IMF says Sudan making progress on implementing economic reforms
March 8, 2021 (KHARTOUM) – The International Monetary Fund (IMF) said that Sudan appears to be adhering to its economic reforms roadmap that would be key to achieving debt relief.
“The Sudanese authorities have made tangible progress on their IMF-supported reform program despite difficult economic conditions compounded by the COVID-19 pandemic, and a challenging humanitarian situation,” the IMF said in a statement Sunday following a meeting on the staff monitored program (SMP) for Sudan.
The SMP involves IMF working with the respective governments to achieve specific economic targets but does not entail financial assistance.
Countries like Sudan that successfully complete SMP can engage the top donors on debt relief and financial assistance.
The IMF particularly praised Sudan’s decision to devalue its currency to bring it in line with the black market among other measures.
“The recent exchange rate unification, removal of fuel subsidies, tax measures taken as part of the 2021 budget, and increase in electricity tariffs will reduce distortions in the economy and facilitate fiscal consolidation,” the international financial body said.
“This should reduce monetization, help bring down the current high rate of inflation, and create fiscal space for much-needed social spending. Such measures should also boost central bank independence by reducing fiscal dominance, incentivize financial flows through the financial system, and minimize opportunities for rent-seeking activities” it added.
However, the IMF urged Khartoum to accelerate the pace of reforms and singled out reforming the exchange rate used by customs.
“To sustain progress and fulfil the requirements for HIPC debt relief, the authorities should implement the reform of the customs exchange rate in a timely fashion to lift revenue and competitiveness, and avoid a return to distortionary policy measures, including multiple currency practices and fiscal subsidies”.
The IMF also urged Sudan to undertake measures to enhance transparency as it relates to state-owned companies, establishing an anti-graft commission and adopting the Central Bank Act.
The Washington-based organization acknowledged the “difficult transition” underway in Sudan and stressed that the latter will need “significant financial assistance” from the donors to incentivize reform.
France is set to host a high-level conference for investment in Sudan next May that will also tackle its $60 billion debt burden.
In a meeting with Sudan PM Abdullah Hamdok in Paris more than a year ago, French president Emanuele Macron pledged to host an international conference to mobilize international public and private investors to work in Sudan after its removal from the U.S. terror list.
The US rescinded Sudan’s terror designation last December which removed a major obstacle that prevented integration with the international community.
Source : Sudan Tribune
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