitored program (SMP) met its upper credit tranche conditionality standard. It runs through June 30, 2021.
Such agreements do not entail financial assistance or constitute an explicit endorsement of the actual program.
Sayeh said Sudan’s program included reforms aimed at stabilizing the economy, removing distortions, improving competitiveness, and strengthening governance.
She said the coronavirus pandemic had compounded the challenges facing Sudan, which is already grappling with high fiscal and external imbalances, high inflation and large numbers of internally displaced people and refugees.
Planned reforms include continued efforts to eliminate large fuel subsidies to facilitate greater social spending, a broadening of the tax base, and work on creating 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,” Sayeh said.
Until now Sudan has been unable to tap the IMF or the World Bank for support because it is still listed by Washington as a state sponsor of terrorism and has $1.3 billion of IMF arrears.
The US indicated after President Omar al-Bashir was removed from power in April 2019 that it was willing to work to remove Sudan from the terrorism list.
Last month, the Sudanese transitional government declared an economic state of emergency on Thursday after its currency fell sharply in recent weeks.