By Charles Lotara, SSMJ Juba, Thursday (October 10, 2024) – The South Sudanese government has signaled intentions to secure a line of credit from the International Monetary Fund (IMF) to support the execution of the 2024/25 fiscal budget passed in September. This comes after the Minister of Finance and Planning, Dr. Marial Dongrin Ater, held a review meeting with the IMF country mission led by Washington-based Mission Chief for South Sudan, Mame Asutou Diouf, and Juba-based Resident Repres
By Charles Lotara, SSMJ
Juba, Thursday (October 10, 2024) – The South Sudanese government has signaled intentions to secure a line of credit from the International Monetary Fund (IMF) to support the execution of the 2024/25 fiscal budget passed in September.
This comes after the Minister of Finance and Planning, Dr. Marial Dongrin Ater, held a review meeting with the IMF country mission led by Washington-based Mission Chief for South Sudan, Mame Asutou Diouf, and Juba-based Resident Representative, Guy Jenkinson, a week after tabling the fiscal budget before parliament.
The Ministry of Finance and Planning briefed the global financial institution on Tuesday about the numerous economic shocks the country is currently experiencing and the steps the government is taking to address these issues in a public statement.
At the center of the briefing was the government's resolve to acquire a loan through the Rapid Credit Facility on the sidelines of the 2024 Annual Meetings of the International Monetary Fund and the World Bank Group, scheduled from October 25 to 27, 2024, in Washington.
“He [Mr. Dongrin] stressed the South Sudan’s interest in securing the IMF Enhanced Credit Facility in the upcoming IMF/World Bank annual meeting in DC to implement some economic programs and stabilize the country’s macroeconomic position,” read the statement in part.
The Enhanced Credit Facility is an IMF initiative which provides fast concessional financial assistance to low-income countries facing an urgent balance of payments need.
The meeting in Juba also touched on the plan to review the customs valuation exchange rate in relation to the official rate, boosting non-oil revenue mobilization, and resumption of Dar blend oil production and export to support the annual budget.
In a separate statement, Ms. Mame Astou Diouf, the IMF Mission Chief for South Sudan, noted the oil crisis, which has bedeviled the country’s economy.
“The pipeline that carries about 70 percent of South Sudan’s oil exports has been inoperable since February 2024, with repairs proving difficult because [it] runs through Sudan. In addition, disruptions to freight traffic in the Red Sea have increased insurance costs for the oil cargoes supplied through South Sudan’s other pipeline,” she stated.
According to the Mission Chief, South Sudan's GDP growth will likely span two fiscal years, 2023/24 and 2024/25, as a result of the decline in oil exports.
"Against this backdrop, South Sudan is estimated to have experienced an economic slowdown during the fiscal year 2023/24 (July 2023−June 2024), with a real GDP growth close to -6 percent, driven by the oil exports drop during the first half of 2024. The slowdown is projected to continue during the fiscal year 2024/25 as the oil production shock persists,” Astouf said.
Budget execution in the fiscal year 2023/24, Astouf noted, proved challenging. While oil revenue collection was strong in December 2023, the pipeline damage has constrained the full-year outturn.
After meeting the leadership of the National Revenue Authority, the IMF noted that there was an increase in non-oil revenue thanks to revenue administration measures and an increase in the exchange rate used for customs valuation at the time. But this only partially compensated for the drop in oil revenue.
“The pipeline damage also resulted in further salary payment arrears and increased monetary financing during the first half of 2024 to cope with the shock. Investment in oil-for-infrastructure continued, albeit at a slower pace to allow redirecting funds towards other urgent government priorities, including salary payments,” she said.
In March 2023, the Executive Board of the International Monetary Fund (IMF) approved a disbursement of US$114.8 million under the Food Shock Window of the Rapid Credit Facility to help South Sudan address urgent balance of payment needs arising from heightened food insecurity.
It followed US$52.3 million disbursement to South Sudan to be approved by the Board to address the COVID-19 pandemic in November 2020 and an additional $334 million wired in August 2021 as part of the general allocation of Special Drawing Rights.
But additional funding is subject to a review of previous spending. Astouf said the IMF was assessing Juba’s preparedness to benefit from a new financing plan ahead of the November 15 compliance deadline, as well as the fund’s commitment to the country’s economic, governance, and political reform agenda.
"The mission discussed performance toward the PMB quantitative targets at end-June 2024 and progress in implementing the structural benchmarks,” Ms. Diouf said in a Wednesday statement.
“Discussions to underpin the completion of the third review of the staff-monitored program with board involvement will continue in the coming weeks,” she added.