International Monetary Fund (IMF) has approved US$174.2m for South Sudan to help the country finance the economy and ensure stability in the face of the COVID-19 pandemic.

Should it go through, it will be the second time the country would benefit from the membership of IMF which started in 2012.

‘‘The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 123 million (50 per cent of quota or about US$ 174.2 million) to South Sudan under the Rapid Credit Facility (RCF),’’ read a statement from the IMF Executive Board dated March 30. 

‘‘The disbursement will help finance South Sudan’s urgent balance of payments needs and provide critical fiscal space to maintain poverty-reducing and growth-enhancing spending.’’

The windfall comes under the auspice of Rapid Credit Facility, a fund’s initiative set up to bail up low income earning countries that struggle to rise above economic troubles due to unprecedented natural disasters and conflicts.

The RCF gives zero-rated loans with a grace period of 5 ½ to 10 years of maturity. This implies that South Sudan may think of repaying the money atleast in a span of a decade after receiving it.

Pressing needs

The fund has predicted a 4.2 per cent shrink in the economy for the current financial year, blaming the misfortunes on the COVID-19 pandemic that inspired the decline in all oil prices.

 The statement partly reads: ‘‘The economic downturn widened the fiscal and the balance of payments deficits, opening large financing gaps in the absence of concessional financing. In the past, the monetization of the fiscal deficit resulted in high inflation and significant exchange rate depreciation.’’

 However, IMF expects a relief come the next financial year should the country rise above its struggles.

However, IMF has praised South Sudan for coming up with fiscal policies to address the economic challenges beginning 2020.

‘‘Since October 2020, the authorities have stopped monetary financing of the deficit which, along with the forex auctions, has helped stabilize the exchange rate. Revenue mobilization measures, including phasing out some tax exemptions, have bolstered domestic non-oil revenue in recent months.’’

But the IMF Deputy Managing Director and Acting Chair Mitsuhiro Furusawa said South Sudan leadership must now address the financing needs, balance of payments as well as roping in fiscal discipline. Furusawa said these will be necessary in helping the country regain favourable economic performance.

‘‘It is important that the authorities remain committed to executing the remainder of the FY20/21 and FY21/22 budgets without arrears accumulation and no recourse to monetary financing,’’ he said, adding: ‘‘Revenue mobilization measures and expenditure rationalization would ensure adequate resource allocation for priority expenditure, including vaccinations, salaries, and critical investments.’’

In January 2021, Central Bank Governor Dier Tong Ngor told Bloomberg that the country was talking to the lender over additional funds on top of US$52.3 million which he described as inadequate.