São Paulo – A mission from the International Monetary Fund (IMF) paid a visit to Sudan from April 29th to May 8th to assess the country’s economy as part of a Staff Monitored Program (SMP) launched this year. In a press release, the Fund’s representative in Sudan, Lodewyk Erasmus, said “preliminary data suggest that economic performance in the first quarter of 2014 is improving in line with projections under the SMP.”
He added that inflation has dropped to 35.7% in the 12-month period ended March, as against 41.9% in the 12-month period ended December 2013. Foreign exchange reserves are up 3.2% and liquidity is up 6.7%. The fiscal deficit was equivalent to 0.2% of the Gross Domestic Product (GDP), as against 0.5% in Q1 last year. Erasmus noted that most of the SMP’s Q1 targets have been met.
The IMF’s program is designed to help Sudan carry out reforms. The country’s economic situation has deteriorated following its separation from South Sudan, in 2011. The Fund remarked that the gap between the official and parallel market exchange rates stemming from uncertainty regarding revenues from transportation of oil from South
Sudan, where an armed conflict is taking place, the political scenario in Sudan itself, where a presidential election is scheduled for next year, and foreign exchange market instability.
Upon separation, Sudan lost a sizeable share of its oil reserves to South Sudan, and consequently started having problems building foreign currency reserves. The IMF advises the Sudanese government to address imbalances through greater exchange rate flexibility, which would help restore competitiveness and support exports, and to avoid the loss of international reserves, among other measures.
According to him, “resolving Sudan’s unsustainable external debt is important” to cushion the impact of secession from South Sudan, enable the implementation of poverty reduction programs and support inclusive growth. The Fund commended the country’s efforts in seeking out debt relief from external creditors, via a Tripartite Committee comprising Sudan, South Sudan and the African Union.
*Translated by Gabriel Pomerancblum
