Man counts a bundle of 50 SSP notes. [Photo: ELRHA]

The International Monetary Fund said it has noted with concern South Sudan’s severe economic and humanitarian challenges, and recommends political stability and policy adjustment on governance and transparency as key to boosting donor confidence.

On November 15, 2024, IMF’s Executive Board discussed the Third and Final Review of South Sudan’s Staff-Monitored Program with Board Involvement (PMB), where it underscored that spillovers from the Sudan war have worsened South Sudan’s macroeconomic situation and exacerbated an already difficult humanitarian situation.

In a press statement, IMF said it noted with concern the country’s severe economic and humanitarian situation, caused by the war in Sudan and its spillovers, flooding, and combined with domestic policy slippages.

It urges the South Sudan government to continue building on the progress made under the Management-endorsed Staff Monitored Program with Board Involvement (PMB) to restore economic stability and maintain debt sustainability.

“Concrete steps to strengthen political stability and address policy missteps and structural challenges, particularly on governance and transparency, would be essential to boost donor confidence,” it said.

“Noting that program performance has significantly weakened, Directors welcomed the corrective measures taken by the authorities and their commitment to further remedial measures in support of the program’s objectives, including efforts to clear salary arrears and prioritize critical social spending.”

The financial agency pointed out that ruptures on a pipeline carrying 70 percent of South Sudan’s crude oil through Sudan has led to a sharp decline oil exports, resulting in lower foreign exchange inflows, currency depreciation and sharp fiscal revenue drop leading to the accumulation of salary arrears, and high inflation.

The war in Sudan has also led to a massive influx of over 800,000 people to South Sudan and supply chain disruption as more 7.1 million South Sudanese are estimated to be experiencing acute food insecurity.

IMF said the South Sudanese authorities face the challenging task of meeting higher spending needs, including on humanitarian relief, against the backdrop of limited financing options.

IMF’s Board of Directors welcomed gradual depreciation of the official exchange rate to narrow the gap
with the parallel market and underscored the need for further adjustment to unify the Foreign Exchange markets and eliminate distortions.

The agency encouraged efforts to further strengthen the monetary policy framework and preserve financial stability, including by enacting remaining recommendations from the Safeguards Assessment.

IMF further said it positively noted the improvements in transparency and governance of fiscal and monetary operations and the oil sector and called for sustained efforts in these areas.

Civil servants and armed forces have not been paid for 11 months – in what has been blamed on the rapture of an oil pipeline pumping South Sudan’s crude to the Red Sea port – but which President Kiir once attribute to mismanagement of none-oil revenue by finance officials.

The demand for clarification on delayed payment of accumulated salaries and arrears which Lakes Governor Rin Tueny Mabor termed a “salary disaster” was one of the dominant issues discussed by the 8th Governors Forum.

President Salva Kiir told the Forum on December 2 – that the country is still in economic distress due to disruption in oil export, but added that he was “fully engaging” with the Sudanese government to resume oil production.

Kiir said the oil export was facing a double crises due to the void left by the withdrawal of Malaysian oil firm Petronas and the impact of Sudan war on the country’s major revenue source.

The Head of State said he is fully engaging with the Head of Sudan’s Transitional Sovereign Council, Gen. Abdel Fattah Al Burhan on ways to ensure full and unhindered resumption of oil production and export.