REPUBLIC OF SOUTH SUDAN

12.6.2024

© 2024 International Monetary Fund
IMF Country Report No. 24/160
http://sudansupport.no/wp-content/uploads/2024/06/1SSDEA2024001_240611_074101.pdf
2023 ARTICLE IV CONSULTATION, AND FIRST AND
SECOND REVIEWS UNDER THE STAFF-MONITORED
PROGRAM WITH BOARD INVOLVEMENT—PRESS
RELEASE; STAFF REPORT; AND STATEMENT BY THE
EXECUTIVE DIRECTOR FOR REPUBLIC OF SOUTH
SUDAN
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions
with members, usually every year. In the context of the 2023 Article IV consultation with
Republic of South Sudan, the following documents have been released and are included
in this package:
• A Press Release summarizing the views of the Executive Board as expressed during its
June 7, 2024 consideration of the staff report that concluded the Article IV
consultation with Republic of South Sudan.
• The Staff Report prepared by a staff team of the IMF for the Executive Board’s
consideration on June 7, 2024, following discussions that ended December 8, 2023,
with the officials of Republic of South Sudan on economic developments and policies.
Based on information available at the time of these discussions, the staff report was
completed on May 20, 2024.
• An Informational Annex prepared by the IMF staff.
• A Debt Sustainability Analysis prepared by the staff of the IMF and the World Bank.
• A Statement by the Executive Director for Republic of South Sudan.
The IMF’s transparency policy allows for the deletion of market-sensitive information and
premature disclosure of the authorities’ policy intentions in published staff reports and
other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
E-mail: publications@imf.org Web: http://www.imf.org
International Monetary Fund
Washington, D.C.
June 2024
PR 24/210
IMF Executive Board Concludes 2023 Article IV Consultation
and IMF Management Completes First and Second Reviews
and Extends Staff-Monitored Program with Board Involvement
with the Republic of South Sudan
FOR IMMEDIATE RELEASE
• South Sudan is significantly impacted by the war in Sudan, especially from a very large
and growing number of refugees, and by a sharp decline in oil production and exports
since mid-February 2024 due to damages to the oil pipeline.
• Article IV discussions focused on putting economic reforms on a sustainable footing,
boosting domestic revenue mobilization, enhancing social spending, and implementing
governance and transparency reforms to reduce corruption.
• The extension of the Staff Monitored Program with Board Involvement (PMB) through
November 15, 2024, provides time to the authorities to implement corrective actions to
bring macroeconomic policies back on track and implement governance reforms; building
a strong track record is essential for any financial arrangement with the IMF.
Washington, DC – June 10, 2024: On June 7, 2024, the Executive Board of the International
Monetary Fund (IMF) concluded the 2023 Article IV consultation1 with the Republic of South
Sudan. On May 14, 2024, IMF Management also approved the completion of the first and
second reviews as well as an extension through November 15, 2024, of South Sudan’s Staff
Monitored Program with Board Involvement (PMB) which was initially approved on February
16, 2023.
The war in Sudan is exacerbating an already dire humanitarian situation. The Sudan conflict
has led to massive return of refugees (over 675,000 as of late-May 2024 in total), higher food
and fuel prices due to difficulties in importing from Sudan, and rising oil production costs
caused by the disruptions of operations at the Port of Sudan. Delays in the repair of the oil
pipeline have reduced oil exports since mid-February 2024 to about one-third of their previous
level. This has exerted pressure on South Sudan’s external and fiscal accounts given that oil
exports account for nearly 90 percent of fiscal revenues and 95 percent of exports.
A 9-month PMB was approved by IMF Management in February 2023 to support the
authorities’ reform agenda aimed at maintaining macroeconomic stability and debt
sustainability and improving governance and transparency with the objective of building a
track record in support of the authorities’ request for a financing arrangement under the
Extended Credit Facility (ECF). Performance under the PMB was initially strong. However,
there have been several slippages in recent months, including the resumption of monetary
financing of the deficit since December 2023, an accumulation of public sector salary arrears
1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial information, and discusses with officials the country’s economic
developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the
Executive Board.
2
(currently at six months), and the reemergence of a significant gap between the official and
market exchange rates. The program has been extended through November 15, 2024, to
allow the authorities time to implement policies aimed at restoring macroeconomic stability,
safeguarding gains on FX reforms, addressing salary arrears, and taking further steps to
strengthen governance and transparency of oil revenue and its use.
Article IV discussions focused on: (i) putting economic reforms under the PMB on a
sustainable footing; (ii) boosting domestic non-oil revenues to create fiscal space;
(iii) enhancing social spending to allow the government to shoulder some of the support for
nutrition, health and education that are currently provided mostly by international partners;
(iv) implementing governance and transparency reforms to reduce corruption; and
(v) assisting the authorities through a tailored capacity building program in key areas, such as
public financial management, revenue administration, and monetary operations.
Escaping fragility requires sustained domestic and multilateral efforts. South Sudan has
significant medium-term BOP financing needs. This reflects several factors, including social
and development spending needs, debt service obligations on a large stock of
non-concessional external debt, reserve coverage of below one month of imports, against a
background of a projected decline in oil prices, and a continued downward global trend for
international aid. To help address these challenges, the authorities have requested a 3-year
arrangement under the ECF. Implementation of macroeconomic stabilization policies and
continued progress on the authorities’ reform program would help establish a track record
towards a potential financial arrangement in the future.
Executive Board Assessment2
Executive Directors broadly agreed with the thrust of the staff appraisal. They expressed
serious concerns over South Sudan’s severe economic and humanitarian challenges, which
have resulted from numerous external shocks, including flooding, the Red Sea crisis, and the
war in Sudan; as well as from domestic policy slippages. Against this worrying backdrop,
Directors urged the authorities to return to prudent macroeconomic policies to restore
economic stability, rebuild buffers, and maintain debt sustainability. They stressed that
pressing ahead with fiscal, governance, and structural reforms, together with continued
multilateral support, is crucial to help South Sudan overcome fragility and address the serious
humanitarian crisis.
Noting the drastic decline in oil revenues, Directors called on the authorities to enhance
non-oil revenue collection and tax administration and to prioritize spending on salaries and
critical social spending, while cutting non-priority spending, as needed, to close the budget
financing gap and preserve debt sustainability. They underscored the need to avoid recourse
to arrears, monetary financing, and non-concessional borrowing. Directors called for resolute
reforms to improve governance and transparency of public operations, including the use of
IMF resources. They recommended improving public financial management and the public
investment framework, including for the oil-for-infrastructure program, which has weak
controls. Directors saw merit in further strengthening the debt management framework.
2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found
here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
3
Directors underscored that ending monetary financing and keeping money growth in check is
essential to bring inflation under control and stabilize the foreign exchange (FX) market, which
would also help in addressing food insecurity. They emphasized the need to build reserves
and to maintain a unified and market determined exchange rate to eliminate FX distortions
and support economic diversification. Directors recommended enhancing the monetary policy
framework, including by implementing the remaining recommendations of the 2021
Safeguards Assessment. They called for addressing the banking sector’s undercapitalization
and for continued efforts to strengthen the anti-money laundering and counter-terrorism
financing framework.
Directors emphasized the need to press ahead with other reforms, including building climate
resilience and improving data provision. They stressed the importance of capacity
development support from the international community, including the IMF, given the large
reform needs amid limited capacity. Directors urged the authorities to facilitate the delivery of
support by humanitarian agencies to help address the dire conditions faced by the population.
Directors took note of the Management-approved 6-month extension of the Staff Monitored
Program with Board Involvement (PMB), which will give the authorities more time to address
recent policy slippages and implement outstanding reforms amid the challenging domestic and
external environment. They called on the authorities to sustain a strong commitment to the
reform agenda and, in this context, welcomed the corrective policy actions being implemented.
Noting the authorities’ interest in a possible arrangement under the Extended Credit Facility,
Directors stressed that successful completion of the PMB with a strong policy track record is
essential for any consideration of a possible arrangement.
4
Republic of South Sudan: Selected Economic Indicators, 2021/22–2026/271
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Act. Prel. Proj.
Output, prices, and exchange rate
Real GDP growth -8.0 -2.4 -8.5 21.1 5.2 5.1
Oil -14.8 -6.8 -16.6 30.9 3.5 3.0
Non-oil 6.0 7.2 7.1 7.4 8.2 8.2
Prices
Inflation (%) 0.9 25.3 42.2 62.9 11.8 7.6
Central government budget
Revenue (%GDP) 30.5 33.7 31.0 33.0 31.7 30.5
Of which: Oil 27.9 29.6 25.3 27.0 25.5 24.1
Expenditures (% GDP) 37.0 25.6 27.3 29.3 27.7 26.2
Fiscal balance (% GDP) -6.5 8.1 3.8 3.7 4.0 4.3
Non-oil 2 -27.5 -17.1 -16.9 -15.2 -14.0 -12.7
Public debt (% GDP) 47.2 51.2 42.9 29.5 23.6 20.8
Balance of payments
Current account (% GDP) -1.6 8.3 4.3 7.1 7.3 6.4
FDI (% GDP) 0.1 0.1 0.6 0.5 0.3 0.5
Reserves (in months of imports) 0.5 0.4 0.7 1.4 2.0 2.4
External debt (% GDP) 34.8 34.8 42.9 36.3 32.8 30.0
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
2 Non-oil revenue excluding grants minus domestically-financed current expenditure minus transfers to
Sudan (including pipeline fees).
REPUBLIC OF SOUTH SUDAN
STAFF REPORT FOR 2023 ARTICLE IV CONSULTATION, AND
FIRST AND SECOND REVIEWS UNDER STAFF–MONITORED
PROGRAM WITH BOARD INVOLVEMENT
EXECUTIVE SUMMARY
Context. South Sudan is a very fragile post-conflict country, and one of the most vulnerable in
the world to climate change effects. The spillovers from the fighting in Sudan have
exacerbated an already dire humanitarian situation. Two-thirds of South Sudan’s population
was exposed to acute food insecurity prior to the outbreak of the conflict in Sudan and the
situation has worsened due to a large and growing number of refugees, and a sharp increase
in fuel and food prices in the border areas with Sudan driven by trade disruptions. The Sudan
war has also delayed the needed repair of the pipeline that transports South Sudan’s crude oil
to international markets through Sudan. As a result, oil exports have since mid-February 2024
collapsed to about one-third of their previous level. This has increased significantly the fiscal
financing and balance of payments gaps given that oil exports account for nearly 90 percent of
fiscal revenues and 95 percent of exports. National elections, the first-ever since South Sudan’s
independence in 2011, are scheduled for December 2024. However, due to delays in and
operationalizing key election-related institutions development partners have expressed
skepticism that free and fair elections will be feasible by the envisaged date.
Article IV discussions. Guided by the 2022 Country Engagement Strategy, discussions focused
on: (i) putting economic reforms under the current Program Monitoring with Board
Involvement (PMB) on a sustainable footing; (ii) boosting domestic non-oil revenue
mobilization to create fiscal space; (iii) enhancing social spending to allow the government to
shoulder some of the support for nutrition, health and education that are currently provided
mostly by the international partners; (iv) implementing governance and transparency reforms
to reduce corruption; and (v) assisting the authorities through a tailored capacity building
program in key areas, such as public financial management, revenue administration, and
monetary operations.
PMB reviews and extension. A 9-month PMB was approved by IMF Management in February
2023 to support the authorities reform agenda aimed at maintaining macroeconomic stability
and debt sustainability and improving governance and transparency with the objective of
building a track record towards an upper credit tranche financial arrangement. The PMB was
combined with a disbursement of 35 percent of quota (about US$114.8 million) through the
Food Shock Window (FSW) of the Rapid Credit Facility (RCF) to address urgent balance of
payments needs, partly arising from the global food shock. Performance under the PMB was
May 20, 2024
REPUBLIC OF SOUTH SUDAN
2 INTERNATIONAL MONETARY FUND
initially strong. Except for the floor on social spending and on reserve money growth that were
missed (the latter by a small margin), all other quantitative targets under the PMB for end-March
and end-June 2023 were met. However, there have been several slippages including the difficulty of
adopting a FY2023/24 budget consistent with the program and delays in implementing several
structural benchmarks. In addition, authorities have resorted to monetary financing of the deficit
since December 2023 to accommodate emerging fiscal spending pressures. In addition, public
sector salary arrears have been accumulating since August 2023 as the authorities delayed salary
payments while verifying payrolls. Despite sporadic payments, salary payments are now outstanding
for the past six months. These slippages have led to extended delays in completing the PMB reviews.
IMF Management had approved two PMB extensions by three months each previously, and the
authorities have requested another 6-month extension to November 15, 2024, to implement the
outstanding structural reforms targeted under the program and bring macroeconomic policies back
on track. The outstanding structural benchmarks have been completed as prior actions for the first
and second PMB reviews, and in the attached Letter of Intent (LOI) the authorities commit to
implement corrective macroeconomic policies as part of the requested third and final PMB review.
Request for financing from the Fund. Escaping fragility requires sustained domestic and
multilateral efforts. South Sudan has significant medium-term BOP financing needs. This reflects
several factors, including social and development spending needs, debt service obligations on a
large stock of non-concessional external debt, and reserve coverage of below one month of imports,
against a background of a projected decline of oil prices and a downward global trend for
international aid. To help address these challenges, as well as the fallout from the damage to the oil
pipeline, the authorities have requested a 3-year arrangement under the Extended Credit Facility
(ECF). Successful completion of the current PMB would help establish track record towards a
potential ECF arrangement in the future.
Staff’s view. Staff assesses that the program remains on track to achieve its objectives and supports
the authorities’ request for completing the first and second reviews of the PMB and its extension to
November 15, 2024 on the basis of the performance so far under the PMB and the corrective
measures that are being taken as outlined in the attached LOI, including the completion of three
prior actions: (i) the completion and publication of the audit of spending financed by the FSW of the
RCF disbursed in March 2023; (ii) the adoption by the BoSS Board of the external audit for the BoSS
financial statements for FY2021; and (iii) completion and publication of budget execution reports for
the first two quarters of FY2023/24. The PMB extension would allow time to implement corrective
actions on salary arrears, monetary financing, and exchange rate policy; strengthen the
macroeconomic policy framework to respond to recent external shocks; and take steps toward
improving the transparency of oil revenue and its use, especially for spending under the
oil-for-roads program.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 3
Approved By
Catherine Pattillo
(AFR) and Guillaume
Chabert (SPR)
An IMF team conducted a mission during November 29–December 8,
2023. The mission team visiting Juba in person comprised Niko Hobdari
(head), Enrique Chueca Montuenga, Sunwoo Lee, Jules Leichter, Masateru
Okamoto, Jens Reinke (all AFR), Guy Jenkinson (IMF Resident
Representative, Juba Office), Hoth Chany (economist, Juba Office), and
Mr. Nyamongo (Senior Advisor, OED). The team met with the previous
Minister of Finance and Planning Mr. Bak Barnaba Chol, Bank of South
Sudan Governor Mr. James Alic Garang, and other high-level government
officials. Staff also had productive discussions with representatives of the
donor and business communities. Discussions continued during the 2024
Spring Meetings in Washington DC with the new Minister of Finance and
Planning Mr. Awow Daniel Chuang Deng and the Governor of the Bank
of South Sudan Mr. James Alic Garang. Mr. Fernando Morán Arce and
Ms. Mireille Nsanzimana (both AFR) contributed to the preparation of
this report.
CONTEXT ___________________________________________________________________________________________ 5
RECENT ECONOMIC DEVELOPMENTS _____________________________________________________________ 5
OUTLOOK AND RISKS ______________________________________________________________________________ 8
POLICY DISCUSSIONS _____________________________________________________________________________ 10
A. Fiscal Policy ______________________________________________________________________________________ 10
B. Monetary and Financial Sector Policy ____________________________________________________________ 17
C. Strengthening Governance and Transparency ___________________________________________________ 19
D. Capacity Development and Emerging Priorities __________________________________________________ 21
E. Data for Surveillance _____________________________________________________________________________ 21
PMB EXTENSION AND OUTLOOK FOR FUTURE IMF ENGAGEMENT ____________________________ 22
STAFF APPRAISAL _________________________________________________________________________________ 23
BOXES
1. Spillovers from the Conflict in Sudan ______________________________________________________________________ 6
2. Salary Increases in the FY2023/24 Budget _______________________________________________________________ 12
3. Social Situation Under Additional Pressure from Sudan’s War__________________________________________ 14
FIGURE
1. Recent Economic Developments __________________________________________________________________________ 7
CONTENTS
REPUBLIC OF SOUTH SUDAN
4 INTERNATIONAL MONETARY FUND
TABLES
1. Selected Economic Indicators, 2019/20–2026/27 _______________________________________________________ 26
Table 2a. Fiscal Operations of the Central Government 2019/20-2026/27 (In Billions of South Sudanese
Pounds, _____________________________________________________________________________________________________ 27
Table 2b. Fiscal Operations of the Central Government, 2019/20-2026/27 (In percent of GDP) __________ 28
Table 3. Monetary Accounts, June 2018–June 2023 _______________________________________________________ 29
4. Balance of Payments, 2019/20–2026/27 ________________________________________________________________ 30
5 Quantitative Targets Under the Program Monitoring with Board Involvement _________________________ 31
6. Structural Targets Under the Program Monitoring with Board Involvement ___________________________ 32
ANNEXES
I. Food Insecurity in Republic of South Sudan _____________________________________________________________ 33
II. Money Supply, the Exchange Rate and Prices in Republic of South Sudan _____________________________ 37
III. Implementation of Recommendations from the IMF 2022 Article IV Consultation ____________________ 43
IV. Risk Assessment Matrix _________________________________________________________________________________ 44
V. Fragility Trends in Republic of South Sudan: An AI-Augmented View __________________________________ 46
VI. Domestic Revenue Mobilization in Republic of South Sudan __________________________________________ 49
VII. External Sector Assessment ____________________________________________________________________________ 53
VIII. Capacity Development Strategy _______________________________________________________________________ 57
APPENDIX
I. Letter of Intent __________________________________________________________________________________________ 63
Attachment I. Memorandum of Economic and Financial Policies ____________________________ 65
Attachment II. Technical Memorandum of Understanding ___________________________________ 59
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 5
CONTEXT
1. The authorities have reiterated their commitment to holding elections by end-2024
but concerns about the timeline are intensifying. The country’s first national elections are due to
be held in December 2024. However, with the establishment and operationalization of key
institutions behind schedule, and insufficient budgetary allocations for election expenses,
development partners have expressed skepticism that free and fair elections will be feasible by the
envisaged date.
2. The Sudan war is exacerbating an already dire humanitarian situation and has delayed
the repair of the oil pipeline that transports South Sudan’s crude oil to export markets
causing a collapse in oil exports since mid-February 2024 (Box 1). Approximately 7.1 million
individuals––more than half of the population––will experience acute food insecurity during the
April–July 2024 lean season (Annex I). This reflects a combination of continuing localized conflict, the
fallout from recent historic flooding, and the precarious conditions of 2.3 million internally displaced
people. The Sudan conflict has led to massive return of South Sudanese refugees that had settled in
Sudan (over 650 thousand as of late-April 2024 in total, including refugees from Sudan), higher food
and fuel prices given difficulties importing from Sudan, and rising oil production costs from the
disruptions of operations at the Port of Sudan. Delays in the repair of the oil pipeline have reduced
oil exports since mid-February 2024 to about one-third of their previous level. This has exerted
pressure on external and fiscal accounts given that oil exports that account for nearly 90 percent of
fiscal revenues and 95 percent of exports.
3. A 9-month Program Monitoring with Board Involvement (PMB) was approved in
February 2023 and combined with a disbursement through the Food Shock Window (FSW) of
the Rapid Credit Facility (RCF). The PMB has been extended twice by three months each
previously, and the authorities have requested another 6-month extension to November 15, 2024, to
implement the outstanding structural reforms targeted under the PMB and bring macroeconomic
policies back on track (see ¶7). The FSW disbursement was SDR 86.1 million, 35 percent of quota
(about US$114.8 million). The authorities allocated US$72.3 million for FX reserves and transferred
US$15 million to the World Food Program (WFP) and US$5 million to the International Organization
for Migration (IOM) to mitigate food insecurity.1 The remainder (US$22.5 million) was allocated
predominantly for social spending, including to import essential drugs (US$10 million) and to fund
school construction and renovation (US$10 million).
RECENT ECONOMIC DEVELOPMENTS
4. The authorities have struggled to maintain fiscal and monetary discipline in the face of
large external shocks. The Ministry of Finance and Planning (MoFP) was able to close the
FY2022/23 fiscal gap estimated at 2.9 percent of GDP at the start of the PMB.2 This was achieved
1 The WFP and IOM have spent the resources allocated to them from the FSW on refugee emergency response,
school feeding programs, urban safety net, and capacity strengthening.
2 See IMF Country Report No. 23/108.
REPUBLIC OF SOUTH SUDAN
6 INTERNATIONAL MONETARY FUND
without new non-concessional borrowing or monetary financing, largely through
higher-than-expected oil and non-oil revenues and lower-than-projected external debt service. The
Bank of South Sudan (BoSS) held reserve money steady between August 2022 and November 2023.
However, it resumed providing overdrafts to the MoFP starting in December 2023 to accommodate
emerging fiscal pressures stemming largely from the need to finance critical spending while faced
with challenges to oil production and export from attacks by Houthi rebels on commercial shipping
in the Red Sea and, more recently, damage to the oil pipeline running through war-torn Sudan
(Text Figure 1).
Box 1. Republic of South Sudan: Spillovers from the Conflict in Sudan
The humanitarian and economic spillovers to South Sudan from the conflict in Sudan have occurred
through three main channels: refugees, trade, and impacts on the oil sector.
Refugees
As of late-April 2024, the total number of arrivals had exceeded 650,000 individuals and continues to rise.
Many of these arrivals are South Sudanese returnees who fled from the civil war during 2013-18, along
with refugees from Eritrea and Sudan. Relocation of refugees from the Northern border regions is made
more difficult by South Sudan’s poor road infrastructure and flooding caused by heavy seasonal rains. The
difficult logistics are also hampering the provision of in-kind assistance by aid agencies, which typically
“pre-position” their supplies ahead of the start of the rainy season.
Trade
South Sudan’s border states import food, medical goods, and fuel from Sudan. This trade has been
disrupted and substituting it with imports from other East African neighbors is logistically difficult and
costly due to South Sudan’s poor internal transport infrastructure. The shift in trade patterns has
contributed to the depreciation of the South Sudanese Pound (SSP) since the start of the Sudan conflict,
as a larger share of its trade with Sudan is reportedly conducted in SSP, while trade with the EAC is
predominantly conducted in U.S. dollars. The disruption in trade with Sudan together with the
agglomeration of refugees in a small number of areas have caused price spikes and shortages in food,
medical goods, and fuel in the states bordering Sudan, exacerbating an already challenging humanitarian
situation.
Oil Sector Impact
The conflict in Sudan has compromised the oil pipeline to Port Sudan––which carries all of South Sudan’s
oil to international markets. Conflicting parties in Sudan’s civil war control various sections of the pipeline,
making access for maintenance hazardous and significantly delaying needed repairs. As a result of
damages to the pipeline, oil exports have since mid-February 2024 declined to about one-third of their
previous level. Uncertainty caused by the conflict (as well as Houthi attacks on shipping vessels in the Red
Sea) has further increased the insurance and freight costs applied to South Sudan’s oil exports, reducing
the net FOB price of a barrel of South Sudanese oil and consequently the government’s oil revenue per
barrel. The ongoing conflict in Sudan is also preventing the importation through Port Sudan of chemicals
and spare parts, which constitute critical inputs for South Sudan’s oil sector, thus altering import routes
for such inputs and increasing the cost of oil production.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 7
Figure 1. Republic of South Sudan: Recent Economic Developments
Oil production has been adversely affected by floods and, more
recently from damages to the oil pipeline from the Sudan war.
Preliminary data from FAO/WFP shows agricultural production
exceeded staff forecasts in 2022.
