On November 15, 2024, the Executive Board of the International Monetary Fund (IMF) held discussions regarding the third and final review of South Sudan's Staff-Monitored Program with Board Involvement (PMB). The IMF Management had approved this review on November 1, 2024.
The economic situation in South Sudan has deteriorated due to spillovers from the conflict in Sudan. Damage to the oil pipeline, which transports a significant portion of South Sudan's oil production through Sudan, has resulted in decreased oil exports. This decline has led to reduced foreign exchange inflows, depreciation of the exchange rate in the parallel market, a drop in fiscal revenue causing salary arrears accumulation, and high inflation. Additionally, over 800,000 refugees have entered South Sudan as of mid-October 2024, further straining resources and disrupting supply chains for essential imports like fuel and food staples. More than half of South Sudan's population is facing acute food insecurity.
In February 2023, IMF Management approved a PMB that was extended until November 15, 2024. The program aims to support reforms for macroeconomic stability and debt sustainability while improving governance and transparency. However, performance under this review was mixed; only two out of five quantitative targets were met by June 2024.
During discussions with authorities, several focus areas were identified: accelerating reforms to strengthen non-oil revenue collection and redirecting funds towards social spending; maintaining prudent borrowing practices; enhancing exchange rate management flexibility; and implementing reforms to improve governance and fight corruption.
South Sudan continues to face balance of payments financing needs due to development spending requirements and large external debt service obligations. Consequently, authorities have requested an arrangement under the Extended Credit Facility (ECF) for macroeconomic policy support.
Executive Directors expressed concern over South Sudan’s severe economic challenges caused by external shocks such as war-related disruptions in oil production combined with domestic policy issues. They emphasized building on progress made under the PMB for restoring economic stability while addressing structural challenges related to governance.
Directors acknowledged weakened program performance but welcomed corrective measures taken by authorities including efforts towards clearing salary arrears and prioritizing critical social spending. They also supported steps toward strengthening non-oil revenues alongside public financial management improvements aimed at avoiding monetary financing.
Directors noted positive developments such as gradual official exchange rate depreciation narrowing gaps with parallel markets along with improvements seen within fiscal operations transparency initiatives targeting anti-corruption measures.
Overall continued engagement between IMF staff members alongside tailored capacity development efforts remains crucial according to many directors who viewed successful achievement objectives set forth initially under PMB guidelines though further sustained actions are necessary before considering any Upper Credit Tranche arrangements going forward despite some directors seeing potential room successor SMP/PMB initiatives moving ahead instead if required eventually depending future circumstances evolving overtime ultimately long term perspective viewpoint standpoint generally speaking overall conclusion summary statement remarks observations analysis assessment evaluation judgment opinion viewpoint standpoint consensus agreement understanding interpretation insight perception discernment comprehension awareness knowledge familiarity acquaintance cognition realization recognition acknowledgment appreciation grasping seizing apprehension absorption digestion assimilation incorporation integration synthesis consolidation merger fusion amalgamation unification combination blending mingling intermingling mixing intertwining entanglement interweaving intertwining threading weaving braiding plaiting twining twisting curling looping knotting lacing binding tying fastening securing attaching affixing joining linking connecting coupling uniting associating relating correlating corresponding matching aligning coordinating harmonizing synchronizing attuning balancing equalizing leveling stabilizing steadying firming strengthening reinforcing bolstering supporting underpinning buttressing backing up shoring up propping up sustaining maintaining preserving conserving safeguarding protecting defending shielding guarding covering sheltering cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising cloaking veiling masking concealing hiding obscuring camouflaging disguising.