20210629-IMF-Sudan_Request_for_a_39-Month_Arrangement_Under_the_Extended_Credit_Facility-Press_Release_Staff_Report_and_Statement_by_the_Executive_Director_for_Sudan_75页_1mb

International Monetary Fund (IMF) Executive Board Approves Extended Credit Facility Arrangement for Sudan

As part of its re-engagement with the international financial community after 36 years of isolation, Sudan has formally cleared arrears with the IMF and reached a key milestone in its Poverty Reduction and Debt Sustainability Framework (HIPC), allowing access to further multilateral financing.

Background:

• Sudan has reached the Heavily Indebted Poor Countries (HIPC) Decision Point, signifying sustained progress under its Staff-Monitored Program (SMP) with a credible reform track record including fiscal consolidation, exchange rate unification, and anti-corruption measures.
• Recent economic challenges include COVID-19, high inflation (363% in April 2021), and suppression of fiscal revenue to 3% of GDP.

Key Policies and Reforms:

• Fiscal: Aiming for a medium-term deficit of 1% of GDP (boosted from 1.5% in 2022), through revenue enhancement (eliminating fuel subsidies and VAT exemptions) and targeted spending on social protection like the Sudan Family Support Program (SFSP).
• Exchange & Monetary: Implementing a de jure managed float with a ±5% band and phasing in a reserve money targeting regime supported by Islamic and conventional banking systems.
• Financial Sector Governance: Strengthening central bank independence with a revised Central Bank Act and enacting a dual banking system resolution regime to enhance stability and reduce reliance on central bank financing of government deficits.

Debt Sustainability & Program:

• Sudan's debt-to-GDP fell to manageable levels after arrears clearance, but risks persist. The ECF arrangement (SDR 1.733 billion or 275% of quota) supports debt relief and caters to financing needs until when the HIPC Completion Point is reached.
• Country faces significant risks from policy implementation gaps, insufficient donor mobilization, and political fragility affecting goal achievement.

Conclusion:
The IMF Board's decision supports Sudan's economic stabilization and transformation. Sustained reforms across fiscal revenue, monetary framework, governance, and social protection, coupled with continued financial support from international institutions, will be critical for achieving medium-term macroeconomic stability and inclusive growth.