Following an 18-month pause, the authorities resumed using
the government overdraft in December 2023…
…which has led to a sharp increase in reserve money…
… and, together with a reduced supply of FX from the collapse
in oil exports, precipitated a rapid depreciation of the exchange
rate…
…and, in turn, a spike in inflation as food and fuel prices
continued to move one-for-one with the exchange rate.
Sources: Bank of South Sudan, FAO, WFP, and IMF staff calculations.
40
50
60
70
80
90
100
110
80
100
120
140
160
180
200
Oil prices (USD/barrel)
Oil production (barrel/day)
Oil production Oil price
0
100
200
300
400
500
600
700
800
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Net claims on Central Government
(billion SSP, at constant SSP/USD)
70
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
250
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Reserve Money (March 2021 = 100)
0
2
4
6
8
10
12
14
16
0
500
1000
1500
2000
2500
Mar-23
Apr-23
Jun-23
Jul-23
Sep-23
Dec-22
Dec-23
Feb-24
Mar-24
Amount auctioned (USD million)
Exchange rates (SSP/USD)
Amount auctioned (RHS) Amount not settled (RHS)
Delayed auction pay-out Parallel market rate
Official rate
Apr-24
400
600
800
1,000
1,200
1,400
1,600
50
70
90
110
130
150
170
190
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
SSP/USD (parallel)
Juba Food & Fuel Prices
(Jan-22 = 100)
Food and Fuel
SSP/USD (parallel)
REPUBLIC OF SOUTH SUDAN
8 INTERNATIONAL MONETARY FUND
5. The exchange rate has been under pressure. Despite the tight monetary stance between
August 2022 and December 2023, the exchange rate depreciated at a faster-than-expected pace for
most of FY2022/23. A brief appreciation of the exchange rate following the FSW disbursement in
March 2023 was reversed by the effects of the outbreak of the Sudan war in April 2023. During the
second half of 2023, the rate of depreciation slowed, reflecting higher oil prices and continued tight
monetary policy. However, the pace of depreciation picked up sharply at the turn of 2024, driven by
a severe disruption to oil production and export and subsequent monetary financing. In addition,
there has been a significant increase in the premium of the exchange rate in the parallel market
relative to the official rate, which stood at about 60 percent in late-April 2024 compared to an
average of below 5 percent during August 2021-December 2023.
6. The depreciation of the exchange rate has led to an inflation surge. Historical evidence
indicates a one-for-one pass-through from exchange rate movements into food and fuel inflation
within six months (Annex II), and this appears to be borne out in recent months. As such, the
larger-than-expected depreciation raised FY2022/23 inflation to 25.3 percent, with elevated inflation
expected to continue through FY2023/24.
7. The performance under the PMB has been mixed. Six out of seven quantitative targets
(QTs) for end-March and end-June 2023 were met; the only missed QTs resulted from a breach of
the floor on social spending and on reserve money growth (the latter by a small margin) (Table 5).3
While the authorities made progress towards the structural reforms targeted under the PMB, several
structural benchmarks were missed (Table 6), resulting in a delay of the two PMB reviews envisaged
for end-June and mid-November 2023. IMF Management approved two extensions of three-months
each of the PMB and the authorities have requested another extension to November 15, 2024, to
provide time to implement pending structural reforms and bring economic policies back on track. As
prior actions for the first and second PMB review: (i) an audit of the FSW-financed expenditure was
finalized and published in April 2024; (ii) the BoSS Board has adopted the external audit for the BoSS
financial statements for FY2021; and (iii) budget execution reports for the first two quarters of
FY2023/24 have been completed and published.4 As elaborated in the attached Letter of Intent, the
authorities are implementing corrective macroeconomic policies for the third and final PMB review.
Most of the 2022 Article IV recommendations have been or are being implemented (Annex III).
OUTLOOK AND RISKS
8. The medium-term outlook is for modest economic growth and contained inflation
amidst elevated levels of uncertainty (Table 1). GDP is projected to contract 8.5 percent in
FY2023/24, with a bounce back of 21.1 percent growth in FY2024/25 following the projected fixing
of the pipeline damage, and average about 5.4 percent over the medium term, driven by a
3 While the authorities remained current on salaries in the priority social sectors, cash rationing led to a shortfall of
spending on goods and capital relative to the budget for these sectors. Social and humanitarian spending was
higher than budgeted to address the impact of the war in Sudan and drought, but it did not offset the significant
underspending relative to allocation in health and education.
4 The budget execution reports for Q1 and Q2 of FY2023/24 are published in the MoFP website.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 9
continued gradual recovery in oil production from disruptions caused by flood damage and the
Sudan war, and continued strong growth in agricultural output. While medium-term growth is
projected above the SSA average, per capita GDP growth would be insufficient to significantly
improve living standards. CPI inflation is expected to return to single digits in the medium term on
the assumption that the BoSS adheres to its reserve-money growth target of below 10 percent per
year.
9. Medium-term BOP gaps are sizeable. Most of the FSW disbursement in March 2023 was
used to strengthen FX reserves. However,
the reduced FX flows from the collapse in
oil exports since February 2024 has put
pressure on the FX market, and reserves
have declined since then (Text Figure 2). As
a result, import coverage remains
insufficient at 0.9 months, leaving South
Sudan highly vulnerable to further external
shocks. Lifting of oil by Sudan in excess of
agreed transfer fees (5 percent of GDP
annually) and external debt amortization
(4 percent of GDP annually) limit the
resources available to support essential
imports. Moreover, aid, including priority
humanitarian assistance, is anticipated to
continue declining substantially, following
a recent temporary boost in the wake of COVID-19 pandemic, Russia’s invasion of Ukraine, and the
Sudan conflict.
10. Risks to the outlook are mostly on the downside (Annex IV). South Sudan remains one
of the world’s most fragile countries (Annex V). The most significant risk arises from the Sudan war.
A further escalation of the conflict in Sudan could complicate the repair of existing damage to the
pipeline transporting South Sudan’s oil through Sudan and result in an extended disruption of oil
production and exports, with devastating economic consequences. Continued attacks on
international shipping in the Red Sea could also further disrupt the export of oil. Significant
domestic risks emanate from an unforeseen break-down of the political power-sharing
arrangements and a flaring up of violence in the lead-up to the 2024 elections. Food insecurity and
internal displacements could be aggravated given the high likelihood of severe floods and droughts
due to climate change effects. On the upside, higher than projected global oil prices and a rapid
resolution of the Sudan conflict could reduce BOP and fiscal financing gaps, while growth potential
in agriculture could be realized if weather conditions allow.
Text Figure 1. Republic of South Sudan: Daily
Reserves
(USD millions)
0
50
100
150
200
250
300
350
400
450
500
Source: Bank of South Sudan, and IMF staff calculations.
REPUBLIC OF SOUTH SUDAN
10 INTERNATIONAL MONETARY FUND
POLICY DISCUSSIONS
11. Discussions focused on policies to help South Sudan progress on escaping fragility.5
These include: (i) returning to prudent macroeconomic policies to restore maintain economic
stability and maintain debt sustainability; (ii) enhancing social spending to allow the government to
shoulder some of the support for health and education currently provided by international donors;
(iii) boosting domestic non-oil revenue mobilization to create fiscal space to cushion volatility from
natural disasters and commodity shocks and increase development spending; (iv) implementing
governance and transparency reforms to reduce corruption; and (v) building resilience by
strengthening safety nets.
Background
12. The FY2023/24 budget implies a financing gap of 5.3 percent of GDP, despite a solid
primary surplus, due to lower oil revenue from pipeline damages and large negative external
financing (Text Table 1, Tables 2a and 2b). The budget included a significant rise (by 3.7 percent
of GDP at the time of budget approval in August 2023) in public salaries to reverse the erosion of
real public wages in recent years, which had left public salaries at an exceptionally low level (Box 2).
This increase was partially offset by reducing the allocation to the oil-for-infrastructure scheme from
20,000 to 16,250 barrels per day, increasing the exchange rate used for customs valuation from
90 to 300 SSP/US$, and removing some ad-hoc tax exemptions granted in the past by the MoFP.
Staff estimates a budgetary impact of SSP110 billion (1.7 percent of GDP) and SSP43 billion
(0.6 percent of GDP) from the reduction in the oil-for-infrastructure allocation and customs
exchange rate adjustment, respectively. High global oil prices and exchange rate effects on oil
revenue in FY2023/24 are offset by a significant fall in oil revenues from the oil pipeline damage.
While the authorities plan to move away from monetary financing, a persistent fall in oil revenue
and limited domestic and external financing options may result in additional monetary financing in
the near term, likely to further accelerate inflation.
13. Salary arrears have reemerged, reflecting both slow implementation of revised
payment procedures and fiscal pressures. Salaries for July–October 2023 were paid with a delay
and those for November 2023-April 2024 are in arrears. This reflects, in part, changes in August 2023
to the procedures for salary payments, which included a vetting by special committees for every
government agency of all salary payments to eliminate ghost workers.6 A significant reduction in oil
revenues beginning in February 2024 has also adversely affected the ability to remain current on
salaries and reduce past arrears.
5 See the Country Engagement Strategy with South Sudan in IMF Country Report No. 23/108 for the main drivers of
fragility in South Sudan and the recommended Fund strategy to help the country escape fragility.
6 Vetting of civil servants was completed by early 2024 but vetting of other state employees, including security forces,
is ongoing.
A. Fiscal Policy
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 11
14. South Sudan’s ratio of non-oil tax to GDP remains the lowest in SSA, despite ongoing
progress with tax administration reforms. South Sudan recorded 4.1 percent tax-to-GDP ratio in
FY2022/23 and is on track to reach 5.8 percent of GDP in FY2023/24. While a significant increase
from previous years, the non-oil tax to GDP ratio remains the lowest in SSA (Text Figure 3). Tax
frontier analysis suggests that South Sudan’s tax gap ranges from 2.9 to 6.1 percent, with the
average gap estimated at about 4.5 percent of GDP (Annex VI). The size of the gap relative to the
actual tax-to-GDP ratio is much larger than the SSA average, suggesting large potential gains from
improvement in revenue administration and tax policy reforms.
Text Table 1. Republic of South Sudan: Summary of Central Government’s Fiscal
Operations
Text Figure 2. Republic of South Sudan: General Government Tax Revenue
Source: WEO live database; South Sudanese authorities.
Budget Prel. Budget Staff Proj. Budget Prel. Budget Staff Proj.
Total revenue and grants 832.8 1,795.7 1,838.0 2,574.3 14.7 33.7 22.2 31.0
Oil revenues 715.8 1,578.1 1,536.5 2,097.2 12.6 29.6 18.5 25.3
Non-oil tax revenue 117.0 217.6 245.3 477.1 2.1 4.1 3.0 5.8
Total expenditure 1,170.7 1,362.6 1,971.3 2,263.1 20.6 25.6 23.8 27.3
Current expenditure 770.6 859.2 1,383.1 1,496.4 13.6 16.1 16.7 18.0
of which: Salaries 64.1 166.1 457.1 457.1 1.1 3.1 5.5 5.5
of which: Operating expenses 158.2 300.2 270.4 270.4 2.8 5.6 3.3 3.3
of which: Interest 16.2 52.6 56.3 0.0 0.3 0.6 0.7
of which: Oil-sector-related domestic transfers 49.9 77.0 123.1 127.0 0.9 1.4 1.5 1.5
of which: Transportation and transit fees to Sudan 92.0 174.8 173.4 255.6 1.6 3.3 2.1 3.1
Net acquisition of non-financial assets 400.0 503.4 588.2 766.7 7.0 9.5 7.1 9.2
of which : Road project 238.2 462.0 435.7 614.1 4.2 8.7 5.3 7.4
Overall balance (cash) -337.8 433.1 -133.3 311.1 -5.9 8.1 -1.6 3.8
Financing -183.1 -211.0 -133.7 -750.5 -3.2 -4.0 -1.6 -9.0
Domestic (net) 0.0 154.4 0.0 22.8 0.0 2.9 0.0 0.3
Foreign (net) -183.1 -365.4 -133.7 -773.3 -3.2 -6.9 -1.6 -9.3
of which: TFA Overpayment to Sudan -270.7 -430.4 -5.1 -5.2
Financing gap 521.0 0.0 267.1 439.3 9.2 0.0 3.2 5.3
Note: For consistency, Percent of GDP figures are calculated as share of staff projected GDP.
FY2022/23 FY2023/24 FY2022/23 FY2023/24
Sources: South Sudanese authorities; and IMF staff estimates and projections.
Billion of SSP Percent of GDP
South
Sudan
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Tax-to-GDP (% of GDP)
Panel II. Sub-Saharan Africa: Tax to GDP (%), 2022
4.4
3.9
4.0
4.8
2.7
3.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0.0
50.0
100.0
150.0
200.0
250.0
Percent of GDP
Billion SSP
Panel I. South Sudan: Non-Oil Revenue
Nonoil Revenue (billions SSP) Nonoil Revenue to GDP (%)
REPUBLIC OF SOUTH SUDAN
12 INTERNATIONAL MONETARY FUND
Box 2. Republic of South Sudan: Salary Increases in the FY2023/24 Budget
Box 2. Figure 1. Government Wage Bill and Employment in
Sub-Saharan Africa
(Latest available value)
Sources: Bank of South Sudan, and IMF staff calculations.
The FY2023/24 budget included a
400 percent nominal increase in
salaries for most civil servants and
organized forces (security and
military personnel). The increase
does not apply to members of
Parliament and some other groups,
whose salaries were increased
significantly in FY2022/23. The
increase applied to allowances and
to public servants serving at the
regional level who are paid through
block grant allocations, creating
challenges to proper estimation and
budget allocation. The wage bill
budgeted in FY2023/24 shows a
250 percent nominal increase
relative to FY2022/23.
Box 2. Figure 2. Wage Bill as a Share of Total Expenditure
in Sub-Saharan Africa in 2022
(In percent)
Sources: Bank of South Sudan, and IMF staff calculations.
This salary increases reverses the
sharp erosion of real public wages
in recent years. The wage bill had
fallen from about 5.5 percent of GDP
in FY2017/18 to about 3.1 percent of
GDP in FY2022/23, as nominal wage
adjustment fell well below inflation
during this period. As a result,
average public salaries in South
Sudan were exceptionally low by
regional standards, as suggested by
a low share of spending on salaries
relative to GDP despite a relatively
large government workforce (Box 2
Figure 1). While the salary increase in
FY2023/24 would bring the wage bill
as a share of GDP to a level slightly
higher (5.5 percent) than in
FY2017/18, the pay for the vast
majority of government workers
would remain below the
international poverty line of
2.15 US$/day and the share of the
wage bill in South Sudan’s total
government spending would remain below the average and mean in Sub-Saharan Africa (Box 2 Figure 2).
BEN
BWA
BFA
BDI
CPV
COG
CIV
ETH GAB
GHA
GIN
KEN
MDG
MUS
SEN
SYC
ZAF
SSD FY2022/23
SSD, FY2023/24
Budget
TZA
UGA
ZWE
0
2
4
6
8
10
12
14
16
0 2 4 6 8 10 12 14 16 18
Wage bill in percent of GDP
General Government Employment in percent of working-age population
0
10
20
30
40
50
60
South Sudan 2022/23
Equatorial Guinea
Kenya
Niger
Uganda
Burundi
Angola
Rep. of congo
Togo
Gambia, The
Côte d’Ivoire
Rwanda
Benin
Mauritius
Tanzania
Cameroon
Liberia
South Sudan 2023/24 Budget
Ghana
Senegal
Guinea
Malawi
Madagascar
Sierra Leone
Burkina Faso
Zambia
C. Afr rep.
Guinea-Bissau
Comoros
Mali
Seychelles
Central African Republic
South Africa
Gabon
Lesotho
Dem.Rep. of Congo
Cabo Verde
Eswatini
São Tomé and Príncipe
Botswana
Namibia
Chad
Eritrea
Mozambique
Ethiopia
SSA Average
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 13
15. Significant spillovers from the conflict in Sudan, protracted flooding, and declining
humanitarian assistance have increased the need for budgetary social spending. The Sudan war
is exacerbating already dire social conditions in South Sudan (Box 3). South Sudan’s social indicators
are among the weakest in the world. This includes the world’s highest proportion of primary
school-aged children out of school (62 percent), and one of the lowest proportions of population
that lives within reach of health care facilities (44 percent). The Sudan conflict is putting the social
system under additional pressure. With social assistance programs for vulnerable groups accounting
for a very small percentage of budgetary expenditures, humanitarian assistance is predominantly
funded by aid from development partners. The resources available to the authorities are inadequate
for addressing the substantial needs for spending in the social sectors.
16. The attached DSA suggest that South Sudan’s debt remains sustainable, but with a
high risks of debt distress. The breaches are larger and more sustained compared to the PMB
approval, which reflect mainly a deterioration in the economic outlook following recent external
shocks. Several risks loom, especially the large fiscal gap created by the recent collapse in oil
revenue. In addition, weak debt management and governance heighten the vulnerability to
domestic and external shocks. Therefore, while debt dynamics under the baseline appear on a
sustainable path, even if the fiscal gaps were to be closed with non-concessional financing in a
worst-case scenario, these risks call for continued commitment to maintaining fiscal discipline and
avoiding new non-concessional borrowing to ensure South Sudan’s debt remains on a sustainable
path.
Staff Recommendations
17. A combination of fiscal measures of about 5.3 percent of GDP will be needed to close
the baseline financing gaps in FY2023/24 and FY2024/25 without additional recourse to
monetary financing or non-concessional borrowing. Raising the exchange rate used for customs
evaluation could quickly raise revenue (the rate was raised to 300 SSP/US$ in the Finance Bill for
FY2023/24, but the recent depreciation has eroded customs revenue potential). Given little scope for
further revenue measures in the short term and the need to protect social spending, significant
containment of non-priority spending will also be needed, especially from the oil-for-infrastructure
scheme, which amounts to 7.4 percent of GDP in FY2023/24. Despite their substantial hike wages
remain reasonable given their extremely low level, as well as the reality that public wages are the
main channel of the social safety net. Salaries and social expenditure should enjoy absolute priority
in spending, whereas non-priority spending, including oil-for infrastructure, be limited to revenue
being available after priority needs have been met.
18. Expenditure arrears and reliance on non-concessional external or monetary financing
should be avoided because they would undermine macroeconomic stability and debt
sustainability. Progress on discussions on payment by Sudan for the oil lifted for excess transit fees
and to collect from Sudan for credits accumulated (US$658.7 million or about 9.0 percent of GDP as
of June 2023) would provide much needed fiscal space. Planned issuance of Treasury bills would be
a useful instrument for the government to finance future budgets and could serve as a building
block for development of financial markets. However, the issuance should be well prepared
REPUBLIC OF SOUTH SUDAN
14 INTERNATIONAL MONETARY FUND
Box 3. Republic of South Sudan: Social Situation Under Additional Pressure from
Sudan’s War1
The war in Sudan has exacerbated an already dire humanitarian situation in South Sudan. Around
9.4 million individuals or 76 percent of the population – including about 4.9 million children, 2.2 million
women, and 337,000 refugees – are anticipated to require humanitarian aid and protection in 2024. The
need has surged by about 500,000 people or by 5 percent compared to 2022. This escalation is propelled by
the conflict in Sudan, climate adversities, and disease outbreaks. Over a million individuals escaping the war
and seeking sanctuary in neighboring nations, including a significant influx of more than 650,000 people
into South Sudan as of late-April 2024. To manage the issue at the border, the WFP has estimated a need for
funding of US$120 million. Prior to the recent conflict in Sudan, South Sudan was already host to more than
300,000 refugees and asylum-seekers in addition to more than 2.3 million internally displaced people.
Box 3. Figure 1. Republic of South Sudan: Social
Spending as Percentage of Total Government Spending
Sources: MoFP, and IMF staff calculations.
Health conditions remain critical.
Only 48 percent of the population
currently have access to basic health
services. Preventable diseases like
malaria, diarrhea, and pneumonia are
leading causes of death, especially
among children. Just 19 percent have
access to basic sanitation services and
51 percent to basic drinking water
services. Health expenditure has been
about 5-6 percent of GDP in recent
years. Life expectancy at birth has
improved by 8 years from 54 years in
2000 to above 62 in recent years,
mostly due to improvement in the political conditions and the end of internal war. Lack of power—with only
7 percent of the population having access to electricity—severely limits water pumping, healthcare,
education, and other basic services.
The education system is profoundly inadequate and child protection risks are severe and increasing.
Over 2.8 million primary-aged children now estimated to be out of school. Learning outcomes are extremely
poor among those enrolled. Severe shortages of trained teachers, learning materials, and infrastructure
undermine service delivery and access. Over 4 million children are estimated to need protection services due
to threats from conflict, violence, exploitation, disease, and malnutrition. However, social services lack
capacity and resources. Levels of acute malnutrition remain extremely concerning. Over 1.4 million children
under 5 are expected to suffer from acute malnutrition in 2024.
The national system for social protection remains extremely limited. Government spending on social
assistance programs accounts for less than 0.5 percent of GDP, one of the lowest rates globally. The majority
of social assistance comes through international humanitarian aid, leaving vulnerable groups like women,
children, the elderly, and disabled heavily dependent on external support.
__________________________________________________
1 For more details on social indicators and social spending in South Sudan see Annex V in IMF Country Report No.
23/108.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 15
technically and be communicated effectively to the banking sector, given the potential adverse
impact of past defaults on market confidence. Proper recording, monitoring and reporting of debt
transactions and better information flow between the debt management unit and relevant agencies
are key to improving the debt management framework. Strengthening the policy and governance
framework to catalyze development partner support in the form of grants and concessional
financing would also support macroeconomic stability. Staff urged the authorities to avoid
non-concessional borrowing or to collateralize any loans against oil revenue consistent with PMB
conditionality and the authorities’ commitments as collateralized transactions could raise the risk of
debt distress including through reducing budget flexibility and further complicating debt
management, especially when the transaction lacks transparency.
19. Revenue and PFM reforms are needed to ensure that development objectives are met
in a sustainable manner. Social and infrastructure needs in South Sudan are large and debt
vulnerabilities are high. This requires efforts are made to increase both oil and non-oil revenues and
ensure that spending is efficient and well-targeted. A strong commitment to strengthen revenue
administration is essential, supported by an enhancement of human resource capacity.7
• Non-oil revenues: Increased non-oil revenue collection would be a more reliable source of
government revenue and could serve as a buffer against significant downside risk from oil
price and output volatility. Revenue mobilization measures that could help enhancing
non-oil revenue collection include broadening of the sales tax base that currently remains
very narrow, while ensuring that the poor and vulnerable are protected, streamlining of
non-statutory tax and customs exemptions, adjusting gradually the exchange rate used for
custom valuation towards the rate prevailing in the market, strengthening customs
administration, enhancing human resource capacity through recruitment and training, and
introducing a Value-Added Tax (VAT) over the medium-term.
• Oil revenues: Oil revenues could be increased through elimination of oil advances, which
cost an estimated 1½ percent of GDP in FY2022/23. This could be supported through
improved cash management and the creation of fiscal cash buffers covering 1–2 months of
budget expenditures that would reduce the need for oil advances.
• Public investment: Strengthening public investment management is essential to ensure
value for money. The oil-for-infrastructure program takes a significant portion of oil
revenues and more needs to be done to report on the status of individual projects. The
process for approving, implementing and monitoring projects should be rigorous and
transparent, supported by procurement guidelines and a clear budget process based on
international best practices. This would help address development partner concerns on
governance and transparency and would be a key building block of building a policy track
record ahead of future possible discussion on a Fund financing arrangement.
• Social spending: A more balanced allocation and reprioritization of the budget would be
necessary for the government to shoulder part of the necessary social spending and start
7 The IMF is providing technical assistance under the Global Public Finance Partnership project (2024–28) to the
South Sudan Revenue Authority to support revenue administration reforms.
REPUBLIC OF SOUTH SUDAN
16 INTERNATIONAL MONETARY FUND
building basic social assistance programs targeted to the most vulnerable. An initial re-
allocation of some spending from infrastructure to social spending would be welcome.
