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International Monetary Fund. Statistics Dept.
This Technical Assistance Mission has been undertaken to support the Bank of South Sudan (BSS) in improving external sector statistics (ESS). The recommendations made during the 2018 mission for the recording of oil exports and transactions with Sudan under the Transitional Financial Agreement were implemented by the BSS. The mission worked toward enhancing the inter-agency cooperation by meeting with selected public sector bodies, providing them with an overview of the balance of payments and the data that the BSS will request from them. Before the end of the mission, requested data from one of the entities, the Civil Aviation Authority was provided. A work program was developed to conduct a visitor expenditure survey and a preliminary International Reserves and Foreign Currency Liquidity template was submitted to IMF’s Statistics Department for review. In order to support progress in the various work areas, the mission recommended a detailed one-year action plan, with the several priority recommendations carrying weight to make headway in improving ESS reliability.
International Monetary Fund. Middle East and Central Asia Dept.
This 2016 Article IV Consultation highlights that Sudan is facing significant domestic and international constraints and large macroeconomic imbalances despite efforts made toward macroeconomic stability and growth. Although good harvests boosted growth to close to 5 percent in 2015, external imbalances widened owing to low commodity export prices, expansionary policies, and insufficient exchange rate adjustment. The terms-of-trade shock widened the current account deficit to 6 percent of GDP in 2015. The budget deficit widened to 1.9 percent of GDP owing to shortfalls in oil revenue. Inflation, which had been contained to 12.6 percent at end-2015, rose to 16.5 percent in July 2016. The outlook is subject to significant downside risks.
International Monetary Fund. Middle East and Central Asia Dept.
KEY ISSUES Context: Sudan’s economy has yet to recover from the shock of South Sudan’s secession three years ago, which took away three-quarters of oil production, half of its fiscal revenues, and two-thirds of its international payments capacity. Despite progress in implementing policies to address the resulting imbalances, inflation remains high and growth sluggish. Macroeconomic adjustment has been complicated by structural weaknesses, a heavy debt burden, U.S. sanctions, and volatile domestic and regional political factors. The authorities embarked earlier this year on a stabilization program supported by a Staff-Monitored Program (SMP). The program runs through end-2014, and the authorities have not yet decided if they want a new SMP; the mission for the third SMP review in December will discuss the matter with them. Developments, outlook, and risks. Economic performance this year has been mixed as growth has remained subdued and inflation still high at about 40 percent. Growth is expected to rebound in 2015, but the outlook remains uncertain. The risks are largely tilted to the downside, although prospects of a successful national dialogue could lead to resolution of domestic conflicts and improved international relations. Article IV. Discussions focused on policies to secure macroeconomic stability, strengthen social safety nets, and a move to sustainable and inclusive growth. Fiscal consolidation (through revenue mobilization and expenditure rationalization, including a gradual phase-out of fuel subsidies) should continue, accompanied by increased public investment and social spending. Tight monetary policy and lower central bank financing of the government should help lower inflation. There is also a need for steps to lower the large premium in the foreign exchange market. Stronger supervision is needed to improve banks’ resilience. More should be done to improve the business climate to boost growth. Program performance: The program remains on track. The authorities continue to minimize non-concessional borrowing and maintain satisfactory track record of payments to the Fund. They recently devalued the official exchange rate by 3 percent to help address external imbalances, which together with a large appreciation of the parallel market rate, has helped lower the premium. Going forward, priority should be given to further reducing inflation by continuing fiscal consolidation, tightening monetary policy, and gradually closing the gap between the official and parallel exchange rates. Debt relief. Relief requires reaching out to creditors, normalizing relations with international financial institutions, and continuing to establish a track record of cooperation with the IMF on policies and payments. The authorities’ agreement with South Sudan to extend the “zero option” by two years is a positive step.