São Paulo – Sudanese authorities are succeeding in controlling inflation and spurring the economy into growth, but a challenging scenario lies ahead, and they must not relinquish the fiscal adjustment and consolidation that are now in place. So says the International Monetary Fund (IMF), which released this Monday (29th) the results of meetings held with local authorities in Khartoum from the 14th to the 25th this month. <\/p>\n
In a press release, the IMF says Sudan has made progress with regard to its economy after it separated from South Sudan in 2011. The secession, however, still weighs down on the North African country’s economy. According to the IMF, Sudanese authorities have succeeded in implementing fiscal adjustment measures that led to 3.7% GDP growth in 2014. These measures also helped narrow the external deficit and reduced inflation, which remains high nonetheless. In May this year, prices climbed by less than 20%. <\/p>\n
Still, challenges lie ahead, due to “lower international oil prices and the conflict in South Sudan are adversely affecting oil-related revenues,” the Fund has stated. Plummeting revenues could lead to a fiscal deficit and external financing gaps. <\/p>\n
When the two countries separated, in 2011, South Sudan kept most of the oil reserves and Sudan was left with refineries and a port to ship out the product. South Sudan is still plagued by domestic conflicts that threaten oil production. “Moreover, expansionary policies in support of agriculture have injected considerable liquidity in the economy. These developments could put upward pressure on inflation and the exchange rate,” the press release warns. <\/p>\n
The IMF also advised Sudan to keep focusing on macroeconomic stability through “prudent fiscal policies,” as well as raise taxes and prioritize social and growth-enhancing expenditure. The Fund’s technicians also advised the country to limit the growth of liquidity to keep inflation at bay, allow greater exchange rate flexibility, and improve the business environment. <\/p>\n
“*Translated by Gabriel Pomerancblum<\/strong><\/p>\n