• Transparency and Accountability: Recent steps towards better transparency are welcome,
including the publication of comprehensive quarterly budget execution. Their regular and
timely publication, including dedicated reports on oil revenue and spending financed by
earmarked resources would strengthen fiscal transparency and accountability (see also ¶29).
Transparent procurement procedures consistent with the Public Procurement and Disposal
of Assets (PPDA) Act will be needed to combat perceptions of pervasive corruption.
20. More efforts are needed to strengthen the institutional framework for debt
management. The authorities need to implement the action plan, including by establishing an
appropriate debt database and a debt management system. While the amendments to the BoSS Act
approved by Parliament in August 2023 did not abolish the mandate of the BoSS to issue sovereign
guarantees (end-May 2023 SB of the PMB), as the authorities argued that this would have been
inconsistent with the Transitional Constitution that mandates BoSS to issue sovereign guarantees,
the amendments limited the issuance of such guarantees only on behalf of the Government, against
any state government subject to “relevant legislation on public finance.” In light of this limited
mandate, it is essential that the issuance of sovereign guarantees be coordinated with state budget
process and subject to the same approval process used for external loans specified in the PFM Act
(i.e., first screening any requests for sovereign guarantees by the Technical Loan Committee (TLC) of
the MoFP, followed by approval by the Council of Ministers upon recommendation by the TLC, and
ultimately adoption by Parliament, before any such guarantees are issued by the BoSS).
Authorities’ Views
21. The authorities expressed their commitment to contain non-priority spending and
continue efforts on non-oil revenue mobilization. They confirmed that the priority would be on
avoiding new salary arrears and delivering planned social spending for the remainder of this fiscal
year. In relation to revenue mobilization, the authorities noted that they had made good progress
on increasing revenues under their 5-year plan but acknowledged that the current level of non-oil
revenue remains significantly below its potential. They will continue efforts on tax and customs
reforms, which include the introduction of a VAT over the medium term and further strengthening
revenue administration. The authorities also agreed on the need to increase public spending on
health, education, and other social and humanitarian support, noting that this may require
containing non-priority spending, including on oil-for-infrastructure, given limited fiscal space in the
current budget and the need to support debt sustainability over the medium term. They committed
to make the issuance of any sovereign guarantees by the BoSS subject to the same approval process
as specified in the PFM Act for external loans, consistent with the recent amendments to the BoSS
Act approved by Parliament. However, they underscored the significant challenges to close the
projected fiscal gap in FY2023/24 without additional recourse to monetary financing or
non-concessional borrowing if the damaged oil pipeline is not brought fully back online soon.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 17
Background
22. The authorities have relied on monetary financing since December 2023, following a
period of strict control over money growth from August 2022 to late-2023. Reserve money
declined by 2 percent between September 2022 and November 2023, contributing to signs of
exchange rate stabilization. Responding to fiscal spending pressures, as well as external shocks
affecting oil revenue, the authorities resorted to monetary financing since December 2023, causing
substantial pressure on the exchange rate. FX auctions remain the main instrument at the disposal of
the BoSS for mopping-up excess liquidity. Following an interruption in late-2022/early-2023, the
regular weekly FX auctions resumed but were paused briefly around early 2023 as the BoSS reserves
fell to a critically low levels and the FSW disbursement was delayed. This pause, together with delays
in settling dollar auctions that took place in December 2022 and March 2023, undermined market
confidence. Given the lack of a functioning FX interbank market, FX auctions in principle play an
important role in helping price discovery in the market. Since January 2024, however, foreign
currency at auctions has been awarded to the lowest, rather than the highest, bidder, slowing
depreciation of the official exchange rate and widening the gap with the parallel market rate.
23. Demand for the BoSS term-
deposit facility (TDF) has been robust.
The BoSS introduced the TDF in October
2022, intended as an additional tool for
monetary policy to complement FX
auctions. It has successfully auctioned at
least SSP 6 billion of term deposits every
month since then, at an average interest
rate of about 14 percent in 2023.
Maturities have been extended gradually,
with the 336- day tenor introduced in
September 2023. The total credit
outstanding under the TDF had risen to
just over SSP 64 billion (about 10 percent
of reserve money) by November 2023
(Text Figure 4).
24. The supervisory role of the
BoSS has expanded with the approval of the Amendment to the 2012 Banking Act in
November 2023. The amended act (Banking and Other Financial Institutions Act) brings supervision
of non-bank financial institutions including microfinance institutions and insurance companies under
the mandate of the BoSS. The institutions were originally regulated by individual state authorities,
including those operating across states. Common licensing process, supervision, and regular
reporting requirement for banks and non-banks will help maintain financial stability.
B. Monetary and Financial Sector Policy
Text Figure 3. Republic of South Sudan: TDF
Auctions, January–November 2023
Sources: Bank of South Sudan, and IMF staff calculations.
0
10
20
30
40
50
60
70
80
0
2
4
6
8
10
12
14
16
Outstanding amount (SSP bn)
Auction volumes (bars, SSP bn)
Interest rate (dots, in percent)
14 days 28 days 84 days 168 days 336 days Outstanding Amount (RHS)
REPUBLIC OF SOUTH SUDAN
18 INTERNATIONAL MONETARY FUND
25. The BoSS is continuing its effort to address the undercapitalization of the domestic
banking sector. Several licensed commercial banks, while not systemically large, remain
undercapitalized. The licenses of two inactive domestic banks were revoked in December 2022 as a
first step towards resolving the issue. Following the revocation, a dedicated liquidation team within
the BoSS was formed, but limited legal expertise in connection with the treatment of assets and
liabilities during a wind down process remains a hurdle to the process. The BoSS is seeking Cabinet
approval for its recently adopted action plan on banking sector reform to ensure that it enjoys
broad political support.
Staff Recommendations
26. Reserve money targeting remains appropriate for South Sudan for the time being,
given the very low level of international reserves and a limited monetary policy toolkit. Staff
analysis suggests a one-for-one relationship, on average, between reserve money growth and the
depreciation of the SSP against the U.S. dollar in the parallel market, with the estimated impact of a
reserve-money expansion on the exchange rate being almost instantaneous. Furthermore, the
exchange rate pass-through into food and fuel prices is also one-for-one with a few months’ lag
(Annex II). Against this background, staff urged the BoSS to avoid additional monetary financing to
avoid further depreciation pressure on the SSP. FX auctions should accept bids according to their
ranking starting with the best exchange rate to the worst from the auctioneer’s point of view to
ensure the premium between the official and parallel exchange rates remains, on average, within a
relatively narrow band. Further strengthening of this monetary policy framework would require
progress in two areas. First, the BoSS needs to improve its capacity for liquidity monitoring and
forecasting in close coordination with MoFP. In particular, market liquidity implications of large fiscal
expenditure should be assessed ahead of time and fiscal and monetary operations should be
properly planned to maintain price stability. Second, the BoSS needs to mop up excess liquidity in a
more predictable manner, with FX auctions being the most effective tool. A well-planned
introduction of treasury bills would also eventually relieve pressure on monetary financing of the
budget.
27. The implementation of the BoSS action plan will be critical to address the
undercapitalization of the domestic banking sector. The BoSS action plan, which draws from IMF
TA recommendations, lays out steps to strengthen the legal expertise and supervisory capacity of
the BoSS, enabling it to enforce compliance of all banks with the amended 2012 Banking Act. A
healthy banking sector would promote private sector development and help expand financial
inclusion, which remains low compared to the average in sub-Saharan Africa.8
Authorities’ Views
28. The BoSS expressed its commitment to strengthen its monetary and operational
framework. The BoSS is committed to containing money growth and managing liquidity consistent
with maintaining low inflation and macroeconomic stability. The BoSS stated that it is strengthening
8 See Annex V of IMF Country Report No. 22/266.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 19
coordination with the MoFP, including on cash management, and will respond appropriately to the
macroeconomic impact of higher salary payments to civil servants resulting from large salary
increases and the recent settlement of wage arrears. While the BoSS is committed to eliminating
monetary financing, it noted that some limited monetary financing may be needed in the short term
in the context of drastically lower oil revenues and continued spending pressures in priority areas.
The BoSS plans to improve the auditing framework and implement the new national payment
system in the coming months. Further the BoSS reiterated its commitment to roll out the BoSS
action plan on the modernization of the monetary policy framework once it is endorsed by the
Council of Ministers, which includes reforms to promote the independence of the central bank and
the move to a price-based framework over the medium term consistent with EAC protocol.
Background
29. The transparency of monetary and fiscal operations and expenditure controls have
improved, but significant weaknesses remain. Up-to-date data on FX auctions outcomes and key
monetary indicators are published by the BoSS, and the MoFP has published the budget execution
reports for FY2022/23 and Q1 and Q2 of FY2023/24. Progress is also being made in improving cash
planning and establishing a Treasury Single Account (TSA). However key issues persist, including
that the cash plan is not being used effectively, and the narrow scope of the TSA does not allow to
fully benefit from cash pooling. A recent audit report by the National Audit Chamber on the part of
central government spending financed from the disbursement through the FSW in March 2023
concluded that funds went to the intended beneficiaries (i.e., predominantly for spending on health
and education). However, it identified several procedural weaknesses, and recommended
improvements in a number of areas, including to ensure that all payments by the MoFP are made
through the Integrated Financial Management and Information System (IFMIS), and that the award
of contract for all goods and services should be consistent with the Public Procurement and Disposal
Act (PPDA) of 2018. In line with the recommendations of Auditor General reports on the two
previous RCF disbursements, the authorities are planning a gradual rollout of salary payments
through commercial banks and issuance of biometric identifications with technical support from the
World Bank for all government employees.
30. In addition, the process for approving, implementing, and monitoring public
investment expenditures lacks transparency. The oil-for-infrastructure scheme accounts for about
one quarter of government expenditure in the FY2023/24 budget; yet reporting on the
implementation of current projects is minimal. The National Audit Chamber conducted a
performance audit report on the status of one road project in October 2023, identifying
implementation weaknesses including significant arrears to the contractor. There has been no
reporting on the status of other road projects. In particular, considerable information gaps remain
on investment planning, procurement processes, and the amount and quality of works completed in
each road project.
C. Strengthening Governance and Transparency
REPUBLIC OF SOUTH SUDAN
20 INTERNATIONAL MONETARY FUND
31. Work is underway to bring South Sudan’s legal framework for AML/CFT in line with
international standards. The 2009 Anti-Corruption Commission Act has been amended in 2023 to
strengthen the fight against corruption. However, the significance of the modification brought by
the new law remains to be assessed as the Staff did not receive copy of it, while the commission
remains under-resourced and lack capacity. South Sudan is on the FATF’s grey list with significant
deficiencies in its AML/CFT framework. With IMF TA the authorities are working to incorporate the
current FATF standards into the draft AML/CFT Act, finalize governance and operational rules for the
Financial Intelligence Unit and develop legislation to protect the non-profit sector from the risks of
terrorism financing.
Staff Recommendations
32. The authorities should reinforce institutional checks on expenditure. This includes
redesigning the payment procedures so that the MoFP can effectively control commitments, using
the cash plan to inform cash limits on monthly expenditure, and enforcing expenditure controls
through the IFMIS built-in functionality based on projected cash flow forecasts. The expansion of the
TSA MOU is necessary to eventually include all spending agencies of the Central Government within
the PFM framework. A robust framework should be adopted to guide the oil-for-infrastructure
scheme starting from project prioritization to procurement and oversight from the MoFP regarding
the inspection and certification of the works.
33. Building on the publication of budget execution reports, the authorities need to step
up their efforts to enhance fiscal transparency. Quarterly budget execution reports should
continue to be published in a timely manner. The procedures under the oil-for-infrastructure
scheme should also be strengthened to bring them in line with best PFM practices, especially on the
appraisal, selection, and procurement processes, as well as on reporting the amount and quality of
works completed and payments made for each road project.
34. Concerted effort and commitment from the authorities are needed to move forward
the implementation of the recommendations of the 2021 IMF Safeguards Assessment. While
the external audit of the BoSS financial statements for FY2021 has been approved by the BoSS
Board, it should be signed and published by the National Audit Chamber as a matter of urgency.
Similarly, the appointment process of an external audit firm to start the FY2022-2023 audit has been
delayed as it has taken longer than expected for the National Audit Chamber to check candidates’
qualifications and should be completed as soon as possible (retained as a structural benchmark for
end-June 2024). Limited progress has also been observed in addressing other priority safeguards
recommendations, including on financial reporting and internal audit. The BoSS is also urged to
follow through on its earlier commitments to strengthen currency operations, including by sending
tender requests to reputable currency manufacturers.
Authorities’ Views
35. The authorities concur with the need to strengthen governance and improve the
transparency of government revenue and spending. They recognize weaknesses in the
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 21
oil-for-infrastructure scheme and the need to improve its implementation process and transparency.
They further agree on expanding the TSA, and regularly publishing quarterly budget execution
reports. In addition, as prior action for the first and second reviews of the PMB, they have completed
the audit of the expenditures financed by the disbursement through the FSW of the RCF and have
published the audit report. They are also committed to appoint an external audit firm with
experience in central bank audits with a view to start the audit for the BoSS financial statements for
FY2022 and FY2023 as soon as possible.
36. The IMF will continue to support the authorities’ CD needs with a tailored capacity
building program. The capacity needs in South Sudan remain substantial across all sectors.
Consequently, CD activities will leverage a variety of channels and resources. This includes physical
and virtual TA delivery from HQ, AFRITAC East, and coordinated support with other organizations
such as the World Bank, taking into account limited absorptive capacity. Support will prioritize areas
such as PFM, fiscal governance, revenue administration, monetary operations, and macroeconomic
statistics (Annex IX).
37. Emerging priorities for surveillance include building resilience to climate change,
enhancing financial inclusion, and promoting gender-inclusive growth. Dealing with climate
change effects will be guided by the analysis in the 2022 Article IV report, which emphasized the
importance of consolidating macroeconomic gains and building reserve buffers, to create the fiscal
and monetary space to cushion volatility from natural disasters or commodity shocks. To expand
financial inclusion, discussions will center on pressing ahead with banking sector reforms. The policy
advice discussed above to increase social spending has strong gender implications, as it would help
support the increase of girls’ enrollment in schools.
38. Data provision continues to have serious shortcomings that hamper surveillance. Most
official macroeconomic data continue to have significant weaknesses in terms of quality, periodicity,
and timeliness. Data on government finances and oil sector transactions deteriorated in quality
during the civil war. However, the authorities have been providing crucial information for
surveillance on oil production, revenues, and debt to development partners through the PFM
Oversight Committee, established in April 2020, and have started to publish such data through the
recent budget execution. South Sudan has been receiving intensive TA from the IMF to assess and
improve the quality of official data on government finances, monetary and financial statistics, and
real sector statistics. Progress is being made to improve data availability and quality, subject to
resource and capacity constraints.
D. Capacity Development and Emerging Priorities
E. Data for Surveillance
REPUBLIC OF SOUTH SUDAN
22 INTERNATIONAL MONETARY FUND
PMB EXTENSION AND OUTLOOK FOR FUTURE IMF
ENGAGEMENT
39. Staff supports the authorities’ request for completing the first and second review and
extending the PMB through November 15, 2024. As discussed in this report, the track record
under the current PMB is mixed and efforts are needed to address recent policy slippages. The
authorities achieved a stabilization of the economy and eliminated the distortions in the FX market
by unifying the exchange rates in the market under the previous SMP. However, the geopolitical
events in Sudan and the Red Sea presented a severe shock to revenue and FX earnings in early 2024.
The authorities resorted to monetary financing as a short-term measure and have limited
depreciation of the official exchange rate, resulting in a widening gap with the parallel exchange
rate. While the fiscal authorities maintain a solid primary surplus and reforms are showing first
results in raising non-oil revenues, salary arrears have accumulated and further cuts to non-priority
are needed in the face of lower oil revenues. Governance reforms have also improved the
transparency of monetary and fiscal operations. However, despite some progress, additional
measures are needed to strengthen governance and transparency, including implementing
recommendations of the safeguards assessment.
40. To that end, as elaborated in the attached LOI the authorities are committed to
implement corrective macroeconomic policies as part of the third and final PMB review to
stabilize the FX market, lower inflation, unify the exchange rate, and clear salary arrears. These
objectives will be supported in the attached LOI and MEFP with:
• Quantitative targets for end-June 2024 that: (i) set a zero limit on monetary financing to
avoid sharply accelerating inflation; (ii) set a floor on salary payments and social spending in
line with budget allocations to safeguard such critical spending; and (iii) sets targets on the
non-oil primary fiscal balance, the BoSS net credit to government, and on non-concessional
borrowing to maintain debt sustainability (MEFP Table 1).
• Structural benchmarks for end-June 2024 on: (i) the appointment of an external auditor to
conduct the audit for the BoSS financial statements for FY2022 and FY2023; (ii) the adoption
a timebound action plan to clear all salary arrears; and (iii) the completion and publication of
BoSS audited financial statements for FY2021 (MEFP Table 2).
41. The Fund’s engagement with South Sudan over the medium term will continue be
guided by the strategy outlined in the 2022 Country Engagement Strategy. As elaborated in the
summary of the Country Engagement Strategy (IMF Country Report No. 22/266 Annex I), policies to
address the manifold sources of fragility in South Sudan should aim to maintain macro stability;
increase agricultural production (a sector that provides the livelihoods for 80 percent of the
population); enhance social spending; and foster private-sector investment. These policies need to
be complemented with institutional reforms to strengthen governance and transparency.
42. The economic reforms supported by the previous SMP and the current PMB are laying
the groundwork for a future UCT program following the successful completion of the PMB.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 23
South Sudan has significant spending needs for poverty reduction and promoting inclusive growth,
giving rise to medium-term BOP gaps which would require financial support from development
partners including the IMF. Nevertheless, significant steps remain to be taken to establish a track
record for a potential program, including to return to fiscal and monetary discipline to recapture
earlier gains in macroeconomic stabilization, and to consolidate FX market liberalization reforms by
unifying the official and parallel market exchange rates. Key areas of reform the authorities should
implement going forward include: (i) bolster reserves and expanding the set of available monetary
instruments; (ii) strengthen debt management and oversight; (iii) deepen PFM reforms and
enhancing the transparency of oil revenue and related spending (especially under the
oil-for-infrastructure scheme); (iv) clear salary arrears and stepping up spending in the social sectors;
(v) improve domestic revenue mobilization; and (vi) strengthen the anti-corruption and AML/CFT
frameworks. Continued implementation of reforms in these areas will help build credibility with
donors and may unlock concessional financing.
STAFF APPRAISAL
43. South Sudan is expected to show robust growth in FY2024/25, but the headwinds
—especially from the Sudan crisis—are considerable. A modest recovery in oil production,
despite the sector’s logistical challenges arising from conflict in Sudan, alongside robust growth in
the non-oil sector should deliver modest growth in the medium term. However, there is a risk that
the fallout from the Sudan crisis could intensify, especially if South Sudan is unable to bring its oil to
international markets for an extended period of time. An unforeseen breakdown of the interim
government’s power-sharing arrangements and larger-than-anticipated adverse impacts from
floods or droughts also pose significant risks to the outlook. Even under the most optimistic growth
outcome, South Sudan’s humanitarian situation will remain dire in the near term, with two-thirds of
the population exposed to acute food insecurity.
44. Considering the drastic decline in fiscal revenue from the damage to the oil pipeline,
the authorities are urged to prioritize spending on salaries and social assistance while
avoiding additional recourse to monetary financing or non-concessional borrowing. The
authorities were able to close a sizeable fiscal gap in FY2022/23 without recourse to new
non-concessional borrowing, monetary financing, or salary arrears. This was partly achieved by
rationing non-priority spending in line with available cash limits. Fiscal discipline has been an
essential precondition for monetary discipline in the past. Given uncertainties on the timing when
the damaged oil pipeline will be brought fully back online, large social spending needs and large
public wage increases, priority should be given to the payment of salaries and critical social
spending while cutting non-priority spending, as needed to close the projected budget financing
gap. The authorities are urged to achieve this with minimal, if any, additional recourse to monetary
financing or non-concessional borrowing with a view to restore macroeconomic stability and
maintain debt sustainability. If emergency financing needs cannot be entirely avoided, short-term
non-concessional borrowing is preferable to monetary financing, due to the latter’s fast pass-
through to prices and exchange rates. The authorities are also urged to avoid collateralizing any
REPUBLIC OF SOUTH SUDAN
24 INTERNATIONAL MONETARY FUND
external borrowing against oil revenue consistent with PMB conditionality and the authorities’
commitments.
45. Keeping money growth in check will be essential to stabilize the FX market and bring
inflation under control. The tight control of the money supply exercised by the BoSS until
late-2023 helped anchor the exchange rate and inflation. The resumption of large monetary
financing since December 2023 has fueled a sharp exchange rate depreciation and a rapid increase
in inflation. The BoSS is urged to bring money growth under control as a priority, to help stabilize FX
market and reduce inflationary pressures. As long as monetary and fiscal policy remain prudent and
the authorities are able to address the impact of spillovers from Sudan, market confidence should
improve, and the volatility of the exchange rate would be reduced.
46. A unified and market determined exchange rate is essential to eliminate the
reemergence of distortions in the FX market and support economic diversification. Staff urges
the BoSS to stick to a policy of awarding FX at auctions to bids according to their ranking starting
with the best exchange rate to the worst from the auctioneer’s point of view, up to the bid for which
the cumulated amount of bids corresponds to the intended allotment. This would ensure that the
premium between the official and parallel exchange rates remains, on average, within a relatively
narrow band, consistent with the differences between these two markets, as was the case until
late-2023.
47. The steadfast implementation of the authorities’ action plans for debt management
reform and banking sector reform is essential to address long-standing structural issues.
South Sudan’s debt management institutions have been beset by a lack of capacity and IT
infrastructure, limited transparency on debt stocks and debt service, and the absence of a debt
management strategy. This has facilitated non-transparent borrowing decisions, raised the cost of
debt service, and undermined credibility vis-à-vis creditors, which the authorities are acknowledging
but are slow to address. Meanwhile, South Sudan’s domestic banking sector has suffered from
long-standing undercapitalization issues, presenting an obstacle to the sustainable growth of
banking services that are vital for South Sudan’s economic development. The respective action plans
adopted by the MoFP and the BoSS promise to address these issues by reforming institutional
setups and increasing critical capacity within an ambitious yet realistic timeframe. The authorities
should make the implementation of these plans a priority, seeking assistance from development
partners as needed.
48. Continued PFM and governance reforms are essential to ensure a good use of public
resources and to build credibility with the public. Transparency about fiscal operations, monetary
developments, and oil sector activity has increased noticeably, and the authorities should maintain
the regular, timely publication of budget execution reports, monetary statistics, and oil production
figures. Further, the authorities are urged to address the findings and recommendations of the
Auditor General report on the use of the FSW disbursement of March 2023, especially to ensure that
all payments by the MoFP are made through IFMIS, and that the awarding of contracts for all goods
and services is consistent with the PPDA of 2018. in addition, the authorities should implement in
the coming months key PFM reforms, including by completing the roll-out of central-government
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 25
salary payments through bank accounts, operationalizing the PPDA, and continuing to build the
institutional framework to fight corruption and embed AML/CFT. The procedures under the
oil-for-infrastructure scheme should also be strengthened, especially as regards the appraisal,
selection, and procurement processes, as well as on reporting the amount and quality of works
completed and payments made for each road project.
49. Staff assesses that the program remains on track to achieve its objectives and supports
the authorities’ request for the completion of the first and second reviews and the extension
of the PMB through November 15, 2024, given overall adequate performance and
demonstrated commitment towards meeting the program’s objectives. The authorities
completed three prior actions: (i) the audit of spending financed by the FSW of the RCF disbursed in
March 2023 was completed and published in April 2024; (ii) the BoSS Board adopted the audit of the
BoSS for FY2021 in May 2024; and (ii) the budget execution report for the first and second quarters
of FY2023/24 have been published shortly after the end of each quarter.
50. Staff recommends that the next Article IV Consultation for South Sudan be held on the
12-month cycle.
REPUBLIC OF SOUTH SUDAN
26 INTERNATIONAL MONETARY FUND
Table 1. Republic of South Sudan: Selected Economic Indicators, 2019/20–2026/271
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Act. Act. Prel.
