IMF approves $114.8m emergency fund for South Sudan
March 2, 2023 (WASHINGTON/JUBA) – The International Monetary Fund (IMF) has approved a payout $114.8 million to help South Sudan address urgent balance of payment needs arising from heightened food insecurity.
The IMF, a statement, said four consecutive years of intense flooding and fallout from Russia’s war in Ukraine, on the heels of the COVID-19 pandemic, have exacerbated an already-dire humanitarian situation in South Sudan.
A combination of flooding and the rising price of staples have exposed 8.3 million people to acute food insecurity, the financial body said Wednesday.
“The disbursement is expected to provide South Sudan with fiscal space to address food insecurity while maintaining social and growth-enhancing spending as well as boosting reserves,” the statement noted.
“Over the last three years, South Sudan has had to contend with overlapping economic shocks from COVID-19, historic flooding, and Russia’s war in Ukraine, which have compounded an already-difficult economic and humanitarian situation driven by weak economic management and institutions. Performance under the Staff-Monitored Program was mixed but recent corrective actions have been taken,” Kenji Okamura, Deputy Managing Director said in statement.
“Looking ahead, emergency financial assistance under the Rapid Credit Facility’s new food shock window will help address urgent balance-of-payments needs and mitigate the impact of elevated food prices,” it adds.
The IMF further lauded the steps authorities in South Sudan have taken in the recent months to restore fiscal discipline and rein in monetary growth.
“Ensuring macroeconomic stability and debt sustainability in the near term will require closing the large fiscal gap remaining in the current fiscal year and pursuing a prudent monetary policy, including sustainably bolstering international reserves. However, the needed fiscal adjustment should protect spending on health, education and social support, especially to the most vulnerable. Refraining from further monetary financing and non-concessional borrowing is important,” stressed Okamura.
He added, “Continued implementation of the peace process is a priority for South Sudan’s economic and social development. The authorities are highly encouraged to continue working with the international community and civil society to promote peace, stability, and national reconciliation.”
Meanwhile, the South Sudanese Minister of Finance and Planning Dier Tong Ngor on Thursday said that IMF’s disbursement will help the country address food insecurity while maintaining social and growth-enhancing spending.
He said years of heavy floods and COVID-19 have enormously impacted economic activity in the country, real Gross Domestic Product has severely contracted, inflation and exchange rate of the South Sudanese pound against other currencies have deteriorated and the fiscal deficit has risen.
Ngor noted that the emergency financing from the IMF would enhance the foreign reserves position for the country’s central bank to intervene in the market to meet any gaps in the foreign exchange market, stabilize the local currency as well as reduce the prices of basic commodities in the market.
(ST)