A 9-month Staff Monitored Program (SMP) combined with a disbursement under the Rapid Credit Facility (RCF) of 50 percent of quota (about US$174 million) was approved on March 30, 2021 to address BOP challenges and build a track record towards an upper credit tranche financial arrangement. This followed a disbursement under the RCF in November 2020 of 15 percent of quota (about US$52 million), which was the first-ever financial disbursement from the Fund to South Sudan. Progress has continued in implementing the revitalized peace agreement of 2018: following the formation of a unity government in February 2020 and the appointment of state governors in June 2020, the national parliament was sworn into office in August 2021. The humanitarian situation remains dire, with about 60 percent of the population facing high levels of acute food insecurity.
South Sudan is a very fragile post-conflict country. After five years of civil conflict, the warring parties came to an agreement for power-sharing in September 2018 and formed a unity government in February 2020. However, peace remains fragile in the face of difficult humanitarian and economic conditions. Already very high levels of poverty and food insecurity have been exacerbated by severe flooding in recent months. The floods (the worst in 60 years) have killed livestock, destroyed food stocks, and damaged crops ahead of the main harvest season. South Sudan’s economy has been hit hard by lower international oil prices following the COVID-19 pandemic.
When analyzing terms-of-trade shocks, it is implicitly assumed that the economy responds symmetrically to changes in export and import prices. Using a sample of developing countries our paper shows that this is not the case. We construct export and import price indices using commodity and manufacturing price data matched with trade shares and separately identify export price, import price, and global economic activity shocks using sign and narrative restrictions. Taken together, export and import price shocks account for around 40 percent of output fluctuations but export price shocks are, on average, twice as important as import price shocks for domestic business cycles.
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper on Sudan provides a first stock-taking of the scale, main transmission channels and potential costs of poor governance and corruption in Sudan and offers preliminary recommendations. A large body of literature and country analyses confirm that weak governance and corruption undermine economic growth, amplify income inequality and erode public trust in the institutions. According to international agencies and existing literature, Sudan has scored very poorly on compliance with rule of law best practices in the past. Effective implementation of preventive measures is important; particularly in relation to politically exposed persons. Transparency on beneficial ownership of legal persons and arrangements to prevent their misuse for laundering the proceeds of corruption are necessary. Transparency, accountability, and comprehensive communication should be the backbone of governance and anti-corruption reforms in each sector. Rationalizing tax exemptions and phasing out tax holidays would strengthen governance while boosting fiscal revenues.
This 2019 Article IV Consultation discusses that while the peace agreement signed in September 2018 has improved the prospects for lasting peace in South Sudan, the implementation of the agreement has become more protracted than envisaged with the recently announced six-month delay in forming a new national unity government. A relapse into war in mid-2016 spread insecurity across the country and severely affected all economic activities and exacerbated the humanitarian crisis and food insecurity. The country is in a serious economic crisis. The discussions focused on the urgent need to restore macroeconomic stability and rebuild economic buffers. Addressing the macroeconomic imbalance, supported by improvements in oil management and public financial management, is an important factor to rebuild confidence in government policies. This will be necessary to regain access to external financial support from development partners. One of the key policy recommendations is to strengthen oil management and transparency by an immediate stop of contracting new oil-backed advances.
This 2016 Article IV Consultation highlights the rapid deterioration of economic conditions in South Sudan since the beginning of the civil conflict in late 2013. Real GDP growth declined by nearly 20 percent during 2015 and 2016, and annual inflation rose to about 550 percent in September 2016 before declining to 370 percent in January 2017. The medium-term outlook faces challenges and significant downside risks. Without significant progress toward peace and economic stabilization, the economic trajectory for South Sudan is highly unstable, and the country risks spiraling into a trap of deteriorating economic performance and worsening security with continued high humanitarian costs.
Economic growth is estimated to have moderated further in 2010 to about 5 percent, reflecting slower growth in both the oil and non-oil sectors. The overall commitment fiscal deficit for 2010 is now estimated at 2.7 percent of GDP, about 0.6 percentage point of GDP below the program target. Monetary policy was expansionary in the first half of 2010, but was subsequently tightened. The current account deficit narrowed during the first three quarters of 2010 largely driven by an increase in oil exports.
In December 2010, the Fund concluded the limited gold sale (403 metric tons) approved by the Board in September 2009. The main purpose of the sale was to generate profits to fund an endowment that would diversify the Fund’s income sources away from lending income. In addition, the Board agreed in July 2009, before approving the sale, to a strategy pursuant to which resources linked to the gold sale would contribute to boosting the Fund’s concessional lending capacity. Total profits from the gold sale were SDR 6.85 billion. The profits significantly exceeded those assumed in April 2008 when agreement was reached on the key features of the new income model, and in July 2009 at the time of the discussions on a financing package to support reform of the Fund’s concessional lending activities. This reflects the substantial increase in the market price of gold throughout the period of the gold sales. With the gold sale complete, it is timely for the Board to revisit the issues relating to the use of the profits. This paper seeks to provide a basis for initial Board consideration of this topic. It focuses primarily on the options for use of the windfall profits above a price of US$935 per ounce, which was the average price required to generate resources for the endowment at the assumed gold price underlying the new income model and to implement the agreed strategy to provide SDR 0.5–0.6 billion in resources linked to gold sales as part of the 2009 concessional financing package.
The Q&A in this issue features seven questions about policy options for emerging market countries (by Marcos Chamon, Chris Crowe, and Jun Il Kim); research summaries on “Does Trade and Financial Globalization Cause Income Inequality?” (by Chris Papageorgiou) and “The Current Account of Oil-Exporting Countries (by Irineu E. de Carvalho Filho); an article on the launch of the IMF’s new research journal, IMF Economic Review, and the contents of the upcoming IMF Staff Papers, which the new the new journal will succeed in 2010; an article on the upcoming Tenth Annual Jacques Polak Research Conference; a listing of visiting scholars at the IMF during July–September 2009; and listings of recent IMF Working Papers and Staff Position Notes.
International Monetary Fund. Middle East and Central Asia Dept.
Strong economic performance across the Middle East and Central Asia is examined against the background of high prices for energy and other commodities. Common economic trends are presented, while prospects and policies are reviewed for the coming year in light of the global economic environment. This latest REO includes boxes treating specific regional topics, such as financial sector reforms and integration in Maghreb countries; economic developments in oil-exporting countries in response to changes in petroleum prices; and the growth boom in the Caucasus and Central Asia.