Output, prices, and exchange rate
Real GDP (percent change) 13.2 -2.3 -8.0 -2.4 -8.5 21.1 5.2 5.1
Oil 26.4 3.2 -14.8 -6.8 -16.6 30.9 3.5 3.0
Non-oil 0.5 -11.6 6.0 7.2 7.1 7.4 8.2 8.2
Inflation (average) 33.6 43.5 0.9 25.3 42.2 62.9 11.8 7.6
Inflation (end-of-period) 12.7 44.7 -11.6 46.2 62.7 28.3 7.8 8.0
Oil GDP (percent of GDP) 62.4 67.2 64.8 61.1 55.9 59.7 56.3 53.2
GDP deflator -2.1 31.9 229.5 77.1 70.3 63.4 8.6 10.2
Official exchange rate (SSP/US$, average) 160.8 190.7… 422.7 … … … … …
Official exchange rate (SSP/US$, end period) 163.8 322.6 499.7 … … … … …
Parallel market exchange rate (SSP/US$, average) 309.2 522.9 432.1 … … … … …
Money and credit
Broad money 40.8 67.3 47.4 108.0 … … … …
Monetary base 42.3 53.4 48.9 82.8 … … … …
Credit to non-government sector 35.2 60.6 74.1 264.6 … … … …
M2/GDP (percent) 20.3 26.3 12.8 15.4 … … … …
Central government budget
Total revenues and grants 29.5 33.6 30.5 33.7 31.0 33.0 31.7 30.5
Of which : Oil 25.5 29.0 27.9 29.6 25.3 27.0 25.5 24.1
Of which : Non-oil tax revenue 4.0 4.7 2.6 4.1 5.8 6.0 6.2 6.4
Of which : Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Expenditures 39.4 37.2 37.0 25.6 27.3 29.3 27.7 26.2
Current 35.7 26.5 24.1 16.1 18.0 21.1 20.0 18.8
Of which : transfers to Sudan 13.1 10.7 5.6 3.3 3.1 6.0 6.0 5.9
Net acquisition of non-financial assets 3.8 10.7 12.9 9.5 9.2 8.2 7.7 7.4
Overall balance (cash) -9.9 -3.6 -6.5 8.1 3.8 3.7 4.0 4.3
Change in non-salary arrears -3.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall balance (accrual balance) -6.5 -3.6 -6.5 8.1 3.8 3.7 4.0 4.3
Public debt
Total External public debt 2 55.2 55.8 47.2 51.2 42.9 29.5 23.6 20.8
Of which : external public debt 44.2 44.9 34.8 34.8 38.0 25.3 19.9 17.6
External sector
Exports of goods and services 63.7 68.4 65.6 62.8 57.3 61.4 58.2 55.2
Imports of goods and services 92.0 85.6 72.8 64.8 68.7 69.2 67.4 65.7
Current account balance (including grants) -19.3 -4.3 -1.6 8.3 4.3 7.1 7.3 6.4
Current account balance (excluding grants) -39.7 -27.0 -20.0 -14.5 -24.4 -18.2 -18.4 -18.3
Gross foreign reserves (millions of US dollars) 129.5 163.7 191.7 148.5 284.4 565.6 840.9 1,083.5
Gross foreign reserves (in months of imports) 0.3 0.4 0.5 0.4 0.7 1.4 2.0 2.4
Memorandum items:
Population (millions) 13.6 14.0 14.4 14.8 15.2 15.7 16.1 16.6
Oil production (millions of barrels) 62.1 64.1 54.5 50.9 42.4 55.5 57.5 59.2
South Sudan’s oil price (U.S. dollars per barrel) 49.3 55.9 86.5 88.5 79.6 76.1 72.1 69.6
Brent price (U.S. dollars per barrel) 51.3 55.2 86.5 88.5 79.6 76.1 72.1 69.6
Nominal GDP (billions of SSP) 789 1,016 3,079 5,323 8,295 16,409 18,761.2 21,725.0
Nominal GDP (billion US$) 4.9 5.3 7.3 7.3 6.0 7.1 7.4 7.8
External debt (millions US$) 2,168 2,390 2,533 2,529 2,295 1,793 1,464 1,367
GNI per capita (US dollars) 320.7 327.8 441.6 429.8 334.9 438.6 413.4 429.6
Nominal SSP GDP (percent change) 10.8 28.8 203.0 72.9 55.8 97.8 14.3 15.8
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
2 Public external debt in SSP (at eop exchange rate) in percent of GDP in SSP (at avg exchange rate). FY2020/2021 value reflects large difference between eop and avg exchange
in that fiscal year.
(Percent of GDP, unless otherwise indicated)
(Annual percentage change, unless otherwise indicated)
2019/20 2020/21
Projections
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INTERNATIONAL MONETARY FUND 27
Table 2a. Republic of South Sudan: Fiscal Operations of the Central Government,
2019/20–2026/27 1
(In billions of South Sudanese pounds)
2020/21 2021/22 2024/25 2025/26 2026/27
Act. Act. dg Prel. Budget Prel. Budget Proj.
Total revenue and grants 232.8 341.5 938.1 832.8 1,795.7 1,837.9 2,574.3 5,419.2 5,945.2 6,629.8
Total oil revenues 201.1 294.1 857.6 715.8 1,578.1 1,536.4 2,097.2 4,434.6 4,782.0 5,230.7
Non-oil tax revenue 31.8 47.4 80.5 117.0 217.6 245.3 477.1 984.6 1,163.2 1,399.1
Grants 0.0 0.0 0.0 0.0 56.2 0.0 0.0 0.0 0.0
Total expenditure 311.1 378.0 1138.5 1170.7 1,362.6 1,971.3 2,263.1 4,811.9 5,195.6 5,702.5
Current expenditure 281.3 269.5 742.9 770.61 859.2 1,383.1 1,496.4 3,468.7 3,750.9 4,094.8
Salaries 36.5 44.1 94.8 64.1 166.1 457.1 457.1 904.3 1,033.9 1,197.2
Operating expenses 82.7 60.4 356.5 158.2 300.2 270.4 270.4 535.0 611.7 708.3
NRA Retention/Commission 9.3 17.4 24.1 47.7 98.5 116.3 139.9
Interest 16.4 1.2 9.9 … 16.2 52.6 56.3 172.3 102.5 64.7
Transfers to states 31.4 44.7 110.7 193.4 137.9 265.0 268.9 603.8 667.6 750.8
Oil-related transfers 10.9 23.5 48.8 49.9 77.0 123.1 127.0 275.6 292.4 316.3
Transfers to MoP (3% of Oil Rev) 3.6 8.8 18.3 18.7 25.4 46.2 42.3 103.3 109.6 118.6
Capital transfers to states (Future Gen Fund) 1.2 0.0 0.0 0.0 8.6 0.0 14.1 0.0 0.0 0.0
Transfers to oil prod states & Com (5% of Oil Rev) 6.0 14.7 30.5 31.2 43.0 76.9 70.6 172.2 182.7 197.7
Non-oil transfers to states 20.5 21.2 61.9 143.5 60.9 141.9 141.9 328.2 375.2 434.5
Block grants to states 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Transfers to Sudan2 103.6 109.1 170.9 92.0 174.8 173.4 255.6 990.1 1,127.2 1,277.1
Transportation and transit fees 22.0 51.0 98.4 92.0 174.8 173.4 255.6 990.1 1,127.2 1,277.1
TFA payments 81.7 58.1 72.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Salary arrears repayment … 0.0 0.0 67.1 0.0 50.0 50.0 83.4 91.7 -43.2
Other expenses 10.7 10.0 0.0 186.7 45.3 90.5 90.5 81.5 0.0 0.0
Emergency contingency fund + ORSA 0.0 10.0 0.0 169.5 13.5 20.9 20.9 0.0 0.0 0.0
Peace agreement 10.7 0.0 0.0 12.0 12.0 50.0 50.0 81.5 0.0 0.0
Transfers to WFP/IOM 0.0 19.8 0.0 0.0 0.0 0.0 0.0
Agriculture Bank of South Sudan 3.0 3.0 0.0 0.0 0.0
South Sudan Pension Fund 15.0 15.0 0.0 0.0 0.0
Other expenditure 14.5 5.2 1.6 1.6 0.0 0.0 0.0
Net acquisition of non-financial assets 29.8 108.4 395.6 400.0 503.4 588.2 766.7 1,343.2 1,444.6 1,607.6
of which: Constituency Development Fund … …… … … … 47.9 47.9 … … …
of which: Oil for Infrastructure project 100.0 274.7 238.2 462.0 435.7 614.1 965.8 0.0 0.0Errors and omissions
Overall balance (cash) -78.3 -36.4 -200.4 -337.8 433.1 -133.4 311.1 607.3 749.7 927.3
Change in non-salary arrears -26.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall balance (accrual balance) -51.7 -36.4 -200.4 -337.8 433.1 -133.4 311.1 607.3 749.7 927.3
Statistical discrepancy 142.8 38.5 -171.9 0.0 222.1 0.0 0.0 0.0 0.0 0.0
Financing gap 0.0 0.0 0.0 521.0 0.0 267.1 439.3 554.3 89.2 -655.2
Financing 194.5 74.9 28.5 -183.1 -211.0 -133.7 -750.5 -1161.6 -838.9 -272.1
Domestic (net) 28.1 32.2 94.6 0.0 154.4 0.0 22.8 0.0 0.0 0.0
Net credit from the central bank 44.2 32.2 94.6 0.0 154.4 0.0 22.8 0.0 0.0 0.0
Overdraft … …… … 0.0 177.2 0.0 0.0 0.0 0.0 0.0
of which: RCF-1 … -16.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of which: Carried over RCF-2 … -94.6 94.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of which: Carried over RCF-FSW … …… … … -22.8 0.0 22.8 0.0 0.0 0.0
Net credit from commercial banks 10.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Change in arrears -26.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Foreign (net) 166.3 42.7 -66.1 -183.1 -365.4 -133.7 -773.3 -1161.6 -838.9 -272.1
Disbursement3 266.6 90.1 344.2 0.0 42.5 47.9 155.1 241.0 100.2
of which: RCF-1 Initial Disbursement … 9.1… … … … … … … … …
of which: RCF-1 Auction Gain … 14.7… … … … … … … … …
of which: RCF-2 Initial Disbursement … 16.1… … … … … … … … …
of which: RCF-2 Auction Gain … 13.9… 0.0 … … … … … … …
of which: RCF-FSW Disbursement … … … … 42.5 … … … … …
Budget for health and education 22.8
Transfers to WFP/IOM 19.8
of which : new SDR …… 60.0 0.0 … … … … …
Amortization -100.3 -47.4 -283.6 -183.1 -137.2 -133.7 -390.8 -1316.7 -1079.9 -372.3
TFA Overpayment … … -126.8 0.0 -270.7 … -430.4 0.0 0.0 0.0
Memorandum items:
Non-oil Primary Fiscal Balance 4 -153.3 -205.5 -846.6 … -910.9 … -1403.7 -2492.7 -2619.9 -2763.9
Oil production (millions of barrels) 62.1 64.1 54.5 … 50.9 … 42.4 55.5 57.5 59.2
Nominal GDP (bn of South Sudanese pounds) 788.7 1,015.8 3,078.5 … 5,322.6 8,294.8 8,294.8 16,409.3 18,761.2 21,725.0
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
2 Transfer to Sudan is the sum of TFA payment (financial transfer) and average transportation fee (average of 9.7 US$/barrel) from using the oil pipeline. TFA payments ended in January 2022.
4 Non-oil revenue minus primary expenditure excluding transfers to Sudan, and tranfers to oil producing states and communities.
3 Initial disbursement refers to the amount received directly by the authorities while Auction Gain refers to the proceeds of the auction in which disbursements were converted at the official exchange rate
Projection
2023/242019/20 2022/23
REPUBLIC OF SOUTH SUDAN
28 INTERNATIONAL MONETARY FUND
Table 2b. Republic of South Sudan: Fiscal Operations of the Central Government,
2019/20–2026/27 1
(In percent of GDP)
2020/21 2021/22 2024/25 2025/26 2026/27
Act. Prel. Prel. Budget Prel. Budget Proj.
Total revenue and grants 29.5 33.6 30.5 15.6 33.7 22.2 31.0 33.0 31.7 30.5
Total oil revenues 25.5 29.0 27.9 13.4 29.6 18.5 25.3 27.0 25.5 24.1
Non-oil tax revenue 4.0 4.7 2.6 2.2 4.1 3.0 5.8 6.0 6.2 6.4
Total expenditure 39.4 37.2 37.0 22.0 25.6 23.8 27.3 29.3 27.7 26.2
Current expenditure 35.7 26.5 24.1 14.5 16.1 16.7 18.0 21.1 20.0 18.8
Salaries 4.6 4.3 3.1 1.2 3.1 5.5 5.5 5.5 5.5 5.5
Operating expenses 10.5 5.9 11.6 3.0 5.6 3.3 3.3 3.3 3.3 3.3
NRA Retention/Commission 0.2 0.3 0.3 0.6 0.6 0.6 0.6
Interest 2.1 0.1 0.3 … 0.3 0.6 0.7 1.1 0.5 0.3
Transfers to states 4.0 4.4 3.6 3.6 2.6 3.2 3.2 3.7 3.6 3.5
Oil-related transfers 1.4 2.3 1.6 0.9 1.4 1.5 1.5 1.7 1.6 1.5
Transfers to MoP (3% of Oil Rev) 0.5 0.9 0.6 0.4 0.5 0.6 0.5 0.6 0.6 0.5
Capital transfers to states (Future Gen Fund) 0.2 0.0 0.0 0.0 0.2 0.0 0.2 0.0 0.0 0.0
Transfers to oil prod states & Com (5% of Oil R 0.8 1.4 1.0 0.6 0.8 0.9 0.9 1.0 1.0 0.9
Non-oil transfers to states 2.6 2.1 2.0 2.7 1.1 1.7 1.7 2.0 2.0 2.0
Transfers to Sudan2 13.1 10.7 5.6 1.7 3.3 2.1 3.1 6.0 6.0 5.9
Transportation and transit fees 2.8 5.0 3.2 1.7 3.3 2.1 3.1 6.0 6.0 5.9
TFA payments 10.4 5.7 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Salary arrears repayment … 0.0 0.0 1.3 0.0 0.6 0.6 0.5 0.5 -0.2
Other expenses 1.4 1.0 0.0 3.5 0.9 1.1 1.1 0.5 0.0 0.0
Emergency contingency fund + ORSA 0.0 1.0 0.0 3.2 0.3 0.3 0.3 0.0 0.0 0.0
Peace agreement 1.4 0.0 0.0 0.2 0.2 0.6 0.6 0.5 0.0 0.0
Transfers to WFP/IOM 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0
Agriculture Bank of South Sudan 0.0 0.0 0.0 0.0 0.0
South Sudan Pension Fund 0.2 0.2 0.0 0.0 0.0
Other expenditure 0.1 0.0 0.0 0.0 0.0 0.0
Net acquisition of non-financial assets 3.8 10.7 12.9 7.5 9.5 7.1 9.2 8.2 7.7 7.4
of which: Constituency Development Fund … … … … … 0.6 0.6 … … …
of which: Oil for Infrastructure project 0.0 9.8 8.9 4.5 8.7 5.3 7.4 5.9 0.0 0.0
Overall balance (cash) -9.9 -3.6 -6.5 -6.3 8.1 -1.6 3.8 3.7 4.0 4.3
Change in non-salary arrears -3.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall balance (accrual) -6.5 -3.6 -6.5 -6.3 8.1 -1.6 3.8 3.7 4.0 4.3
Statistical discrepancy 18.1 3.8 -5.6 0.0 4.2 … 0.0 0.0 0.0 0.0
Financing gap 0.0 0.0 0.0 0.0 0.0 3.2 5.3 3.4 0.5 -3.0
Financing 24.7 7.4 0.9 0.0 -4.0 -1.6 -9.0 -7.1 -4.5 -1.3
Domestic (net) 3.6 3.2 3.1 -3.4 2.9 0.0 0.3 0.0 0.0 0.0
Net credit from the central bank 5.6 3.2 3.1 0.0 2.9 0.0 0.3 0.0 0.0 0.0
Overdraft … …… … 0.0 3.3 0.0 0.0 0.0 0.0 0.0
of which: RCF-1 … -1.6 0.0 … … … … … … …
of which: Carried over RCF-2 … -9.3 3.1 … … … … … … …
of which: Carried over RCF-FSW … … …… … -0.4 … 0.3 … … …
Net credit from commercial banks 1.3 0.0 0.0 0.0 0.0 … 0.0 0.0 0.0 0.0
Foreign (net) 21.1 4.2 -2.1 0.0 -6.9 -1.6 -9.3 -7.1 -4.5 -1.3
Disbursement3 33.8 8.9 11.2 … 0.8 … 0.6 0.9 1.3 0.5
of which: RCF-1 Initial Disbursement … 0.9 … … … … … … … …
of which: RCF-1 Auction Gain … 1.4 … … … … … … … …
of which: RCF-2 Initial Disbursement … 1.6 … … … … … … … …
of which: RCF-2 Auction Gain … 1.4 0.0 … … … … … … …
of which: RCF-FSW Disbursement … … … … 0.8 … …… … … …
of which: new SDR … 1.9 0.0 … … … … … …
Amortization -12.7 -4.7 -9.2 -3.4 -2.6 -1.6 -4.7 -8.0 -5.8 -1.7
TFA Overpayment 0.0 0.0 -4.1 0.0 -5.1 0.0 -5.2 0.0 0.0 0.0
Memorandum items:
Non-oil Primary Fiscal Balance 4 -19.4 -20.2 -27.5 … -17.1 … -16.9 -15.2 -14.0 -12.7
Oil production (millions of barrels) 62.1 64.1 54.5 … 50.9 … 42.4 55.5 57.5 59.2
Nominal GDP (bn of South Sudanese pounds) 788.7 1,015.8 3,078.5 … 5,322.6 5835.2 8,294.8 16,409.3 18761.2 21725.0
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
4 Non-oil revenue minus primary expenditure excluding transfers to Sudan, and tranfers to oil producing states and communities.
3 Initial disbursement refers to the amount received directly by the authorities while Auction Gain refers to the proceeds of the auction in which disbursements were converted at the official exchange rate
Projection
2019/20 2022/23 2023/24
2 Transfer to Sudan is the sum of TFA payment (financial transfer) and average transportation fee (average of 9.7 US$/barrel) from using the oil pipeline. TFA payments ended in Jan ’22.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 29
Table 3. Republic of South Sudan: Monetary Accounts, June 2018–June 2023
(In billions of South Sudanese pounds, unless otherwise indicated)
2022 2023
Jun Jun Jun
Prel.
Net foreign assets -58.0 -69.2 -71.4 -199.3 -409.2 -980.1
Claims on nonresidents 41.5 55.3 89.3 143.1 245.6 938.2
Central bank 7.6 5.0 21.2 52.8 95.8 470.9
Commercial banks 33.9 50.3 68.1 90.3 149.8 467.3
Liabilities to nonresidents 99.6 124.5 160.7 342.4 654.8 1918.3
Central bank 20.8 23.1 23.7 76.5 269.7 1101.4
Commercial banks 78.8 101.5 136.9 265.9 385.1 816.9
Net domestic assets 147.0 182.8 231.2 466.7 803.2 1,799.8
Net domestic credit 180.1 148.4 206.3 361.6 736.8 1818.2
Net claims on central government 174.6 139.4 194.1 342.0 702.7 1694.0
Claims on other sectors 5.5 9.0 12.2 19.6 34.1 124.2
Other items (net) -33.1 34.4 24.9 105.1 66.4 -18.5
Broad money 89.0 113.5 159.8 267.4 394.1 819.7
Currency outside banks 27.1 36.9 59.5 74.3 96.1 183.2
Transferable deposits 50.3 65.7 87.4 165.0 260.3 542.3
o/w: in foreign currency 38.9 49.2 67.5 124.0 183.5 426.8
Other deposits 11.6 10.9 13.0 28.9 37.7 94.2
o/w: in foreign currency 4.2 3.4 3.6 13.4 15.2 46.8
Net foreign assets -13.1 -18.1 -2.5 -23.6 -173.9 -630.5
Claims on nonresidents 7.6 5.0 21.2 52.8 95.8 470.9
Liabilities to nonresidents 20.8 23.1 23.7 76.5 269.7 1101.4
Net domestic assets 102.5 122.7 151.3 251.9 513.8 1,252.0
Net domestic credit 88.4 35.3 78.7 110.8 330.3 858.4
Claims on commercial banks 1.2 2.8 2.0 1.7 2.1 2.6
Net claims on central government 87.2 32.5 76.7 108.8 327.3 854.1
Claims on central government 94.7 39.3 79.3 146.5 338.2 869.0
Liabilities to central government 7.5 6.8 2.6 37.6 10.9 14.9
Other items (net) 14.0 87.4 72.6 141.1 183.5 393.6
Monetary base 89.3 104.6 148.8 228.3 339.9 621.5
Currency in circulation 30.5 42.8 67.3 96.1 121.7 211.2
Liabilities to commercial banks 55.9 58.7 77.4 123.5 205.9 369.2
Liabilities to other sectors 3.0 3.1 4.2 8.7 12.4 41.1
Memorandum items:
Money multiplier 1.0 1.1 1.1 1.2 1.2 1.3
Share of foreign currency deposits to total deposits 0.7 0.7 0.7 0.7 0.8 0.9
Monetary base (year-on-year change in percent) 29.0 17.1 42.3 53.4 48.9 82.8
Broad money (year-on-year change in percent) 63.5 27.6 40.8 67.3 47.4 108.0
Sources: South Sudanese authorities; and IMF staff estimates and projections.
2019 2020 20212018
Central Bank
Monetary Survey
Jun Jun Jun
Actual
REPUBLIC OF SOUTH SUDAN
30 INTERNATIONAL MONETARY FUND
Table 4. Republic of South Sudan: Balance of Payments, 2019/20–2026/271
(In millions of U.S. dollars, unless otherwise indicated)
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Act.
Current account balance -947 -230 -119 603 262 504 535 493
Trade Balance -733 -262 153 509 95 474 574 551
Exports of goods 3,089 3,611 4,745 4,534 3,430 4,313 4,254 4,248
Oil 3,061 3,583 4,717 4,500 3,376 4,229 4,146 4,122
Nonoil 28 28 28 34 54 84 108 126
Imports of goods -3,822 -3,873 -4,592 -4,025 -3,335 -3,839 -3,680 -3,697
Balance of Services -657 -656 -675 -657 -783 -1,031 -1,246 -1,358
Exports of services 34 34 34 34 34 34 34 34
Imports of services -691 -690 -709 -691 -817 -1,065 -1,279 -1,392
o/w: oil-related -438 -437 -470 -424 -420 -448 -481 -489
of which non-oil -253 -253 -239 -266 -398 -617 -798 -902
Income -558 -519 -937 -906 -786 -735 -679 -608
Wages of expatriate oil workers -150 -162 -168 -168 -195 -221 -212 -203
Investors’ profits -351 -318 -650 -746 -598 -513 -511 -476
Investment income (net) -82 -64 -142 -22 -41 -74 -40 -23
Current Transfers (net) 1,001 1,207 1,340 1,657 1,737 1,796 1,886 1,908
Grants 0 0 73 103 128 116 150 146
Workers’ remittances (net) 79 79 75 82 121 189 249 281
Financial transfers to Sudan -508 -233 -234 0 0 0 0 0
Other sectors (including NPISH) 1,290 1,361 1,444 1,473 1,488 1,491 1,488 1,480
Capital and financial account 637 281 91 -415 -359 -451 -293 -27
Capital account 0 0 0 0 0 0 0 0
Financial account 637 281 91 -415 -359 -451 -293 -27
Foreign direct investment2 -18 47 48 44 113 180 154 179
of which: non-oil 22 24 24 24 24 24 24 24
Other investment 655 234 43 -459 -472 -631 -447 -206
of which: Foreign borrowing (net) 672 234 144 -13 -250 -502 -329 -97
of which : New SDR allocation
3 … … -150 … … … … …
of which : RCF-FSW … … … -113 … … … …
Overall balance -310 51 -28 188 -97 53 242 465
Errors and omissions 408 -17 56 -231 0 0 0 0
Financing -99 -34 -28 43 -136 -281 -275 -243
Change in net foreign assets of the central bank -99 -34 -28 43 -136 -281 -275 -243
of which : Change in gross reserves (Increase -) -98 -34 -28 43 -136 -281 -275 -243
Financing gap 0 0 0 0 233 228 33 -223
Memorandum items:
Current account balance including transfers (percent of GDP) -19.3 -4.3 -1.6 8.3 4.3 7.1 7.3 6.4
Current account balance excluding transfers (percent of GDP) -39.7 -27.0 -20.0 -14.5 -24.4 -18.2 -18.4 -18.3
South Sudan oil price (dollars per barrel; weighted average) 49.3 55.9 86.5 88.5 79.6 76.1 72.1 69.6
Gross foreign reserves (millions of US dollars) 130 164 192 149 284 566 841 1,083
In months of current year’s imports of goods and services 0.3 0.4 0.5 0.4 0.7 1.4 2.0 2.4
Oil production (millions of barrels) 62.1 64.1 54.5 50.9 42.4 55.5 57.5 59.2
Nominal GDP (billions of U.S. dollars) 4.9 5.3 7.3 7.3 6.0 7.1 7.4 7.8
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
2 Net of outflows associated with the repatriation of oil investments (Capex cost oil).
3 The full SDR allocation was SDR 235.8 million, approximately US$335 million, of which US$150 million was on-lent to the budget while US$185 million was used to strengthen reserves.
