South Sudan debt distress risk remains high - IMF

IMF expects South Sudan risk of debt distress to remain high amid challenges rising from conflicts in Sudan, declining humanitarian support and floods that continue to wreck havoc in the country....

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The International Monetary Fund (IMF) expects South Sudan risk of debt distress to remain high amid challenges rising from conflicts in Sudan, declining humanitarian support and floods that continue to wreck havoc in the country.

The country is further facing expenditure pressures to finance salary arrears and the general election which is scheduled for 2024.

“The risk of debt distress remains high, owing to elevated debt service costs, and low levels of foreign exchange reserves and fiscal buffers. The need to remain cautious on contracting new debt has also contributed to a continued reliance on costly oil advances,” said IMF.

South Sudan gross debt to GDP is currently pegged at 60.4pc.

The IMF Staff team which met the authorities at the end of last month has recommended the need for South Sudan to create fiscal space through containing low-priority and low-efficiency expenditures.

According to the multilateral lender, the conflict in Sudan has created logistical challenges, increased the cost of oil production, and exacerbated an already difficult humanitarian situation in the country with over 400,000 refugees having arrived from its northern neighbour as of early December 2023.

Nonetheless, South Sudanese authorities have been commended rolling out prudent fiscal and monetary policies that have supported macroeconomic stability.

“Progress on domestic revenue reforms continue, with an adjustment to exchange rates used for customs valuation and improved tax collection contributing to a significant increase in non-oil revenues,” added IMF.

The IMF staff further agreed with the country’s authorities to clear salary arrears, publish first quarter fiscal report for FY2023/24 and complete the audits of the last Rapid Credit Facility (RCF) disbursement and the FY2021 Bank of South Sudan (BoSS) financial statements.