ADDIS ABABA – The International Monetary Fund (IMF) announced its Executive Board a disbursement of $174.2 million to South Sudan under the Rapid Credit Facility (RCF).
This is the second IMF financial assistance to South Sudan since it joined the IMF in 2012.
The Fund said finance will help finance Juba’s urgent balance of payments needs and provide critical fiscal space to maintain poverty-reducing and growth-enhancing spending, the Fund said.
A sharp decline in international oil prices triggered by the pandemic and devastating floods have eroded economic gains of the peace process in the country.
“These challenges have led to urgent balance of payments and fiscal financing needs and reversed early economic gains from political stability,” said Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair.
“The IMF’s emergency financing under the Rapid Credit facility would help meet priority spending needs, catalyze donor support, and foster critical economic reforms” in the country, said the deputy managing director.
He, however, stressed “prudent fiscal and monetary policies are necessary to promote macroeconomic stability”.
South Sudan’s economy is slated to contract by 4.2 percent in 2020/21 fiscal year. But a modest economic recovery is projected in FY2021/22 on the heels of oil price recovery, the IMF said.
Juba has embarked on reforms to restore macroeconomic stability.
Since October 2020, its government has stopped monetary financing of the deficit which, along with the forex auctions, have helped stabilize the exchange rate.
Revenue mobilization measures, including phasing out some tax exemptions, have bolstered domestic non-oil revenue in recent months, according to the IMF.