Projections
2019/20 2020/21
Prel.
1Table 5. Republic of South Sudan: Quantitative Targets Under the Program Monitoring with Board Involvement
End-Nov
2022
Actual
End-Mar
2023
PMB Target
End-Mar
2023
Act.
End-Jun
2023
PMB Target
End-Jun
2023
Act.
End-Jun
2024
Proposed
Non-oil primary balance (floor: in billions of SSP)1 … -830.0 -683.2 -996.0 -910.9 -1,358
Central bank net credit to the central government (ceiling: in
billions of SSP) 2
178.0 178.0 178.0 178.0 178.0 0.0
Contracting or guaranteeing of non-concessional debt by the
central government (continuous ceiling: in millions of U.S.
dollars) 3
0.0 0.0 0.0 0.0 0.0 0.0
Average net international reserve (floor: in millions of U.S.
dollars) 4
97.5 141.5 208.2 151.5 183.7 100.0
Reserve money growth (ceiling: in percent) 5 … 5.0 5.6 7.5 -2.2 2.5
Salary payments to central government workers (floor: in billions
of SSP) 6
… 106.7 114.1 142.3 166.1 75.8
Priority social spending (floor: in billions of SSP) 6, 7 … 112.1 40.8 149.4 66.3 22.0
1 For end-March and end-June 2023 the number is cumulative from June 30, 2022, and for end-June 2024 the number is cumulative from June 30, 2023.
2 For end-March and end-June 2023 the number accommodates central bank net credit extended to the government in July and August 2022 and imposes no further
central bank net credit to the government from September 2022 onwards. For end-June 2024 the number is cumulative from end-April 2024. If during the period May-
June 2024 revenue fall below payments for salaries and social spending (on health, education and humanitarian assistance) as specified in the QTs for end-June 2024 on
such spending in this table, the target for end-June 2024 would be adjusted upwards by the difference, up to SSP 55 billion.
3 Subject to prior consultation with Fund staff, exceptions may apply for NCB that involves either (i) debt management operations that improve key liquidity and/or
solvency debt burden indicators without adversely affecting the risk rating; or (ii) finances critical investment projects with a high social and economic return that are
integral to the authorities’ national development program, and for which concessional financing is not available.
4 Targets are defined as the average stock of daily NIR balances during March and June 2023 and June 2024.
5 For end-March and end-June 2023 the number is cumulative growth rate in reserve money (defined as currency in circulation, due to banks, and due to OFI) from
September 30, 2022, adjusting for month-on-month exchange rate changes, and for end-June 2024 the number is the cumulative growth rate from end-April 2024. If
during the period May-June 2024 revenue fall below budgeted amounts for salaries and social spending (on health, education, and social and humanitarian assistance)
as specified in the QTs for end-June 2024 on such spending in this table, the target for end-June 2024 would be adjusted upwards by the difference, up to 15 percent.
6 For end-March and end-June 20023 the number is cumulative from June 30, 2022, and for end-June 2024 the number is cumulative from April 30, 2024.
7 The proposed floor on social spending is set at the proposed spending on education, health, and social and humanitarian sectors in the FY2022/23 budget
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 31
REPUBLIC OF SOUTH SUDAN
Table 6. Republic of South Sudan: Structural Targets Under the Program Monitoring with Board Involvement
Measures Target Date1 Current Status/Rationale
1. MoFP to develop and adopt by end-March 2023, in consultation with Fund staff,
an action plan to strengthen the institutional framework for debt issuance and
management and formulate a debt management strategy. (IMF Country Report No.
2023/108 MEFP ¶18).
Mar-2023 Not met. Action plan adopted by MoFP in June 2023.
2. National Assembly to adopt amendments to the BoSS Act aimed at bringing the
South Sudan legislation in line with international best practices for central banking
legislation and governance (IMF Country Report No. 2023/108 MEFP ¶18).
May-2023 Not met. Amendments to the BoSS Act were adopted by
Parliament in August 2023. The amendments allow the
BoSS to issue sovereign guarantees consistent with the
Transitional Constitution, but amendments specify that
the issuance of such guarantees will be subject to
relevant legislation on public finance.
3. BoSS to adopt an action plan to implement recommended action items on
banking sector reform developed in August 2022 by BoSS staff with MCM (IMF
Country Report No. 2023/108 MEFP ¶12).
Jun-2023 Met.
4. Publish all signed oil production sharing agreements with oil-extracting
companies as well as quarterly reports on the oil sector (IMF Country Report No.
2023/108 MEFP ¶14).
Jun-2023 Not met. The publication of oil production sharing
agreements is opposed by oil companies as a breach of
contractual obligations. However, the details of the oil
sharing agreements are available in the oil reports
published in the Ministry of Petroleum website.
5. Completion and publication of an audit of the spending of the new RCF
disbursement under the FSW (IMF Country Report No. 2023/108 LOI ¶5).
Sep-2023 Not met. The audit report was completed and published
in March 2024.
6. Publish the audit of spending by the central government that was financed by the
disbursement through the Food Shock Window of the Rapid Credit Facility;
Prior action Met.
7. BoSS Board to adopt the BoSS financial statements for financial year 2021; Prior action Met.
8. Publish the budget execution reports for Q1 and Q2 of FY2023/24. Prior action Met.
9. Appoint an external auditor to perform BoSS audits for financial year 2022
and beyond (MEFP ¶4). Proposed.
Jun-2024 Strengthen BoSS safeguards.
10. Adopt a timebound action plan to clear all salary arrears (MEFP ¶4). Proposed. Jun-2024 Strengthen fiscal discipline.
11. National Audit Chamber will finalize the external audit of the BoSS financial
statements for FY2021 and the audit report will be published (MEFP ¶4). Proposed.
1 Target dates refer to end of the month unless otherwise stated.
32 INTERNATIONAL MONETARY FUND
REPUBLIC OF SOUTH SUDAN
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 33
Annex I. Food Insecurity in Republic of South Sudan1
A. Evolution of Food Insecurity
1. South Sudan has seen more than five consecutive years of severe food insecurity, which
continues going into 2024 with an estimated 7.1 million people facing acute food insecurity.
According to the most recent Integrated Food Security Phase Classification (IPC) exercise released in
November 2023, approximately 7.1 million individuals will experience severe acute food insecurity at
the Crisis level (IPC Phase 3) or higher during the April – July 2024 lean season projection period. Of
those affected during the April – July 2024 lean season, 79,000 will be in Catastrophe (IPC 5) acute
food insecurity, including 40,000 in Northern Bahr el Ghazal State, 11,000 in Jonglei State, and 28,000
newly arrived returnees from Sudan. About 2.3 million will face Emergency (IPC 4) acute food
insecurity and the remaining 4.7 million individuals will be in Crisis (IPC 3) conditions.2 More recently,
spillover effects from the Sudan crisis on food prices, food availability, and insecurity have
exacerbated the humanitarian needs of both the resident population and the 415,000 newly arrived
returnees and refugees3. For more details on the Sudan crisis see Box 1.
2. During the July 2023–June 2024 time period, an estimated 1.65 million children under
the age of five are estimated to have suffered from acute malnutrition, the highest level
observed to date, surpassing levels seen during the conflict in 2013 and 2016.4 This projection
was generated collaboratively through the IPC AMN process, building from a convergence of
evidence drawn from the county-level results of SMART surveys, and the Food Security and
Nutrition Monitoring System (FSNMS). Out of these, approximately 480,000 children will require
treatment for severe acute malnutrition (SAM), while another 1,170,000 children will need treatment
for moderate acute malnutrition (MAM). The burden of acute malnutrition will be heavily
concentrated in the five states of Jonglei, Northern Bahr el Ghazal, Upper Nile, Unity, and Warrap,
which will account for about 72 percent of the total.5
3. Food insecurity situation has dramatically worsened in recent years, especially
following the war and the back-to-back years of heavy flooding (Figure 1). The severity of the
situation is evident from the classification of counties under the IPC AMN (Integrated Phase
Classification––Acute Malnutrition) framework. During July – September 2023, 55.3 percent of the
country’s counties were classified as IPC AMN Phase 4 (Critical), 18.8 percent of counties in IPC AMN
Phase 3 (Serious), 25.0 percent counties in IPC AMN Phase 2 (Alert), and 11.3 percent in IPC AMN
1 Contributors: Tara Muehlschlegel and William Nall from World Food Program.
2 The Integrated Food Security Phase Classification. 6 November 2023. IPC South Sudan Acute Food Insecurity
Malnutrition Sep2023 July2024 report. IPC. https://www.ipcinfo.org/ipc-country-analysis/details-
map/en/c/1156667/?iso3=SSD.
3 RRC IOM UNHCR Population Movement from Sudan to South Sudan Dashboard. 1 December 2023.
https://app.powerbi.com/view?r=eyJrIjoiZTMwNTljNWYtYmVhYi00ZGI2LTgwYzAtN2UyNDZmZTRlNjBkIiwidCI6IjE1OD
gyNjJkLTIzZmItNDNiNC1iZDZlLWJjZTQ5YzhlNjE4NiIsImMiOjh9&pageName=ReportSection95859b8850a76994e6fb
4 South Sudan Acute Food Insecurity and Malnutrition Analysis: IPC Acute Food Insecurity Analysis (July 2022) and
SMART Surveys (July 2021–June 2022)», July 2022.
5 World Food Programme. 30 March 2023. South Sudan Partner Briefing. WFP.
REPUBLIC OF SOUTH SUDAN
34 INTERNATIONAL MONETARY FUND
Phase 1 (Acceptable). During October 2023 to March 2024, while the situation is expected to
improve in 77.5 percent of all counties, 93.8 percent of counties will likely remain within the same
IPC AMN phase.
Figure 1. Republic of South Sudan: Acute Food Insecurity Phase Classifications, 2014-23
Sep 2014 Sep – Dec 2019 Sep – Nov 2023
Source: IPC South Sudan
B. Climate Shocks and Food Insecurity
4. South Sudan is vulnerable to various climate shocks, including floods, droughts, and
dry spells, which have intensified in recent years due to climate change. These climate shocks
have had a significant impact on the country’s food security, exacerbating an already fragile
situation due to conflict and other humanitarian crises. The country has experienced a series of
severe climate shocks in the past few years. For example, in 2019, heavy rainfall and flooding
resulted in extensive damage to crops, livestock, and infrastructure, and displaced tens of thousands
of people. In 2021, South Sudan experienced its worst floods in decades, with heavy rainfall affecting
most parts of the country, leading to displacement and loss of livelihoods. Moreover, the flooding
has exacerbated the situation by causing conflict in the Equatoria region of the country, where
displaced herders were fighting with established farmers over land. The frequency and severity of
climate shocks in South Sudan are expected to increase in the future due to climate change, which
will further exacerbate food insecurity and other humanitarian crises in the country.6
5. In 2022 approximately 900,000 individuals have been affected by floods across
29 counties in South Sudan, including the southern part of the Abyei Administrative Area
(Figure 2). The most severely affected regions are Northern Bahr El Ghazal, Warrap, Unity, and
Western Equatoria states. The floods caused significant damage, including the destruction of
livestock and crops, washed away infrastructure such as roads and bridges, and demolished schools,
and health facilities.7 The floods resulted in outbreaks of cholera and malaria. These recurring floods,
occurring just one year after even larger ones in 2021, underscore the persistent danger faced by a
country lacking the necessary infrastructure to effectively respond to such crises.
6 International Crisis Group. 17 April 2023. South Sudan. Crisis Group. Retrieved from https://southsudan.crisisgroup.org/.
7 «South Sudan Flooding Snapshot 2 (October 11, 2022).» Humanitarian Response, United Nations Office for the
Coordination of Humanitarian Affairs (OCHA), 11 October 2022, www.humanitarianresponse.info/en/operations/south-
sudan/infographic/south-sudan-flooding-snapshot-2-october-11-2022.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 35
6. Additionally, the flooded areas and heavy rainfall leave regions with engrained
flooding from previous years. The
floods of 2020 were so severe that they
left some regions waterlogged even
during the dry seasons that followed. As
a result, the 2021 floods were
exacerbated and made way for swift
inundation during the rainy season.
While the annual precipitation typically
peaks in August, the floods in South
Sudan’s central regions typically reach
their maximum extent in October. The
water levels did not recede in early 2022
in many parts of South Sudan. Because
the soil was already saturated, even a
small amount of rainfall could cause
catastrophic flooding. Unexpected rain
between April and June, which was still
months away from the annual flood peak displaced thousands.8
7. Climate shocks in South Sudan
compound the existing vulnerabilities,
intensifying their adverse effects on
the population and the economy.
According to the Internal Displacement
Monitoring Centre (IDMC), in 2022
almost 600,000 people have been
internally displaced because of floods.
This is an increase by 17.6 percent from
the previous year and an increase of 691
percent in the past five years (Figure 3).
8. Looking ahead, South Sudan is
projected to experience significant
impacts from climate change in the
long term, according to simulations
conducted by UNDP Human Climate
Horizons. Notably in the form of increasing temperatures, resulting in a substantial increase in the
frequency of days with temperatures exceeding 35 degrees Celsius to 222 days per year on average
(Figure 4).9
8 International Crisis Group, 2022.
9 UNDP Human Climate Horizons, 2023, https://horizons.hdr.undp.org/#/country/SSD
Figure 2. Republic of South Sudan:
People Affected by Floods, 2022
Source: UN OCHA.
Figure 3. Republic of South Sudan: Internal
Displacements Due to Natural Disasters, 2012–22
(New displacements, in thousands)
0
100
200
300
400
500
600
2012 2013 2014 2015 2017 2018 2019 2020 2021 2022
Flood Storm Wildfire
Source: IDMC
REPUBLIC OF SOUTH SUDAN
36 INTERNATIONAL MONETARY FUND
C. Addressing Food Insecurity in South Sudan
9. The World Food Program (WFP) has been expanding the use of cash transfers in its
programs, with almost US$58 million transferred in 2021. This approach provides greater
autonomy to recipients and enhances cost-efficiency by reducing the need for food transportation
and storage. The WFP’s school meal
programs have also proved successful
in fostering a healthy and productive
learning environment for children,
resulting in an increase in enrollment
and attendance rates of up to an 80
percent. WFP aims to aid over
400,000 children through school
meals and a special take-home ration
until 2023. Additionally, WFP and
UNICEF have been working together
to intensify the nutrition response in
South Sudan, providing treatment to
malnourished children, pregnant
women, and nursing mothers, with
the aid of over 12,000 community
nutrition volunteers across the
region.
10. On January 1st, 2023, the WFP has initiated the implementation of its new three-year
Country Strategic Plan (2023–25). This plan aims to expand upon the WFP’s life-saving efforts by
fostering pathways for resilience, development, and peace. The organization intends to combat
entrenched inequities and isolation by promoting interconnected, peaceful communities. Over the
next three years and beyond, the WFP will work towards achieving zero hunger goals while also
contributing to climate resilience and peace initiatives. However, despite the WFP’s efforts, the
demand for humanitarian aid has continued to rise amidst numerous crises and limited resources,
most recently due to the ongoing Sudan crisis and continued climate shocks. To address the most
pressing needs, the WFP estimates it will require US$3.7 billion between January 2023 and
December 2025.10 Portions of the IMF’s recent disbursement of the Food Shock Window have been
channeled through the WFP and International Organization for Migration (IOM) by the authorities.
The WFP resources will be used to support the WFP’s school feeding program. A Memorandum of
Understanding has not yet been signed with the authorities relating to the use of the funds going
towards the IOM.
10 World Food Programme. (2022). Country Strategic Plan for South Sudan (2023–25). Retrieved from:
https://executiveboard.wfp.org/document_download/WFP-
0000142938?_ga=2.128004620.1659485717.1697133057-401803399.1697133057
Figure 4. Republic of South Sudan: GDP Per Capita
and Climate Change
0
50
100
150
200
250
300
2 3 4 5 6
Days above 35 degrees celsius,
annual average
GDP per capita, 2020 (in logs)
Source: UNDP Human Climate Horizons
Note: Days above 35 degrees celsius in 2040-59, under a
moderate emissions scenario.
SSD
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 37
Annex II. Money Supply, the Exchange Rate, and Prices in
Republic of South Sudan1
1. After a one-year period of stability following the successful unification of South
Sudan’s exchange rate in July 2021, the South Sudanese Pound (SSP) has experienced a
sizeable depreciation over the past 12 months. The authorities committed to eliminating the gap
between the official and
parallel-market exchange rates,
and to letting the official rate be
market-determined, as a prior
action to first Staff-Monitored
Program (SMP) initiated in
March 2021. At the time, the
gap between the official and
parallel exchange rates stood at
over 250 percent, implying large
rents for FX traders with access
to U.S. dollars at the official
rate. The Bank of South Sudan
(BoSS) began adjusting the
official rate from March 2021,
achieving convergence of the
two rates by July 2021, aided by
an appreciation of the SSP in
the parallel market (Figure 1).
For the following 12 months,
the unified exchange rate
remained stable within a range
of 400-450 SSP/USD, with
regular FX auctions aiding price
discovery in the market (Figure
2). However, the SSP has
depreciated significantly since
June 2022 following the second
and third episode of monetary
expansion discussed below,
with parallel market rate
reaching 2205 SSP/USD by mid-
April 2024.
1 Prepared by Mr. Robert Zymek and Ms. Sunwoo Lee.
Figure 1. Republic of South Sudan’s Official and Parallel-
Market Exchange Rates since the FX Reform
Sources: Bank of South Sudan, and IMF staff calculations.
Figure 2. Republic of South Sudan: FX Auctions and the
Official and Parallel-Market Exchange Rates
Sources: Bank of South Sudan, and IMF staff calculations.
0
5
10
15
20
25
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Apr-21
May-21
Jul-21
Aug-21
Dec-20
Feb-21
Jan-22
Mar-22
Apr-22
Jun-22
Jul-22
Sep-22
Dec-21
Feb-22
Feb-23
Mar-23
May-23
Jun-23
Aug-23
Sep-23
Nov-23
Jan-24
Feb-24
Amount auctioned (USD million)
Exchange rates (SSP/USD)
Amount auctioned (RHS) Amount not settled (RHS)
Delayed auction pay-out Parallel market rate
Official rate
Mar-24
REPUBLIC OF SOUTH SUDAN
38 INTERNATIONAL MONETARY FUND
2. Periodic monetary financing has been a major contributor to the depreciation of the
SSP since the formal end of South Sudan’s civil war. Since the signing of the peace agreement in
September 2018, South Sudan
has enjoyed three periods of
relatively steady money
growth, interrupted by three
episodes of rapid monetary
expansion due to monetary
financing of the deficit. This is
reflected in the evolution of
reserve money (Figure 3).
Between September 2018 and
July 2020, reserve money grew
by about 2 percent per month,
but it increased by 22 percent
between July and September
2020––the first episode of
monetary financing. Reserve
money then remained virtually
unchanged between
September 2020 and May
2022, before expanding by
62 percent in the two months between May and July 2022––the second episode. It remained stable
with small fluctuations until December when there was a third episode of monetary financing. The
first two episodes, occurring at the turn of South Sudan’s fiscal year, illustrate the continued fiscal
dominance of monetary policy in South Sudan, with the BoSS required to finance fiscal operations
due to revenue shortfalls and the resulting emergence of large arrears on public salaries. All three
episodes were accompanied by significant depreciations of the SSP.
3. Staff estimates suggest that a 1-percent increase in reserve money tends to trigger an
approximately 1 percent depreciation of the SSP against the U.S. dollar in the parallel market
on average. The estimated impact of a reserve-money expansion of the exchange rate is almost
instantaneous: most of the long-term impact is realized within the same month, with the remainder
manifesting in the following month (blue line in Figure 4a). However, given the relatively short data
series available, and limited number of monetary episodes, such estimates come with large
confidence bands (blue-shaded area in Figure 4a). This underscores the extent of uncertainty about
the effect a potential future money shock will have on the exchange rate, with a significant
probability that a 1-percent reserve-money expansion could trigger a depreciation in excess of
1 percent.
4. In turn, a 1 percent depreciation of the parallel-market SSP/USD exchange rate tends
to pass-through into food and fuel prices in Juba one-for-one with a few months’ lag. Staff
estimates suggest that there is full pass-through of SSP depreciations into Juba food and fuel
Figure 3. Republic of South Sudan: Reserve Money and the
Exchange Rate
Sources: Bank of South Sudan, and IMF staff calculations. Episodes of monetary
financing shaded in red. Reserve money is defined as currency in circulation and
BoSS short-term liabilities to banks and other financial institutions at constant
exchange rates.
250
400
550
700
850
1000
1150
1300
1450
1600
1750
1900
2050
50.0
70.0
90.0
110.0
130.0
150.0
170.0
190.0
210.0
230.0
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
Mar-24
Parallel Market Exchange Rate, SSP/USD
RM Index (March 2021 = 100)
Reserve Money Parallel market rate, SSP/USD
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 39
prices.2 However, only a small portion of the effect occurs on impact, and it takes about a quarter for
the long-run impact to be fully realized (Figure 4b). The magnitude of the effect and its gradual
nature are consistent with South Sudan’s heavy reliance on imported food and imported (processed)
fuel and a plausible lag in the responsiveness of retail prices to rising import costs. The parallel-
market exchange rate, on which these estimates are based, is the relevant gauge of the price impact
of depreciations over the full period from September 2018 and February 2024. Since July 2021, the
parallel and official exchange rates have tracked each other closely until a parallel market premium
gap re-emerged in January 2024. Prior to the FX reform, while the official exchange rate was fixed at
162 SSP/USD, prices moved with the parallel rate (Figure 5).
5. Economic theory suggests that exchange rates are driven by purchasing power parity
(PPP) in the long run, which can provide a guide to the “long-run fair value” of the SSP and
help assess the drivers of the recent depreciation. After controlling for transportation and other
transaction costs, the long-run equilibrium exchange rate between currencies should be such as to
bring about purchasing power parity of currencies in different locations. Food prices across markets
in South Sudan and Uganda between September 2018 and June 2023 were used to compute the
hypothetical PPP SSP/USD exchange rate. Uganda shares a common border with South Sudan and
the two countries have strong social and economic ties. The prices of food items, including beans,
2 Juba food and fuel prices for the period September 2018-June 2023 are measured using WFP-collected prices
aggregated into a food-and-fuel CPI index using the weights South Sudan’s NBS employs to construct the official
CPI. This staff-constructed index is highly correlated with the official food-and-fuel CPI during the period September
2018-June 2022. Since June 2022, there has been a marked deterioration in the quality of official inflation statistics
due to resource shortfalls at NBS.
