Abstract
Sudan has been adversely affected by the global crisis through a sharp decline in oil receipts. Executive Directors welcomed the Staff-Monitored Program (SMP), which aimed to reduce the fiscal deficit, tighten monetary stance, and increase exchange rate flexibility. Directors urged the authorities to maintain prudent macroeconomic policies and to accelerate fiscal and financial sectors as well as structural reforms. Directors agreed that progress on debt relief under HIPC for Sudan is essential to remove the debt overhang and regain access to concessional financing for development and social projects.
June 23, 2010
1. The following information has become available since the staff report (www.imf.org) was prepared. It does not change the thrust of the staff appraisal.
2. A new government was formed on June 14, 2010. Mr. Ali Mahmood Abdul-Rasool was appointed Minister of Finance and National Economy, while the ex-Finance Minister, Mr. Awad Ahmed Al-Jaz, became Minister of Industry. The new Minister of Finance has reconfirmed Sudan’s commitment to the staff-monitored program and to continued cooperation with the Fund.
3. Inflation was in the 14–15 percent range in the first five months of 2010, mainly due to an increase in food and beverages prices, which constitute more than 50 percent of the CPI basket. This was mostly supply driven. By end-May, net international reserves have increased by about $30 million, compared to the most recent figure available during the mission (end-February). The central bank has announced measures to tighten monetary policy by increasing reserve requirement from 8 percent to 11 percent (effective July 1, 2010) and withdrawing central bank deposits with commercial banks. Also, the authorities have allowed more flexibility in the exchange rate which has depreciated by 3.8 percent since end-March 2010.
4. The authorities have confirmed that fiscal structural measures for end-June 2010 (review of tax exemptions granted under Investment Encouragement Act and introduction of customs ASYCUDA software) are expected to be implemented. The review of the tax policy regime (structural measure for end-July 2010) is underway and is also expected to be completed as scheduled.