The International Monetary Fund has agreed to give the South Sudanese government a $334 million economic stabilization loan
According to the governor of central bank, “South Sudan agreed with IMF that half of this amount will be used for budget support to pay salary arrears and the other part will remain with the central bank for a balance-of-payment support to stabilize the exchange rate and also to stabilize the market,
More than a year ago, prior to the coronavirus pandemic, South Sudan’s exchange market rate was 280 South Sudanese pounds for a dollar. Today, $1 exchanges for 620 South Sudanese pounds on the black market. The official exchange rate is $1 for 183 South Sudanese pounds.
The governor also made clarities regarding the loan say the country has been allocated $334 million by the IMF as part of the general allocation of Special Drawing Rapid approved by the IMF Board of Directors on 2nd August 2021. The allocation became effective on Monday 23rd of August.
With the current situation, the Revitalized Agreement on the Resolution of the Conflict in South Sudan (RARCSS) rekindled the peace process and state building. After five years of civil conflict, the warring parties came to an agreement for power-sharing in September 2018.
Notwithstanding some delays, the main milestones have been met with the formation of the unity government in February 2020, the agreement on the number of states and the appointment of ten state governors. The peace-building process has been tentative though, owing to factional differences.
About 40 percent of the population remain internally displaced or live as refugees in neighboring countries, and more than 80 percent live below the poverty line.
The country has a very limited social safety net system and very low spending on health and education, which are largely reliant on donor support. Food insecurity remains persistently elevated across most of the country, with more than half of the population in need of food assistance.
The humanitarian crisis has been exacerbated by severe flooding in recent months, the worst in 60 years. It has affected more than 1 million people (about 10 percent of the population), killed livestock, destroyed food stocks, and damaged crops ahead of the main harvest season. Aid agencies are warning of a looming famine in parts of the country.
The much needed aid/resources offered by the world bank have come when South Sudan is implementing an extremely essential economic reforms, including monetary and far-reaching foreign exchange market reforms which involve refraining financing of the deficit according the Central Bank governor.
Dier Tong, said the loan will improve South Sudan’s foreign reserves and this will help build external resilience and sustain current reforms in the exchange market.
He however confirmed and pledged his commitment to transparency, good governance and accountability in the use and reporting of South Sudan’s Special Drawing Rapid allocation.
Earlier this year in late March, IMF gave South Sudan government an economic stabilization loan of $174.2 million to boost the economy. After receiving the loan, the Central Bank in April announced weekly auctioning of an additional $3 million to private banks and forex in an attempt to stabilize the economy.
Since December 2020, the Bank of South Sudan said it has auctioned over $30 million to the market.