Figure 4a. Republic of South Sudan: Impact
of a 1-Percent Reserve-Money Shock on the
SSP/USD Exchange Rate
Figure 4b. Republic of South Sudan: Impact
of a 1-Percent SSP/USD Depreciation on
Juba Food and Fuel Prices
Sources: BoSS, South Sudan National Bureau of Statistics (NBS), World Food Programme (WFP), and IMF staff
calculations. Solid lines show cumulative impulse responses estimated on monthly data for the period September 2018–
February 2024 using local projections (Jordà, 2005), with the three post-2018 monetary expansions treated as exogenous
shocks. Shaded areas represent 90-percent confidence intervals. The exchange rate is the SSP/USD exchange rate in the
parallel market. Juba food and fuel prices are measured using WFP price data, aggregated employing NBS consumption
weights. See Annex I Box 1 for technical details.
REPUBLIC OF SOUTH SUDAN
40 INTERNATIONAL MONETARY FUND
maize, maize meal, millet,
sorghum, and oil, were
aggregated using WFP’s
minimum consumption basket
weights to construct a price of a
comparable food basket in each
country, after accounting for
transportation costs (see Annex
II, Box 1 for details). The PPP
SSP/USD exchange rate was
calculated as the rate at which
the SSP price of South Sudan
food basket equals the USD price
of adjusted Ugandan food basket
once expressed in the same
currency. For robustness, an
alternative measure of the fair
value was calculated based on
the estimated one-for-one co-
movement between the reserve
money and exchange rate.
Reserve money growth was used
to make exchange rate
projections, assuming in line with
earlier staff analysis (see IMF
Country Report No. 21/246) that
the exchange rate was at around
fair value in April 2021.
6. Such an analysis
suggests that multi-month
departures from “long-run fair
value” are not uncommon for
the SSP, possibly due to the
confidence effects, and that
the currency may be somewhat
undervalued at present.
Comparing the parallel-market
SSP/USD exchange rate against
the two long-run benchmarks
suggest that there have been
multi-month departures from
long-run “fair value” in recent history (Figure 6). One explanation for this may be confidence effects:
Figure 5. Republic of South Sudan: Juba Food and Fuel
Prices and the Official and Parallel Exchange Rates
Sources: BoSS, South Sudan National Bureau of Statistics (NBS), World Food
Programme (WFP), and IMF staff calculations. Juba food and fuel prices are
measured using WFP price data, aggregated employing NBS consumption
weights.
Figure 6. Republic of South Sudan: Gap Between Parallel
Market Exchange Rate and Long Run Fair Value Measures
(in Percentage)
Sources: BoSS, IFS, World Food Programme (WFP), and IMF staff calculations.
The percentage gap was calculated as the gap between the parallel market
exchange rate and each estimated fair value measure as percentage of the
estimated measure.
80.00
230.00
380.00
530.00
680.00
830.00
980.00
1,130.00
1,280.00
1,430.00
1,580.00
1,730.00
1,880.00
2,030.00
2,180.00
30.0
50.0
70.0
90.0
110.0
130.0
150.0
170.0
190.0
210.0
230.0
250.0
270.0
290.0
310.0
330.0
350.0
370.0
390.0
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
Mar-24
SSP/USD
Jan-22 = 100
Juba food&fuel price index SSP/USD (official) SSP/USD (parallel)
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 41
in the short run, if market participants expect the local currency value to depreciate, with everything
else constant, the demand for foreign currency will rise and the exchange rate will fall. Notably, the
two long-run benchmarks both suggest that the SSP was undervalued in the months prior to the
March 2021 FX reform, and both point to a possible confidence boost in the market immediately
following the FX reform. Moreover, both measures suggest that the depreciation of recent months
has left the SSP undervalued as of June 2023, although they disagree about the extent of the
undervaluation. A possible undervaluation of the SSP could reflect low market confidence, due to the
ongoing conflict in Sudan and an erratic pattern of FX auctions. November and December 2022 FX
auctions were not settled, and auctions suspended for the following two months. There were further
settlement delays in February and March 2023, with regular auctions only resuming from April 2023
at a volume of USD 5 million per week (Figure 2). This raises the prospect of appreciation if monetary
conditions remain unchanged and market participants regain confidence in the management of the
money supply and FX auctions by the BoSS.
7. The analysis highlights a number of policy messages.
• A large residual fiscal gap can trigger monetary expansions at the end of the fiscal year in an
environment characterized by fiscal dominance. This underscores the importance of sound
fiscal management, including realistic budget planning and good cash management, to
safeguard monetary stability in a context of fiscal dominance.
• Monetary stability is crucial to stabilize consumer prices. Monetary expansion leads to
inflation for key items in households’ consumption basket via approximately one-for-one
depreciation of the SSP and full pass-through of a depreciation into prices.
• Fixing the value of the SSP does not insulate the economy from the effect of money on prices.
As South Sudan’s pre-reform experience shows, in the presence of a fixed official exchange
rate monetary expansion raises the premium between the official and parallel-market
exchange rates and causes a depreciation of the parallel-market rate. In turn, prices respond
to fluctuations in the latter rate, as most traders will be unable to access foreign currency at
the official rate.
• FX reform and steady money growth can restore market confidence, but this may take several
months. Monetary expansions, on the other hand, lower market participants’ expectations
and can result in undervaluation for extended periods of time. Following the large monetary
expansion in the summer of 2022, the SSP/USD exchange rate remains about 20 percent
above a long-run fair value implied by PPP as of end-June 2023.
REPUBLIC OF SOUTH SUDAN
42 INTERNATIONAL MONETARY FUND
Box 1. Republic of South Sudan: Local Projections and PPP Exchange Rate
The impulse-response functions shown in Figures 4a and 4b are estimated using local projections
following Jordà (2015).1 Specifically, to ascertain the impact of a shock to variable 𝑥𝑥𝑡𝑡 in month 𝑡𝑡 on
variable 𝑦𝑦𝑡𝑡+ℎ in month 𝑡𝑡 + ℎ (ℎ ≥ 0), a regression of the following form is estimated:
ln 𝑦𝑦𝑡𝑡+ℎ = 𝛼𝛼 ℎ + � 𝛽𝛽𝑠𝑠
ℎ ∆ ln 𝑥𝑥𝑡𝑡−𝑠𝑠
𝑆𝑆
𝑠𝑠=0
+ � 𝛾𝛾𝑠𝑠
ℎ ln 𝑦𝑦𝑡𝑡−𝑠𝑠
𝑆𝑆
𝑠𝑠=1
+ � 𝜹𝜹 𝑠𝑠
ℎ ′
𝑆𝑆
𝑠𝑠=0
𝒁𝒁 𝑡𝑡−𝑠𝑠 + 𝑒𝑒𝑡𝑡+ℎ,
where 𝒁𝒁𝑡𝑡 is a vector of possible control variables, 𝑒𝑒𝑡𝑡+ℎ is the error term, and 𝛽𝛽̂0
ℎ corresponds to the
impact of the shock after ℎ months. This approach is used to identify i) the impact of money shocks on
the SSP/USD exchange rate, and ii) the impact of changes in the SSP/USD exchange rate on Juba food
and fuel prices, up to a horizon of 5 months, ℎ ∈ {0,1,2,3,4,5}. The analysis is performed on data covering
the period September 2018 to February 2024. The reserve money expansions in August-September
2020, June-July 2022, and December 2023 are used as exogenous money shocks, with reserve money
defined as under the terms of the ongoing PMB (see IMF Country Report No. 23/108, Appendix I.II). Juba
food and fuel prices are measured using WFP data, aggregated into a basket price with the consumption
weights used by South Sudan’s NBS. A (lagged) measure of changes in global food and fuel prices is
deployed as right-hand-side control variable. The estimation allows for up to three lags of the right-
hand-side variables and imposes Newey-West standard errors.
The PPP exchange-rate benchmark is computed as the rate at which the SSP price of food basket
in South Sudan equals the USD price of comparable food basket in Uganda. The food basket is
constructed using the weights of the WFP’s minimum consumption basket, which includes 15 kilograms
(kg) of cereals, 1.5kg of pulse, and 0.9kg of cooking oil.2 Retail prices of relevant food items, including
maize, maize meal, millet, and sorghum, are aggregated using the Constant Elasticity of Substitution
aggregator with equal weights to obtain price of cereals. When multiple types of each food item are
available, as in the case of beans, the average price is used. Thirteen sample markets, which includes the
markets in two capital cities, were selected based on data availability of relevant food items.3
To account for possible transportation cost differences, Ugandan prices are adjusted using commodity
fixed effects estimated from the regression:
ln 𝑝𝑝𝚤𝚤𝑡𝑡
𝑠𝑠���� = 𝛿𝛿𝑖𝑖 + ln 𝑝𝑝𝚤𝚤𝑡𝑡
𝑈𝑈���� + 𝑒𝑒𝑖𝑖𝑡𝑡
where 𝑝𝑝𝚤𝚤𝑡𝑡
𝑠𝑠���� is the average USD price of good 𝑖𝑖 at time 𝑡𝑡 in South Sudan; 𝑝𝑝𝚤𝚤𝑡𝑡
𝑈𝑈���� is the average USD price of
good 𝑖𝑖 at time 𝑡𝑡 in Uganda; and 𝛿𝛿𝑖𝑖 is the commodity fixed effect of good 𝑖𝑖. The hypothetical price of
good 𝑖𝑖 imported to South Sudan from Uganda is then calculated as: 𝑝𝑝̂𝑖𝑖𝑡𝑡
𝑆𝑆 = 𝑒𝑒 𝛿𝛿� 𝑖𝑖 𝑝𝑝𝑖𝑖𝑡𝑡
𝑈𝑈. Once the hypothetical
prices are obtained, the USD price of food basket is calculated using the prices and WFP weights. The
PPP exchange-rate benchmark is calculated as the ratio between the hypothetical USD price and the
actual SSP price of the food basket.
___________________________________
1/ Jordà, Ò., 2015. “Estimation and Inference of Impulse Responses by Local Projections,” American Economic Review,
95, 1, pp. 161-182.
2/ The WFP basket also includes 0.15kg of salt, which is not included for this estimation due to data availability.
3/ The South Sudan sample includes prices from KonyoKonyo (Juba), Jau, and Rumbek. The Ugandan sample includes
prices from Owino (Kampala), Gulu, Iganga, Kaabong, Kapchorwa, Kotido, Lira, Makaratin, Masindi, Mbale, Mbarara,
and Soroti.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 43
Annex III. Implementation of Recommendations from the IMF
2022 Article IV Consultation1
1 Prepared by Mr. Masateru Okamoto.
Recommendations Status
Fiscal Policy
Strengthen expenditure controls
and cash management.
Ongoing. Bank accounts of central government ministries, departments, and agencies
in USD have been closed and the funds deposited in SSP bank accounts; GoSS
gradually rolling out electronic fund transfers for salary payments; an MoU on TSA
arrangements signed in March 2023 between the BoSS and MoFP; cash plan being
updated more regularly and used to inform budget releases.
Continue to improve revenue
collection and spending efficiency.
Ongoing. Tax revenue collection as a share of GDP improved in FY2022/23 and is
expected to improve further in FY2023/24, reflecting improvements in tax
administration and suspension of non-statutory discretionary tax exemptions and
adjustment of exchange rate used by customs. Expenditure is starting to be redirected
towards social spending.
Review spending on the road
infrastructure program.
Ongoing. Spending for roads reduced in the FY2023/24 to create room for salary
increases and higher spending on health and education.
Strengthen the institutional
framework for debt management.
Ongoing. An external debt stocktaking was completed by an external auditor and
published in December 2022. Authorities currently receiving IMF TA towards
strengthening the debt management framework.
Establish a fiscal anchor to guide
fiscal policy.
Not met. Authorities have expressed commitment to continue implementing fiscal
policies that are consistent with macroeconomic stability and debt sustainability.
Monetary Policy
Improve BoSS’s liquidity
monitoring and forecasting
capabilities.
Ongoing. BoSS coordinating with MoFP through the Liquidity Working Group and the
Cash Management Committee.
Expand BoSS’s monetary toolkit. Met. BoSS introduced in October 2022 a new term deposit facility as an additional
tool for monetary policy to complement FX auctions.
Financial Stability
Address undercapitalized banks. Ongoing. Licenses of 2 inactive domestic banks have already been revoked. The BoSS
approved in June 2023 a time-bound strategy to review the licenses of banks that
have ceased operations and to address undercapitalization in the domestic banking
sector.
Governance
Develop a plan for addressing
recommendations in the audit
report of the second RCF.
Met. The plan was approved by the MoFP in January 2023 and published on the MoFP
website.
Publish all signed oil production
sharing agreements between the
government and commercial
companies.
Not met. Publication is pending agreement with oil companies to ensure consistency
with contractual obligations.
Implement the safeguards
assessment recommendations
Ongoing. BoSS Board has adopted the audited FY2021 financial statements; the
process of selecting an internationally reputable firm to audit the BoSS from FY2022
onwards is underway.
REPUBLIC OF SOUTH SUDAN
44 INTERNATIONAL MONETARY FUND
Annex IV. Risk Assessment Matrix1
Source of Risks Likelihood Expected Impact on
Economy
Policy Response
Conjunctural Shocks and Scenarios
Intensification of regional
conflict. Escalation or
spread of the conflict in
Gaza and Israel, Russia’s war
in Ukraine, and/or other
regional conflicts or
terrorism disrupt trade (e.g.,
energy, food, tourism,
supply chains), remittances,
FDI and financial flows,
payment systems, and
increase refugee flows.
High High. The conflict in Sudan
could result in further damage
to the oil pipeline to Port
Sudan, negatively impacting
South Sudan’s export and
fiscal revenues.
Build fiscal and international
reserve buffers to cushion
against potential balance of
payment shock. Advance non-
oil revenue reforms.
Commodity price
volatility. A succession of
supply disruptions (e.g., due
to conflicts, export
restrictions, and OPEC+
decisions) and demand
fluctuations causes
recurrent commodity price
volatility, external and fiscal
pressures in EMDEs, cross-
border spillovers, and social
and economic instability.
High High. Increased food and fuel
prices and more inflationary
pressure on the poor and
vulnerable. On the positive
side, higher global oil prices
may strengthen the fiscal and
external accounts.
Use windfall hydrocarbon
earnings to rebuild
macroeconomic buffers. Adopt
temporary fiscal measures to
protect food security for
vulnerable population.
Social discontent. High
inflation, real income loss,
spillovers from conflicts
(including migration),
worsening inequality, and
disputed elections cause
social unrest and
detrimental populist
policies. This exacerbates
imbalances, slows growth,
and leads to policy
uncertainty and market
repricing.
Medium High. Social unrest fueled by
increasing prices and
shortages of essentials,
inadequate healthcare, and
low food security
Improve budget execution
with respect to social
spending, and grow wages and
social spending sustainably, in
collaboration with
development partners (where
needed).
1 Prepared by Mr. Masateru Okamoto.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 45
Source of Risks Likelihood Expected Impact on
Economy
Policy Response
Structural Risks
Extreme climate events.
Extreme climate events
driven by rising
temperatures cause loss of
human lives, severe
damage to infrastructure,
supply disruptions, lower
growth, and financial
instability.
Medium High. Increased pressures on
public expenditures during
floods, droughts or famines
would divert resources away
from growth-enhancing
spending and decrease
growth. It would also lead to
lower agricultural output, an
increase in food inflation and
negatively affect the poor
and vulnerable groups.
Use targeted programs to
help vulnerable groups.
Reprioritize spending. Build
buffer to cushion against next
natural disaster. Guard against
second-round effects on
inflation.
Disorderly energy
transition. A disorderly
shift to net-zero emissions
(e.g., owing to shortages in
critical metals) and climate
policy uncertainty cause
supply disruptions,
stranded assets, market
volatility, and subdued
investment and growth.
Medium High. Sharp decrease of
exports and fiscal revenues
resulting from disorderly shift
to net-zero emissions and
following decline in oil prices.
Implement reforms to improve
competitiveness. Diversify
exports as well as revenues.
Build fiscal and international
reserve buffers to help
manage the transition.
Domestic Risks
Political tension and the
deterioration of security
situation. 1
Medium High. Diversion of resources to
deal with internal conflict and
heightened levels of country
risk, especially with first post-
independence elections
expected towards the end of
2024, could hamper the
growth and lower oil
production and lead to and
insufficient investment,
economic instability and
increasing poverty.
Keep implementing the peace
agreement and seek
reconciliation between the
political parties.
Focus on economic
stabilization, fair sharing of oil
revenues, and overall good
governance.
Delays in improving
governance or capacity.
Medium–High High. Diversion of resources
from development and
continued threat of social and
political instability. Entrenched
rent seeking behavior,
pressures on current
expenditures, and low quality
of public investment.
Strengthen anti-corruption
efforts, including by improving
oil-sector transparency, focus
on strengthening economic
institutions, and foster
improvements in the business
environment.
1 Overall, the political and security situation is stable but remains fragile.
REPUBLIC OF SOUTH SUDAN
46 INTERNATIONAL MONETARY FUND
Annex V. Fragility Trends in Republic of South Sudan: An
AI-Augmented View2
1. State fragility is a complex issue. Fragile and conflict-affected states (FCS) are often
characterized by problems with governance, capacity, and legitimacy, leading to tensions and
violent conflict. Shared traits among these states include institutional and policy implementation
limitations, a turbulent political backdrop, severe domestic resource constraints, and high
vulnerability to shocks. Despite the absence of a universally agreed operational definition, most
academic research considers states fragile when their limited institutional capability, political
instability, and poor governance significantly impair their ability to provide security and basic public
services to their population.
2. State fragility arises from various internal and external factors. Causes of fragility in the
literature include but are not limited to weak governance, corruption, poverty, inequality, conflict
and violence, international interventions, economic shocks, climate conditions, and erosion of social
cohesion, among others. Poor institutions, political fragmentation, and inadequate national
institutions contribute significantly to state fragility, as well as socioeconomic variables such as low
Human Development Index (HDI), increased infant mortality, and lower schooling. Fragile states
often face interconnected challenges that hinder long-term growth and are characterized by six
defining qualities (Collier in Chami et al. 2021): lack of shared identity, illegitimate government,
inability to perform basic functions, existential uncertainty, underdeveloped private sector and
vulnerability to economic and political shocks. Various theories have been proposed to explain the
conditions leading to fragility “traps”. The states affected by the “fragility syndrome” (Collier, 2020)
frequently exhibit divided societies with oppositional identities, making it challenging for different
groups to collaborate for the common good. Instead, the state is often viewed as a resource to be
exploited, perpetuating a cycle of poor governance, corruption, and instability.
3. AI/ML techniques could offer some advantages over traditional methods. Artificial
intelligence and machine learning techniques such as various deep learning neural network
architectures and support vector machines, if used and trained appropriately, could be more capable
of detecting non-linear relationships, managing large and high-dimensional datasets, learning from
data, avoiding overfitting, and handling noise and outliers. Due to the multi-dimensional and
complex nature of fragility and its typically non-linear relationship with numerous socio-economic
and environmental factors, AI/ML techniques can be very helpful for fragility analysis. Also, the
dynamic nature of fragility data also could benefit from AI/ML techniques’ ability to remember
long-term patterns in large datasets, resulting in more reliable models. Our approach faces
challenges with data quality and availability. We use imputation methods for missing data but
recognize their limitations. Imputed data can lack the depth of expert judgment, crucial in contexts
with limited or poor-quality data.
2 Prepared by Mr. Tohid Atashbar. For technical details, see Atashbar, T. (2023). How Nations Become Fragile: An AI-
Augmented Bird’s-Eye View (with a Case Study of South Sudan).
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INTERNATIONAL MONETARY FUND 47
4. Multiple methods could be used to assess fragility scores and trends. Utilizing multiple
machine-learning methods, including scikit-learn for Kernel Principal Component Analysis and
standard scaling, we performed fragility analysis for each year from 1979 to 2021 using OECD
collected raw data to calculate dimensional and aggregate fragility scores for countries. We then
employed an SVC (Support Vector Classifier) model with a Polynomial kernel to classify countries
based on their fragility scores. To check for improvements, we repeated classification procedure
using Recurrent Neural Networks (RNN). Finally, we trained a long-short-term memory network
(LSTM) to estimate the impact of dimensions on fragility scores and predict future values. To
effectively display the results, we built a Plotly Dash-based application that allowed for an interactive
exploration and comparison of the data across dimensions, countries, and years.
5. South Sudan has been among the most fragile nations in recent decade. The results
from the ML-assisted analysis (in Table 1) shows that South Sudan, along with Somalia and the
Central African Republic have experienced the highest levels of fragility in recent years.
6. Environmental challenges have greatly impacted South Sudan. As shown in Figure 1,
South Sudan has been one of the most environmentally fragile countries in 2021 alongside the
Philippines and Haiti. The country has faced historic flooding, which has affected two-thirds of its
territory, emphasizing importance of environmental issues in understanding and tackling fragility.
Table 1. Republic of South Sudan:
Most Fragile Countries in the World,
2010–21
Figure 1. Republic of South Sudan: Most
Environmentally Fragile Countries
in 2021
Source: Author’s calculations based on OECD dataset.
7. Political fragility, along with human and security dimensions, are major contributors
to South Sudan’s overall fragility. Figure 2 illustrates that political fragility has consistently been a
significant issue since the country’s inception. Environmental challenges, such as floods and
droughts, have periodically intensified the fragility, though their impact varies over time, as
evidenced by the post-2020 levels being comparable to those in 2012. The human condition
remains a persistent concern, consistently contributing to the nation’s fragility. Economic fragility,
however, shows signs of improvement since 2016–17. Moreover, Figure 3 highlights a strong
REPUBLIC OF SOUTH SUDAN
48 INTERNATIONAL MONETARY FUND
correlation between the precarious security situation in South Sudan and its overall fragility,
underscoring the interplay between these various dimensions.
Figure 2. Republic of South Sudan:
Dimensional Fragility Over Time
Figure 3. Republic of South Sudan: Heatmap of
Correlation of Dimensional Fragilities in 2021
Source: Ibid.
Figure 4. Republic of South Sudan: Risk and Coping Political Fragility Sub-Indicators
Source: Ibid.
8. Assessing the various aspects of political fragility in South Sudan reveals a concerning
trend. Apart from women’s political empowerment, other sub-indicators of political fragility have
remained at elevated levels in recent years, with no tangible improvements observed. This persistent
high level of political fragility suggests that the country is struggling to establish a stable and
inclusive political environment (as discussed in South Sudan CES, 2022), which in turn has
far-reaching consequences for its overall fragility.
9. The key to mitigate fragility of South Sudan is to address political and security issues.
This requires a sustainable governance strategy that addresses root causes of the conflicts as well as
promoting inclusivity and dialogue among different groups. On the economic side, macroeconomic
stability needs to be achieved through economic and public finance reforms as well as investments
in infrastructure and improved agricultural techniques.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 49
Annex VI. Domestic Revenue Mobilization in
Republic of South Sudan1
1. Increasing non-oil revenue will be key to create fiscal space and help maintain debt
sustainability of South Sudan. The government of South Sudan relies on oil revenue to cover more
than 90 percent of its expenditure, which is prone to significant price and output risk. High volatility
of oil prices, exchange rate, and oil production make it difficult for the government to have reliable
revenue forecasts and execute the budget with consistency over the fiscal year. Moreover, the
country’s basic social spending needs are currently primarily covered by off-budget support from
international donors. Diversifying the revenue source will be important in creating consistent fiscal
space for necessary social and development spending needs without leading to debt sustainability
risks.
2. South Sudan’s non-oil tax-to-GDP ratio remains the lowest in Sub-Saharan Africa
(SSA), despite ongoing progress with reforms. South Sudan’s general government non-oil tax-to-
GDP ratio was 4.1 percent in FY 2022/23, which was the lowest among 45 SSA countries (Figure 1).
