By Charles Lotara
The International Monetary Fund (IMF) has poured cold water on the government’s appeal to bail the country out of the liquidity crunch announced by the Central Bank two weeks ago as the Bretton Wood institution struggles to save the world economy from a total recession.
A senior official from IMF told The City Review in an exclusive interview last week that the organization is currently reserved on the possibility of extending a financial relief to the government of South Sudan.
The development comes more than a week after the Deputy Governor of Central Bank Daniel Akech Pouch announced that the national reserve was running dry before the statement was reversed by the Governor a day later.
“We have seen the article on the governor’s announcement and have no comment to offer,” Lucie Mboto Fouda, Senior IMF Communication Officer told The City Review from Washington D.C Tuesday last week.
Mboto says the IMF was yet to understand the macroeconomic environment in the country, which can only happen after discussions with bank officials.
“The IMF staff are looking forward to the continued dialogue with government authorities and central bank officials to understand the macroeconomic situation,” she said.
South Sudan’s economic outputs are being affected by the novel coronavirus which has resulted in a drastic drop in oil prices in the global market. Unemployment rates are at record high; agricultural activities have been slowed as the government cannot empower farmers due to lack of budget.
The impact of the coronavirus on the oil sector has seen the scarcity of forex. With the South Sudanese Pounds losing grip against the United States Dollars, the rate of inflation is also spinning out of control, rising prices of basic commodities beyond the reach of the lower and middle-income households.
According to the IMF World Economic Outlook Update report published in June, the possibility of economic growth is unlikely as the world economy faces “a crisis like no other” and “an uncertain recovery” throughout the year 2020.
As COVID-19 ravages South Sudan and the world, IMF says liquidity assistance is urgently needed for countries confronting health crises and external funding shortfalls with accountability through debt relief and financing through the global financial safety net.
The institution says in countries with better economies even under COVID-19, a swift and, in some cases, novel actions by major central banks have enhanced liquidity provision and limited the rise in borrowing costs