IMF: Sudan made progress, but needs further reforms

02 de junho de 2016

International Monetary Fund staff met with local authorities and suggested measures to enable the country to borrow, support the poor and reduce its debt.

São Paulo – International Monetary Fund (IMF) staff convened with Sudanese government officials and issued a report on the country’s economy this Thursday (2). According to the document, fiscal adjustments in Sudan have helped increase tax revenues, curb the fiscal deficit and fight inflation. Those measures alone, however, do not suffice to spur growth, attract investment or improve people’s lives.

According to the Fund, the challenges facing Sudan include containing a fiscal deficit tantamount to 1.9% of Gross Domestic Product (GDP) and an external current account deficit of 6% of GDP. Additionally, Sudan struggles when it comes to doing business with other countries due to an economic embargo from the United States.

IMF staff met with Sudanese authorities in Khartoum from May 21 until this Thursday. Mission chief Eric Mottu said in the IMF report that Sudan has made “remarkable” progress toward macroeconomic stability and growth, even after its secession from South Sudan five years ago.

The report also claims that the country had a good crop last year, but notes that commodity prices are low, the government is more reliant on Central Bank financing, and foreign exchange reserves are limited. “As a result, the outlook is mixed and macroeconomic stability rests on continued large external financing, according to the document.

Considering those projections, the IMF delegation suggested that local authorities should increase fiscal revenue, reduce the fiscal deficit, tighten monetary policy to ensure low inflation, strengthen social safety nets to support the most vulnerable and accelerate structural reforms to improve the business environment and encourage private investment and job creation.

The report also claims that Sudan has debts in arrears and that this prevents its access to external financing, weighing heavily on the country’s development. Mottu believes the North African country must “engage with international partners to secure comprehensive support for debt relief and the lifting of sanctions.” He also said the country is eligible for debt relief under the IMF’S Heavily Indebted Poor Countries (HIPC) Initiative.

*Translated by Gabriel Pomerancblum