With the goal of raising the ratio to 6 percent by FY 2027/28, the National Revenue Authority (NRA)
launched a five-year Strategic Plan for resource mobilization in 2022. Ongoing reforms include
hiring of new NRA staff, construction of the NRA inhouse training center, implementation of e-tax
and e-customs, and streamlining of customs duties and taxes exemptions. The NRA’s non-oil
revenue collection2 has more than doubled in FY 2022/23 with progress in reforms. Despite the
large growth, the country’s revenue collection remains very low compared to neighboring countries.
Even with the achievement of the NRA’s 6 percent target, the country would stay very close to the
bottom of the SSA country rankings.
3. A measure of South Sudan’s tax revenue potential can be obtained by comparing the
actual level of revenue with the benchmark “tax frontier”. Stochastic tax frontier analysis
estimates the tax effort of a country by comparing its tax-to-GDP ratio with the ratio of countries
with similar characteristics. Higher inefficiency relative to the benchmark level implies lower tax effort
in the model. The tax effort of South Sudan was estimated using a panel of 146 countries for the
sample period between 2002 and 2020. A set of characteristics that are known to be associated with
the level of tax revenue, including GDP per capita, share of agriculture in value-added to GDP, trade
openness, income inequality, and public spending on education, were included in the model as
independent variables.3 The Tax frontier of each country was calculated using the estimated tax
1 Prepared by Ms. Sunwoo Lee.
2 Non-oil revenue includes tax revenue, customs duty, and the revenue from fees and licenses.
3 We follow the estimation approach in the April 2018 SSA Regional Economic Outlook “Domestic Revenue
Mobilization in SSA: What Are the Possibilities?”. Due to data availability and for consistency across countries,
‘General Government Tax Revenue to GDP ratio’ as reported in WEO database was used for all sample countries as
the dependent variable in the estimation. Tax frontier was estimated with the following equation: 𝑦𝑦𝑖𝑖𝑡𝑡 = 𝛼𝛼𝑖𝑖 + 𝛽𝛽 ′ 𝑋𝑋𝑖𝑖𝑡𝑡 +
𝜃𝜃𝑖𝑖𝑡𝑡 − 𝜇𝜇𝑖𝑖𝑡𝑡, where 𝑦𝑦𝑖𝑖𝑡𝑡 is the log of tax revenue-to-GDP ratio for country i at period t, 𝑋𝑋𝑖𝑖𝑡𝑡 is a vector of independent
(continued…)
REPUBLIC OF SOUTH SUDAN
50 INTERNATIONAL MONETARY FUND
Figure 1. Republic of South Sudan: General Government Tax Revenue
Source: IMF WEO database; South Sudanese authorities
Figure 2. Republic of South Sudan: Tax Frontier Estimates
Source: South Sudanese Authorities; WEO live database; World Development Indicators, World Bank; and staff calculations.
Note: SSA = Sub-Saharan Africa. Estimations with three different country samples (world, emerging and developing economies,
and SSA economies) were used to obtain the range for tax frontier. Point estimates report the average of different estimations.
The upper and lower bounds are defined as two times the standard deviations of the estimations above and below the average.
variables, 𝜇𝜇𝑖𝑖𝑡𝑡 is the inefficiency independent from the residual 𝜃𝜃𝑖𝑖𝑡𝑡. Tax frontier is calculated as the actual tax-to-GDP
ratio divided by the estimated tax effort 𝑇𝑇𝑇𝑇 = exp(−𝜇𝜇𝑖𝑖𝑡𝑡). 𝜇𝜇𝑖𝑖𝑡𝑡 and 𝜃𝜃𝑖𝑖𝑡𝑡 were assumed to follow truncated-normal and
normal distribution with zero mean, respectively. For more information on the identification of 𝜇𝜇𝑖𝑖𝑡𝑡, see Jondrow et
al., 1981, “On the Estimation of Technical Inefficiency in the Stochastic Frontier Production Function Model”, Journal
of Econometrics, Volume 19, Issues 2–3.
South
Sudan
0
5
10
15
20
25
30
35
40
45
50
Tax-to-GDP (% of GDP)
Panel II. Sub-Saharan Africa: Tax to GDP (%), 2023
4.4
3.9
4.0
4.7
2.6
4.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0.0
50.0
100.0
150.0
200.0
250.0
Percent of GDP
Billion SSP
Panel I. South Sudan: Non-Oil Revenue
Nonoil Revenue (billions SSP) Nonoil Revenue to GDP (%)
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 51
effort and the actual tax-to-GDP ratio of the country. The gap between the actual tax-to-GDP ratio
and the estimated tax frontier measures the tax gap (potential) that the country could achieve.
4. The tax frontier analysis suggests that South Sudan’s tax gap ranges from 2.9 to
6.1 percent of GDP, with the average gap estimated at about 4.5 percent of GDP. The tax gap
is larger than the SSA average, despite that lower actual tax-to-GDP ratio of the country tends to
lower the level of estimated tax frontier. The calculated tax frontier in 2023 ranges from 6.9 to
10.1 percent of GDP, compared to the actual ratio projected at 4.0 percent.4 South Sudan has the
lowest tax effort (the ratio of actual tax-to-GDP ratio to tax frontier) in the SSA region, suggesting
huge potential gains from improvement in tax administration and tax policy reforms (Panel III of
Figure 2). The low tax effort can be partly due to the country’s high oil dependence, which could
encourage the substitution away from mobilizing non-resource tax revenue and discourage
investment in tax institutions.5 It is important to note that the estimate is sensitive to the group of
sample countries and the frontier can increase over time with improvements in macroeconomic and
institutional conditions. Reaching the SSA mean for the macroeconomic variables included in the
model as independent variables, for instance, would further raise the country’s tax frontier to about
12 percent of GDP with everything else fixed.
5. Stronger tax and customs administration and diversification of tax revenue sources
would be required to better exploit the revenue potential:
Tax administration should be strengthened to enhance revenue collection. As part of the authorities’
plan to modernize tax administration, new Integrated Tax Administration System was implemented
in July 2021. However, the internal capacity of NRA remains weak, and the recruitment process is
slow, delaying the final delivery of e-Tax and the integration of all revenue collection functions
under the NRA. Compliance monitoring also needs to be strengthened with a dedicated unit.
Further progress in customs reforms is needed. Some progress has been made on customs reform but
more needs to be done to meet government revenue collection targets. The implementation of e-
Customs has been slow, further impeded by inadequate infrastructure and the weak IT environment.
The NRA does not have complete oversight of all border posts and the customs exchange rate
remains low compared to the official market exchange rate despite the recent adjustment.
Moreover, the amount of exemptions remains large relative to the total collections, thereby
considerably eroding the tax base. Some progress has been made in this area with the Ministry of
Finance and Planning suspending non-statutory discretionary exemptions in May 2023 and directing
the drafting of comprehensive exemption regulations to further streamline the exemptions.
Corporate Income Tax (CIT) collection could be improved. The country’s tax revenue is currently
primarily reliant on Personal Income Tax (PIT) revenues (Panel III of Figure 3). South Sudan’s CIT
revenue to GDP ratio remains extremely low even though the tax rate is comparable to SSA average,
4 The range was obtained through estimating a variation of regressions using different country sample groups
(global, emerging market developing economies, and Sub-Saharan Africa).
5 Benitez et al., 2023, “Building Tax Capacity in Developing Countries”, IMF Staff Discussion Notes, SDN/2023/006.
REPUBLIC OF SOUTH SUDAN
52 INTERNATIONAL MONETARY FUND
potentially due to weak tax compliance and limited business growth.6 Strengthening of tax compliance
monitoring and improvement of regulatory environment for businesses would enhance another
source of direct tax revenue.
There is additional scope of revenue from the introduction of Value-Added Taxes (VAT), but the tax
should be introduced with caution. VAT is considered an effective revenue booster that broadens the
tax base, although it requires strong capacity for effective implementation. VAT yields on average
amounts to about 4 percent of GDP in the SSA region and comprises about 30 percent of total
revenue collected (Panel III of Figure 3). To minimize potential distortions and the impact on poorest
population, carefully targeted exemptions would be required. Ongoing efforts to strengthen
capacity in the NRA would also be needed to boost yields.
6 South Sudan ranked 185 out of 190 in World Bank’s ‘Ease of Doing Business’ in 2019.
Figure 3. Republic of South Sudan: Tax Rates and Revenue in Republic of South Sudan
(by type of tax)
Source: IMF Fiscal Affairs Tax Revenues database; ISORA; KPMG; South Sudanese Authorities; and staff calculations.
Note: SSA = Sub-Saharan Africa; SSD = South Sudan; SSC = Social Security Contributions. Tax rates report the rates applied to
the highest income bracket. 25, 18, and 35 SSA countries were included in Panel I, II, and III, respectively, for the calculation of
SSA average due to data availability.
SSA Average (2020)
0
5
10
15
20
25
30
35
2015 2023
Panel I. Corporate Income Tax
Rate (%)
South Sudan SSA Average (2020)
SSA Average (2020)
0
5
10
15
20
25
30
35
2015 2023
Panel II. Personal Income Tax
Rate (%)
South Sudan SSA Average (2020)
0
2
4
6
8
10
12
14
SSA Average
(2018-2020)
South Sudan
(FY2022/23)
Panel III. Tax Revenue to GDP,
by Type of Source (%)
Other Taxes
Excise
Sales
VAT
CIT
PIT
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INTERNATIONAL MONETARY FUND 53
Annex VII. External Sector Assessment1
Based on data as of October 2023, the external position of South Sudan is assessed to be weaker than
implied by fundamentals and desirable policies. In the absence of standard tools, this conclusion
reflects very low level of reserve adequacy coupled with South Sudan’s political fragility and heavy
reliance on oil export proceeds that have been very volatile in the recent past and South Sudan’s
political fragility. Achieving external stability requires sustaining macroeconomic stabilization through
continued fiscal and monetary prudence, lasting peace, and good governance.
1. The significant structural changes in recent years, broad-based fragility and weak
statistical infrastructure complicate the use of standard tools for the external sector
assessment in the case of South Sudan. Given insufficient data and uncertainty about structural
and policy variables, neither the External Balance Assessment (EBA) nor EBA-lite is applicable to
South Sudan. In the following, the external assessment is based on a more descriptive analysis.
2. The FX reforms introduced under the
SMP achieved convergence of the exchange
rates, eliminating the previously large
distortions in the FX market. The reform
liberalized the FX market and eliminated the
large distortions from a significant exchange
rate premium in the parallel market relative to
the official rate. Supported by two
disbursements under the Rapid Credit Facility
and higher global oil prices, the
macroeconomic stabilization and FX market
reforms contributed to an appreciation of the
market rate.
3. The FX reforms adopted a multi-pronged approach to liberalizing the foreign
exchange market. The reforms started with the introduction of weekly FX auctions to FX bureaus in
December 2020 and were deepened further in April 2021 through a number of additional measures
that included (i) opening the FX auctions to banks; (ii) allowing commercial banks to buy and sell FX
at market rates; and (iii) adjusting the official exchange rate gradually (1 percent each trading day)
until it converged with the parallel market rate. These reforms led to convergence of the different
exchange rates in the market in mid-August 2021. Following such convergence, the official exchange
rate was discontinued and replaced with a reference rate based on rates prevailing in the market.
4. The spread between the official and parallel rates substantially decreased after the
reforms. The FX reforms, combined with monetary discipline and an oil price recovery that has
boosted FX liquidity, have led to a significant appreciation of the exchange rate in the parallel
market. The spread between the official and parallel market rates has averaged about 2.3 percent
1 Prepared by Mr. Tohid Atashbar.
REPUBLIC OF SOUTH SUDAN
54 INTERNATIONAL MONETARY FUND
since August 2021 when the exchange rates in the market were effectively unified until October
2023.
5. The exchange rate has depreciated significantly since mid-2022 and staff analysis
suggests that the SSP is somewhat undervalued at present. The exchange rate depreciated for
most of FY2022/23. While to a large extent this is attributed to last year’s monetary expansion, other
factors have contributed to the observed depreciation. These include a weakening oil price in early
2023 and confidence effects due to a pause in FX auctions by the BoSS in late-2022/early-2023,
aimed at rationing reserves before the FSW disbursement, both of which played a significant role.
Although there was a brief appreciation following the FSW disbursement, it was temporarily
reversed in April due to the outbreak
of conflict in Sudan. However, since
June 2023, the exchange rate has
shown signs of stabilization, buoyed
by higher oil prices and the continued
tight monetary policy stance of the
BoSS. As discussed in Annex II, the
SSP may be somewhat undervalued at
present. This is based on two different
approaches that are used as a guide
to “long-run fair value” (i.e., a
purchasing power parity approach
and the estimated co-movement
between reserve money and the
exchange rate).
6. South Sudan is a heavily oil-dependent country, with oil exports accounting for about
99 percent of total exports of goods. The recovery of oil prices and the SDR allocation nearly
closed the BOP gap in
FY2021/22 and FY 2022/23.
However, sizable BOP
financing gaps are estimated
for the current year and over
the medium term. Measures
of about 5.7 percent of GDP
will be needed to close the
financing gap in FY2023/24.
Financing gaps averaging
44.2 percent of GDP over the
horizon of the next 3-4 years
will leave South Sudan
vulnerable to shocks and
large unmet financing needs
to support the country’s objectives for economic convergence and inclusive growth.
-60
-40
-20
0
20
40
60
-7,000
-5,000
-3,000
-1,000
1,000
3,000
5,000
7,000
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24
%GDP
Million Dollars
Trade Balance and Composition of Exports
Nonoil
Oil
Imports of goods
Trade Balance (percent of GDP)
Current account balance excluding transfers (percent of GDP)
Prel.
Source: South Sudan Authorities and IMF Staff calculations. Proj.Prel.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 55
7. Low levels of foreign reserves reflect external disequilibrium. South Sudan’s foreign
exchange reserves have increased over the last two years after a steady decline since the outset of
the civil conflict in 2013. The
August 2021 SDR allocation and
the uptrend in oil prices due to
geopolitical uncertainties have
contributed to the accumulation
of reserves. Nonetheless, the level
of gross international reserves at
October-2023––at US$ 384
million, or 0.9 in months of
imports––is inadequate by any
measure. Given the country’s high
dependence on oil exports and
reliance on imports for most basic
goods for domestic consumption,
South Sudan needs substantial
foreign exchange buffers. In this context, the “rule of thumb” of three months of imports would
likely be suboptimal. In the medium and long term, a level of reserves closer to the average of LIC oil
exporters (4 months of imports cover) would be preferable.
8. Fiscal and monetary discipline and strengthening the balance of payments are
important to stabilize South Sudan’s external position. While the standard tools for the external
sector assessment are not applicable to the case of South Sudan, the analysis on the exchange rate
and the reserve adequacy shows South Sudan’s external disequilibrium. In the short term,
continuing fiscal discipline, refraining from central bank financing, and allowing for greater
exchange rate flexibility are essential. Permitting gradual depreciation of the SSP in line with the
reserve money growth target, in combination with a well-calibrated fiscal rule, could allow BoSS
dollar reserves to grow over time. Over the medium term, diversification away from dependence on
oil will be key for external stability and
achieving sustainable economic growth.
9. The ongoing conflict in Sudan
poses a sizable risk to South Sudan’s
external sector. Although the oil pipeline to
Port Sudan is still operational, the ongoing
strife in Sudan has already elevated insurance
and freight costs for South Sudan’s oil
exports. If tensions escalate, these expenses
could climb even higher and/or potentially
disrupt oil shipments. The rise in global oil
prices has offset some of these added
expenses, helping to maintain the net price of a barrel of South Sudanese oil.
0
10
20
30
40
50
60
70
80
90
100
-25
-20
-15
-10
-5
0
5
10
15
20
25
2019/20 2020/21 2021/22 2022/23 2023/24
% GDP
Current Account and Oil Prices
Prel. Proj.
Source: South Sudan Authorities and IMF Staff calculations.
0
200
400
600
800
1,000
1,200
1,400
1,600
2015 2016 2017 2018 2019 2020 2021 2022 2023
Reserve Adequacy
(USD. Millions)
Three Months of Imports Reserves
Proj.
Source: South Sudan Authorities and IMF Staff calculations.
REPUBLIC OF SOUTH SUDAN
56 INTERNATIONAL MONETARY FUND
10. In conclusion, despite South Sudan’s reliance on oil exports and higher oil prices,
which should theoretically strengthen its position, the external sector outlook for the country
is weaker than anticipated based solely on these factors. This assessment stems from factors
unique to South Sudan as compared to other oil-exporting economies. In addition to the very low
level of reserves discussed above, key among these is the country’s political fragility, which, unlike in
more stable oil-exporting countries, creates a heightened risk of disruption in oil production and
exportation, in addition to the higher security-related expenditures. Additionally, South Sudan’s
economic challenges are compounded by its underdeveloped infrastructure and lack of economic
diversification, making it more susceptible to external shocks. These elements, combined with the
ongoing war in Sudan that could potentially lead to disruptions in South Sudan’s oil exports, place
South Sudan in a more precarious economic position than its oil-exporting peers, thereby justifying
a ‘weaker than’ assessment.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 57
Annex VIII. Capacity Development Strategy1
A. Context
1. Capacity development (CD) activities in South Sudan increased significantly under the
first Staff Monitored Program (SMP). South Sudan formally joined AFRITAC East in May 2020.
Since then, AFRITAC East has provided additional technical assistance and CD assessments.
Technical Assistance (TA) missions have taken place in several areas including monetary policy
operationalization, liquidity management, financial sector supervision, banking resolution, Public
Financial Management (PFM), government finance statistics, CPI statistics, and macro-fiscal analysis.
The framework provided by the SMP also allowed for some institution-building through program
targets that may improve CD traction going forward.
2. TA traction has improved significantly relative to the pre-SMP experience.
Nevertheless, low capacity suggests that the best course of action in the near term continues to be
for streamlined and sequential technical assistance that is focused on the most critical needs, and
delivered in small increments, allowing the authorities to implement recommendations step by step,
while demonstrating continuous progress. Further effort in implementing recommendations from
past TA would help support future requests and ensure technical advice is usefully supporting the
authorities’ reform program.
3. The authorities have expressed a strong preference for longer-term, in-person TA.
Experience under the SMP suggests that in-person TA, delivered through a longer-term program of
hands-on activities, has delivered the most tangible benefits. The authorities have expressed a
strong preference for this approach. In response, the IMF has resumed its in-person CD missions
following the end of pandemic restrictions. A long-term resident Public Financial Management
(PFM) advisor was installed in July 2023 to assist the authorities in strengthening budget execution.
The BoSS has requested a similar arrangement to assist on key high-level reforms such as possible
currency re-denomination, re-introduction of T-Bills, and liquidity forecasting.
4. Addressing South Sudan’s status of being under Increased FATF Monitoring (Grey List)
for AML/CFT risks requires CD support. To address these risks, the authorities committed to
implementing reforms as part of the action plan developed in June 2021. South Sudan has also been
approved as a member to the Eastern and Southern Africa Anti Money Laundering Group
(ESAAMLG) and has committed to undertake a Mutual Evaluation by ESAAMLG. Such progress
needs to be complemented with CD support and the authorities have received scoping TA to assist
with drafting the necessary new legislation in this area.
1 Prepared by Mr. Masateru Okamoto.
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58 INTERNATIONAL MONETARY FUND
B. CD Priorities
5. The authorities have expressed interest in several capacity development topics related
to the implementation of Chapter IV in the R-ARCSS, which remains a roadmap following the
extension of the agreement, as well as their action plan on AML/CFT.
• The reform program on public financial management is fully owned by the government who
developed a concept note for its PFM reform in which 13 reform areas are prioritized (Annex
Box). The authorities have requested and received assistance in PFM issues including the
implementation of a Treasury Single Account (TSA), cash management, and arears
management. Progress of reform in these areas remains ongoing and will likely require
additional support through follow-ups and additional TA.
• TA support for civil service reform, in terms of wage, structure, and size of public
employment is recommended to guarantee adequate resource allocation to social spending
in education and health sectors.
• Further TA support for the central bank is needed to carry forward the reforms envisaged
under the ongoing Staff Monitored Program with Board Involvement (PMB). This includes
several topics in monetary policy, FX management, and banking supervision. The authorities
received TA support on developing a crisis resolution framework and addressing the issue of
undercapitalized banks in August 2022, and on currency operations to assist progress
towards the implementation of the IMF Safeguards Assessment recommendations in March
and August 2023. In addition, the authorities have expressed interest in the continued
Text Table: Republic of South Sudan: Current PFM Reform Priorities
1. Implement a TSA
2. Strengthen cash management
3. Relocate Loans Committee to MoFP
4. Review, verify and clear all arrears
5. Review and verify loans and contracts collateralized or guaranteed against crude oil
6. Strengthen the Anti-Corruption Commission (ACC) and the Audit Chamber (external auditor)
7. Establish a Public Procurement and Asset Disposal Authority (PPADA)
8. Rollout electronic payroll using biometric system
9. Strengthen Fiscal and Financial Allocation Monitoring Commission (FFAMC)
10. Strengthen macro-fiscal framework (Not in R-ARCSS)
11. Strengthen the budget process and budget credibility (Not in the R-ARCSS)
12. Revenue management (Not in R-ARCSS)
13. Cross-cutting: Instructional Reforms & Legislative Reviews (Not in R-ARCSS)
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 59
support for the areas of monetary policy and FX management. They also identified other
topics including assistance in compilation of statistics.
• In the area of AML/CFT, the objective is to bring the AML/CFT legal and institutional
framework into compliance with international standards thereby allowing South Sudan to
exit the gray listing of FATF. This will require significant effort on many fronts (e.g.,
development of a National Risk Assessment, risk based supervisory regimes and a system for
the collection of beneficial ownership information). The authorities have received TA to
identify gaps and drafting the needed AML/CFT legislation.
• Support in debt management is underway as an integral part of the reforms planned under
the PMB. A scoping mission has recently been provided to assess gaps in debt management
practices and will be followed by sequenced joint FAD-MCM missions to build the
institutional framework for debt management and a medium-term debt strategy. TA to
strengthen core functions of domestic tax and customs was also provided to the National
Revenue Authority (NRA) in 2022 and 2023.
• TA has recently been provided on government finance statistics and public sector debt
statistics to assist authorities to compile these statistics in a manner aligned with GFSM 2014
and to expand the institutional coverage of these statistics.
• Priority topics for CD growth are debt management, crisis resolution, public investment
management, and wage structure, with assistance on CPI, national accounts, and external
sector statistics to be provided subject to absorption capacity.
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60 INTERNATIONAL MONETARY FUND
Priority CD Topics
Priorities Objectives Challenges
Public
Financial
Management
Support the authorities’ PFM reform
strategy, implement a treasury
single account, improve cash
management, improve debt
management, enhance budget
preparation and implementation,
and strengthen the macro-fiscal
framework.
Absorptive and implementation capacity is
very low. While the newly appointed FAD
Resident Advisor will work with the MoFP
to address the capacity constraints at the
technical level, buy-in from top
management would be key for timely
implementation of CD recommendations.
Revenue
Administration
Improve petroleum revenue
management, as well as non-oil
revenue.
The institutional, absorptive and
implementation capacities are very low.
The reforms underway at the national
revenue authority have resulted in a
significant increase in non-oil revenue but
additional reforms are needed. While the
PFM oversight committee has helped,
there is still weak coordination between
the MoFP and the Ministry of Petroleum
which complicates the management of oil
revenues and oil advances.
Central Bank
Operations
Improve monetary policy operations
and FX management, liquidity
management, currency operations,
banking supervision and resolution,
and debt management.
Implementation capacity is very low at the
central bank, and TA is required for most
central bank operations.
Statistics Improve monetary and financial
statistics, balance of payment
statistics, debt statistics, CPI, and
national statistics.
Absorptive and implementation capacity is
very low. Ownership needs to be
established.
AML/CFT Review the existing law, prepare for
joining international conventions,
develop a legal framework on
beneficial ownership.
The institutional, absorptive and
implementation capacities are very low.
Ownership needs to be established.
