IMF releases $174.2 million to South Sudan to plug balance of payments gap

©wikimedia.org

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo

NAIROBI (Reuters) - The International Monetary Fund said on Wednesday it had released $174.2 million to South Sudan under its Rapid Credit Facility to address urgent balance of payments needs, after floods and an oil price shock hurt economic performance.

In 2018, South Sudan ended five years of civil war that killed an estimated 400,000 people, but President Salva Kiir and Vice President Riek Machar’s disagreements kept the peace process from being fully finalised. They repeatedly pushed back deadlines to form a government of national unity, but in 2020 finally did so.

“The pandemic-related oil price shock and devastating floods have led to an economic downturn. The ... downturn widened the fiscal and the balance of payments deficits, opening large financing gaps in the absence of concessional financing,” the IMF said in a statement late on Tuesday.

It expected the economy would contract 4.2% in the 2020/21 (July-June) fiscal year, it added. The forecast is deeper than a 3.6% contraction the fund forecast in November.