The International Monetary Fund (IMF) has announced the approval of a $52.3 million loan to South Sudan. In order to address the urgent need to balance pending payments, the IMF approved emergency assistance to the country under the Rapid Credit Facility.
Since joining the International Monetary Fund (IMF) 8 years ago after its succession from Sudan in 2011, South Sudan has just secured its first loan from the international lender. This comes at a time when the country is struggling with the global oil price crash, the COVID-19 (coronavirus) pandemic and a measles outbreak.
According to the IMF, the pandemic and oil price shock created a severe economic disruption, leading to a sharp decline in South Sudan’s growth and reversing some early gains from political stability.
Before 2020, South Sudan recorded significant economic growth due to improved political stability and an uptick in global oil prices. Economic growth rebounded, inflation declined, and the exchange rate stabilized.
According to Mitsuhiro Furusawa, IMF’s Deputy Managing Director, efforts to address the human and economic effects of the pandemic are appropriate and have helped limit its spread. “Additional financing from the international community remains critical to close the external financing gap and ease the adjustment burden,” Furusawa added.
The latest disbursement is expected to help finance South Sudan’s urgent balance of payments needs and contain the financial shocks its economy is facing. It would also provide a financial space to reduce poverty and enhance growth.
Earlier in the year, the landlocked country raised $500 million from the African Export-Import Bank (Afreximbank) to fund power transmission, infrastructure and farming projects. Apart from oil, its key foreign earner, South Sudan is an agrarian society with a majority of smallholder farmers whose source of livelihoods were impacted by multiple negative trends in 2020.