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INTERNATIONAL MONETARY FUND 61
C. CD Risks and Modality
6. Limited absorptive and implementation capacity remains the key risk to the CD
activities. Traction on CD has historically been low and, despite significant recent improvements,
the implementation of TA recommendations has been very slow due to political constrains, weak
governance, high staff turnover, limited institutional memory, and frequent changes of management
in most recipient institutions. Post-pandemic, while virtual TAs has helped expedite the delivery and
follow up of TA, weak IT capacity has posed a major challenge.
7. Fund engagement with authorities in CD activities has taken place through several
channels. These include the Fund’s local office in Juba, bilateral meetings in HQ and Juba,
workshops in neighboring countries, as well as several virtual meetings during the COVID-19
pandemic. South Sudan’s membership of AFRITAC East has opened opportunities to deliver CD and
helped increase support with several TA activities executed through the AFRITAC East center.
8. Incremental TA delivery supports the authorities best. Low capacity suggests that the
best course of action in the near term would be technical assistance focused on the most critical
needs and priority topics, delivered in small increments, in person, and through a series of longer-
term interactions, allowing the authorities to implement recommendations step by step, while
demonstrating continuous progress.
D. Priorities by IMF Department
FAD
Topics (ordered based on
priority)
Objectives
Debt Management
(joint with MCM)
Strengthen the debt management framework including by
enhancing debt data recording, monitoring, reporting and
disclosure. This is a high priority area.
Public Financial Management Implementation of the PFM reform strategy concept note,
TSA implementation, cash management, budget preparation
and implementation, and development of the macro-fiscal
framework.
Expenditure policy Enhancing execution of the budget in line with plans and
support fiscal discipline.
Revenue Administration Improving petroleum revenue management; enhance non-
oil revenue management through CD to the national
revenue authority; automation of NRA business processes;
change management.
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62 INTERNATIONAL MONETARY FUND
LEG
Topics Objectives
AML/CFT Supporting the authorities in addressing gaps identified in
a scoping mission.
MCM
Topics (ordered based on
priority)
Objectives
Debt Management
(joint with FAD)
Developing a medium-term debt management strategy.
This is a high priority area.
Crisis resolution Addressing the prevalence of critically undercapitalized
banks (CUBs) in the domestic banking sector, developing a
crisis resolution framework, and strengthening central bank
supervisory capabilities. This is a high priority area.
Liquidity forecasting and
monitoring
Continuing hands-on training and follow up virtual sessions
to achieve the objective of issuing daily liquidity reports.
Currency Operations Developing a strategy to strengthen currency operations
including purchasing, storage, processing, destruction
activities.
Banking Supervision Identifying regulatory gaps and implement Risk Based
Supervision (RBS). Authorities requested TA on RBS.
Central bank operations Enhancing monetary policy implementation and
introducing monetary policy tools and facilities (e.g., term
deposits).
STA
Topics (ordered based on
priority)
Objectives
Monetary and financial statistics,
balance of payment statistics,
debt statistics
Supporting central bank in its operations.
Government Finance Statistics Compilation of fiscal and public debt data.
CPI statistics Improving the collection and methodology of CPI
calculation across different states.
Real Sector Statistics Computing and publishing national accounts statistics.
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63 INTERNATIONAL MONETARY FUND
Appendix I. Letter of Intent
Juba, Republic of South Sudan, May 14, 2024
Ms. Kristalina Georgieva
Managing Director
International Monetary Fund
700 19th Street N.W.
Washington, D.C. 20431
Dear Ms. Georgieva:
1. The IMF Program Monitoring with Board Involvement (PMB), which was approved February
16, 2023, has provided welcome support to our macroeconomic and stabilization efforts. Our solid
performance under the PMB as discussed below demonstrates our commitment to building a track
record of sound policies and reform implementation. We also hope that continued progress on
implementing our reform agenda will lay the groundwork for a future Fund-supported program and
strengthen relations with development partners, unlocking financial support on concessional terms
for critical development and poverty-reduction measures. Financial support received through the
IMF Food Shock Window has been instrumental in supporting depleted FX reserves and addressing
humanitarian challenges, with mechanisms in place to ensure the utilization of Fund resources is
done in a transparent manner.
2. The program commitments under the PMB were largely respected. Quantitative targets for
end-March and end-June 2023 covering fiscal, monetary and debt were met, except for the targets
on social spending and on reserve money growth (the latter by a small amount). In line with
program commitments, we have adopted an action plan to strengthen debt management and an
action plan on banking sector reform while amendments to the BoSS Act have been adopted by the
National Assembly to specify that the issuance of sovereign guarantees will be subject to relevant
legislation while the Bank of South Sudan remains allowed to issue such guarantees consistent with
the stipulation in the Transitional Constitution. In addition, we have improved the transparency of oil
revenue, including by providing comprehensive information on oil production on the Ministry of
Petroleum website, and publishing quarterly budget execution reports on a regular basis. However,
the publication of oil production sharing contracts has not been possible given resistance from
private sector counterparties. As prior actions for the first and second PMB reviews, we have taken
the following measures: (i) the General Audit Chamber has published the audit of spending by the
central government that was financed by the disbursement through the Food Shock Window of the
Rapid Credit Facility; (ii) the external audit of the BoSS financial statements for financial year 2021
has been approved by the BoSS Board; and (iii) we have published the budget execution reports for
Q1 and Q2 of FY2023/24.
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64 INTERNATIONAL MONETARY FUND
3. Given the progress made in implementing the PMB, we are seeking completion of the first
and second reviews. In addition, we request a 6-month extension of the PMB through November 15,
2024, to allow time to establish a credible macroeconomic framework aimed at addressing the oil
shutdown and in line with our commitment to establish a strong policy track record to underpin our
longer-term structural reform agenda.
4. We have benefited significantly from close engagement with the IMF through the PMB and
capacity building in several key macro policy areas. We request that the remaining PMB review is
conducted in conjunction with discussion for Fund financing through the Extended Credit Facility.
Continued collaboration will be essential for maintaining reform momentum and ensuring that
South Sudan builds the institutions needed for stability, growth and poverty reduction over the long
term. We also look forward to further assistance from the Fund and other development partners to
build the technical capacity needed to implement macroeconomic reforms. We will not introduce
any measures or policies that would compound our BOP difficulties and will not impose new or
intensify existing trade restrictions. We will also not introduce or intensify existing restrictions on
payments and transfers for current international transactions; introduce or modify multiple currency
practices; or enter into bilateral payments agreements which are inconsistent with Article VIII of the
IMF’s Articles or Agreement. The GoSS will provide IMF staff with such information as may be
requested in connection with the progress made in implementing the economic and financial
policies and in achieving the objectives of the program.
5. We authorize the IMF to publish this letter, the attached MEFP and TMU, and the related
staff report, and the Informational Annex and the debt sustainability analysis (DSA) prepared by the
IMF and World Bank staff, including placement of these documents on the IMF website.
Sincerely yours,
/s/ /s/
____________________ ____________________
Mr. Awow Daniel Chuang Dr. James Alic Garang
Minister, Ministry of Finance and Planning Governor, Bank of South Sudan
Attachments (2)
I. Memorandum of Economic and Financial Policies
II. Technical Memorandum of Understanding
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65 INTERNATIONAL MONETARY FUND
Attachment I. Memorandum of Economic and Financial Policies
Juba, Republic of South Sudan, May 14, 2024
Recent Developments
1. South Sudan has faced significant economic and humanitarian challenges over the
past year, including from destructive flooding, the Red Sea crisis and the war in neighboring
Sudan. Historic levels of flooding have caused large displacements in many parts of the country.
The Red Sea crisis is disrupting our oil exports, forcing the Bank of South Sudan (BoSS) to extend an
overdraft to the budget in December 2023 to finance critical spending. The war in Sudan has
increased costs of oil production and disrupted trade in our border areas with Sudan. In addition,
more than 650,000 refugees have fled to South Sudan, exacerbating an already difficult
humanitarian situation in our country and creating significant financing and other needs which are
being addressed through a coordinated effort between the government and development partners.
More recently, a part of the pipeline that transports two-thirds of our oil through Sudan has been
shut down since mid-February due to technical reasons and repairing it has been challenging due to
the ongoing conflict in Sudan.
2. The economic pressures from these shocks are being felt through multiple and
interrelated channels. The drastic reduction in oil production and exports has had a devastating
effect on our economy given that oil represents 90 percent of fiscal revenues and 95 percent of
exports. The need to finance critical government expenditures through central bank overdrafts has
increased SSP liquidity, while lower oil exports have reduced FX inflows. The combined effect of
these recent developments has resulted in pressure on the FX market, contributing to a depreciation
of the exchange rate and increased volatility in the premium between the official and parallel market
exchange rates. Lower fiscal revenues since mid-February is making it difficult to pay salaries and
finance critical social spending given limited sources of domestic and external financing. Budget
implementation for the rest of FY2023/24 will be extremely challenging given uncertainty about the
duration of the disruption to the oil sector.
Economic Policies
3. Despite the extremely challenging environment, the government has made efforts to
stabilize the economy. Budget implementation in FY2022/23 was prudent, as higher than expected
oil and non-oil revenues and expenditure restraint resulted in an increased primary surplus and no
recourse to external borrowing. The government has strengthened administrative procedures for
public sector salary payments by creating special committees for every government agency to
review public sector payrolls. However, this process, combined with limited budgetary resources to
finance the significant increase in the wage bill in the FY2023/24 budget, has resulted in the
accumulation of several months of salary arrears. Additional fiscal challenges stem from the
upcoming elections and the unification of the military and security forces in line with commitments
in the 2018 Revitalized Peace Agreement. We have avoided external payment arrears and, given the
heavy external debt service burden, we are discussing with some of our largest commercial creditors
REPUBLIC OF SOUTH SUDAN
66 INTERNATIONAL MONETARY FUND
potential market-based debt reprofiling operations, with a view to extending loan maturities and
reducing payments in FY2023/24 and beyond.
4. Recognizing the need to address immediate macroeconomic policy challenges and
reinvigorate our reform agenda, we commit to the following measures during the remainder
of the extended PMB: (i) revise FX auction procedures to ensure that FX is awarded to the bids
according to their ranking starting with the best exchange rate to the worst rate from auctioneer
point of view in order to ensure that the premium between the official and parallel exchange rates
remains, on average, within a narrow band consistent with our commitment to exchange rate
unification, (ii) avoid budget financing from the BoSS, except in exceptional cases where limited
amounts help address temporary liquidity needs or to support critical spending especially on
salaries and social spending (e.g., health, education and social assistance) in case of continued large
shortfalls in revenue from damages to the oil pipeline; (iii) cut spending as needed to contain the
fiscal deficit, while prioritizing salary payments and social spending; (iv) elaborate and implement a
timebound plan for the clearance of salary arrears (structural benchmark for end-June 2024); (v)
National Audit Chamber will finalize the external audit of the BoSS financial statements for FY2021
and the audit report will be published (structural benchmark for end-June 2024); (vi) develop and
begin implementing a plan to increase transparency in the oil-for-infrastructure scheme, including
through improved reporting of earmarked revenues, a detailed breakdown of spending, and
progress of individual projects, as well as implementation of procurement procedures for future
road projects consistent with PPDA; and (vii) appointment of an appropriate external auditor with
experience in central bank audits to perform BoSS audits for FY2022 and beyond (structural
benchmark for end-June 2024). We remain committed to avoiding external non-concessional
borrowing to support debt sustainability. Tables 1 and 2 attached contain the quantitative targets
and the structural benchmarks for the remainder of the PMB.
INTERNATIONAL MONETARY FUND 67
REPUBLIC OF SOUTH SUDAN
Table 1. Republic of South Sudan: Quantitative Targets Under the Program Monitoring with Board Involvement
End-Nov
2022
Actual
End-Mar
2023
PMB Target
End-Mar
2023
Act.
End-Jun
2023
PMB Target
End-Jun
2023
Act.
End-Jun
2024
Proposed
Non-oil primary balance (floor: in billions of SSP)1 … -830.0 -683.2 -996.0 -910.9 -1,358
Central bank net credit to the central government (ceiling: in
billions of SSP) 2
178.0 178.0 178.0 178.0 178.0 0.0
Contracting or guaranteeing of non-concessional debt by the
central government (continuous ceiling: in millions of U.S.
dollars) 3
0.0 0.0 0.0 0.0 0.0 0.0
Average net international reserve (floor: in millions of U.S.
dollars) 4
97.5 141.5 208.2 151.5 183.7 100.0
Reserve money growth (ceiling: in percent) 5 … 5.0 5.6 7.5 -2.2 2.5
Salary payments to central government workers (floor: in billions
of SSP) 6
… 106.7 114.1 142.3 166.1 75.8
Priority social spending (floor: in billions of SSP) 6, 7 … 112.1 40.8 149.4 66.3 22.0
1 For end-March and end-June 2023 the number is cumulative from June 30, 2022, and for end-June 2024 the number is cumulative from June 30, 2023.
2 For end-March and end-June 2023 the number accommodates central bank net credit extended to the government in July and August 2022 and imposes no further
central bank net credit to the government from September 2022 onwards. For end-June 2024 the number is cumulative from end-April 2024. If during the period May-
June 2024 revenue fall below payments for salaries and social spending (on health, education and humanitarian assistance) as specified in the QTs for end-June 2024 on
such spending in this table, the target for end-June 2024 would be adjusted upwards by the difference, up to SSP 55 billion.
3 Subject to prior consultation with Fund staff, exceptions may apply for NCB that involves either (i) debt management operations that improve key liquidity and/or
solvency debt burden indicators without adversely affecting the risk rating; or (ii) finances critical investment projects with a high social and economic return that are
integral to the authorities’ national development program, and for which concessional financing is not available.
4 Targets are defined as the average stock of daily NIR balances during March and June 2023 and June 2024.
5 For end-March and end-June 2023 the number is cumulative growth rate in reserve money (defined as currency in circulation, due to banks, and due to OFI) from
September 30, 2022, adjusting for month-on-month exchange rate changes, and for end-June 2024 the number is the cumulative growth rate from end-April 2024. If
during the period May-June 2024 revenue fall below budgeted amounts for salaries and social spending (on health, education, and social and humanitarian assistance)
as specified in the QTs for end-June 2024 on such spending in this table, the target for end-June 2024 would be adjusted upwards by the difference, up to 15 percent.
6 For end-March and end-June 20023 the number is cumulative from June 30, 2022, and for end-June 2024 the number is cumulative from April 30, 2024.
7 The proposed floor on social spending is set at the proposed spending on education, health, and social and humanitarian sectors in the FY2022/23 budget
Table 2. Republic of South Sudan: Structural Targets Under the Program Monitoring with Board Involvement
Measures Target Date1 Current Status/Rationale
1. MoFP to develop and adopt by end-March 2023, in consultation with Fund staff,
an action plan to strengthen the institutional framework for debt issuance and
management and formulate a debt management strategy. (IMF Country Report No.
2023/108 MEFP ¶18).
Mar-2023 Not met. Action plan adopted by MoFP in June 2023.
2. National Assembly to adopt amendments to the BoSS Act aimed at bringing the
South Sudan legislation in line with international best practices for central banking
legislation and governance (IMF Country Report No. 2023/108 MEFP ¶18).
May-2023 Not met. Amendments to the BoSS Act were adopted by
Parliament in August 2023. The amendments allow the
BoSS to issue sovereign guarantees consistent with the
Transitional Constitution, but amendments specify that
the issuance of such guarantees will be subject to
relevant legislation on public finance.
3. BoSS to adopt an action plan to implement recommended action items on
banking sector reform developed in August 2022 by BoSS staff with MCM (IMF
Country Report No. 2023/108 MEFP ¶12).
Jun-2023 Met.
4. Publish all signed oil production sharing agreements with oil-extracting
companies as well as quarterly reports on the oil sector (IMF Country Report No.
2023/108 MEFP ¶14).
Jun-2023 Not met. The publication of oil production sharing
agreements is opposed by oil companies as a breach of
contractual obligations. However, the details of the oil
sharing agreements are available in the oil reports
published in the Ministry of Petroleum website.
5. Completion and publication of an audit of the spending of the new RCF
disbursement under the FSW (IMF Country Report No. 2023/108 LOI ¶5).
Sep-2023 Not met. The audit report was completed and published
in March 2024.
6. Publish the audit of spending by the central government that was financed by the
disbursement through the Food Shock Window of the Rapid Credit Facility;
Prior action Met.
7. BoSS Board to adopt the BoSS financial statements for financial year 2021; Prior action Met.
8. Publish the budget execution reports for Q1 and Q2 of FY2023/24. Prior action Met.
9. Appoint an external auditor to perform BoSS audits for financial year 2022
and beyond (MEFP ¶4). Proposed.
Jun-2024 Strengthen BoSS safeguards.
10. Adopt a timebound action plan to clear all salary arrears (MEFP ¶4). Proposed. Jun-2024 Strengthen fiscal discipline.
11. National Audit Chamber will finalize the external audit of the BoSS financial
statements for FY2021 and the audit report will be published (MEFP ¶4). Proposed.
1 Target dates refer to end of the month unless otherwise stated.
68 INTERNATIONAL MONETARY FUND
REPUBLIC OF SOUTH SUDAN
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INTERNATIONAL MONETARY FUND 69
Attachment II. Technical Memorandum of Understanding
Juba, Republic of South Sudan, May 14, 2024
1. This Technical Memorandum of Understanding (TMU) defines the quantitative targets
and structural benchmarks for monitoring the performance of South Sudan for the third
review of the Program Monitoring with Board involvement (PMB). In addition, the TMU
specifies the data to be provided to the IMF for program monitoring purposes, and the periodicity
and deadlines for the transmission of the data.
2. The third review of the PMB will be monitored based on seven quarterly quantitative
targets (QTs) and three structural benchmarks listed in Tables 1 and 2 of the Memorandum on
Economic and Financial Policies (MEFP). The QTs are as follows.
i. Floor on non-oil primary balance;
ii. Ceiling on central bank net credit to the central government;
iii. Floor on the average net international reserves (NIR);
iv. Continuous ceiling on contracting or guaranteeing of non-concessional borrowing;
v. Floor on salary payments to central government workers;
vi. Ceiling on reserve money growth; and
vii. Floor on priority social spending.
Quantitative Targets
3. Non-oil primary balance of the central government is measured as non-oil revenues minus
total expenditures excluding interest payments, transfers to the Ministry of Petroleum (MoP) and the
oil producing states and communities, and transfers for transit fees to Sudan. For the purposes of
the program, all revenues and expenditure denominated in foreign currency will be valued at the
program exchange rate of 1,600 SSP/US$.
4. Central bank net credit to the Central Government is the change in the stock of net credit
to the central government (NCG) by the Bank of South Sudan (BoSS) between end-June 2024 and
end-April 2024. NCG is defined as the difference between gross claims on central government and
gross liabilities to the central government. For the purposes of the program, all claims and liabilities
of the central government to the BoSS denominated in foreign currency will be valued at the
program exchange rate of 1,600 SSP/US$.
5. Net international reserves (NIR) of the BoSS are defined as reserve assets of the BoSS net
of short-term external liabilities of the BoSS. Reserve assets are defined as foreign assets readily
available to, and controlled by, the BoSS and exclude pledged or otherwise encumbered foreign
assets, including, but not limited to, assets used as collateral or guarantees for third-party liabilities.
Reserve assets must be denominated and settled in a convertible foreign currency. Short-term
foreign liabilities are defined as liabilities to nonresidents, of original maturities less than one year,
REPUBLIC OF SOUTH SUDAN
70 INTERNATIONAL MONETARY FUND
contracted by the BoSS. For program-monitoring purposes, official reserve and short-term liabilities
at the end of each test period will be calculated in U.S. dollars by converting the stock denominated
in SDR, EUR and GBP at program exchange rates of, respectively, 0.76, 1.07 and 1.25 against one US
dollar. The NIR limits for each test period are defined as the average NIR daily stocks during the
month of the test period.
6. Contracting or guaranteeing of new non-concessional external debt by the central
government applies to debt to non-residents with original maturity of one year or more at
non-concessional terms and to guarantees issued to both residents and non-residents. For the
purposes of the program, the definition of “debt” is set forth in point No. 9 of the «Guidelines on
Performance Criteria with Respect to External Debt» (see Decision No. 6230-(79/140) as revised on
August 31, 2009 (Decision No. 14416-(09/91)), attached in Annex I). This quantitative target will be
assessed on a continuous basis starting from program approval.
• For program purposes, a debt is concessional if it includes a grant element of at least
35 percent, calculated as follows: the grant element of a debt is the difference between
the present value (PV) of debt and its nominal value, expressed as a percentage of the
nominal value of the debt. The PV of debt at the time of its contracting is calculated by
discounting the future stream of payments of debt service due on this debt. The discount
rate used for this purpose is the unified discount rate of 5 percent set forth in Executive
Board Decision No. 15248-(13/97). For debts with a grant element equal or below zero, the
PV will be set equal to the nominal value of the debt.
• Discussion on the contracting and/or guaranteeing of any new non-concessional debt
will only be undertaken after consultation with the IMF. Exceptions to the zero-program
target for non-concessional debt and guarantees may apply for debt that involves either
(i) debt management operations that improve key liquidity and/or solvency debt burden
indicators without adversely affecting the risk rating; or (ii) transactions that finance critical
investment projects with a high social and economic return that are integral to national
development program and for which concessional financing is not available.
7. Floor on salary payments to central government workers includes payment of all central
government civil salaries, military and armed forces, and foreign mission salaries during May and
June 2024. Foreign currency salary payments, such as foreign mission salaries, will be valued at the
program exchange rate of 1,600 SSP/US$.
8. Floor on priority social spending includes central government spending on the education,
health, and humanitarian sectors as defined in the FY2022/23 budget.
9. Reserve money is defined as the sum of local currency circulating outside of banks, and
total reserves for banks and other financial institutions (required and excess) at the BoSS. For
program purposes, limits on reserve money growth for the end of the test period are defined as the
percentage difference between the average daily reserve money during June 2024 and the reserve
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 71
money stock at end-April 2024, adjusting foreign-currency components for exchange-rate changes
between the two periods.
PROGRAM MONITORING AND REPORTING REQUIREMENTS
10. The information on implementation and/or execution of structural benchmarks under the
program will be reported to IMF staff within two weeks after their programmed implementation
date. The status of implementation of other structural program measures will also be reported to
IMF staff within the same time frame.
11. The authorities will report the information specified in Table 1 below according to the
reporting periods indicated. More generally, the authorities will provide IMF staff with all
information required for effective follow-up on economic policy implementation.
12. The authorities agree to consult IMF staff on any new external debt proposals. They will
report to IMF staff on the signing of any new external debt arrangements and the conditions
pertaining to such debt.
Text Table 1. Republic of South Sudan: Data to be Reported for Program Monitoring
Reporting Agency Data Frequency Submission Lag
MoFP
Table of government fiscal operations Monthly 8 weeks
Government tax and non-oil revenue Monthly 8 weeks
Oil production and revenue Monthly 8 weeks
Stock of salary arrears of the Central Government Monthly 8 weeks
Salary payments in total and by sector (including
foreign mission and military/armed forces} Monthly 8 weeks
Budget execution report Quarterly 8 weeks
Disbursements of External Debt including Newly
Contracted Debt of Government Quarterly 8 weeks
Projected external debt service Quarterly 8 weeks
BoSS
BOSS balance sheet Monthly 4 weeks
Monetary Survey Monthly 4 weeks
Detailed FX Auction Results Weekly 1 week
List of guarantees issued by the BOSS Monthly 1 week
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 72
Annex I. Guidelines on External Debt
Excerpt from Executive Board Decision No. 6230-(79/140) as revised on August 31, 2009 (Decision
No. 14416-(09/91)):
• For the purpose of this guideline, the term «debt» will be understood to mean a current, i.e.,
not contingent, liability, created under a contractual arrangement through the provision of
value in the form of assets (including currency) or services, and which requires the obligor to
make one or more payments in the form of assets (including currency) or services, at some
future point(s) in time; these payments will discharge the principal and/or interest liabilities
incurred under the contract. Debts can take a number of forms, the primary ones being as
follows:
(i) loans, i.e., advances of money to the obligor by the lender made on the basis of an
undertaking that the obligor will repay the funds in the future (including deposits,
bonds, debentures, commercial loans, and buyers’ credits) and temporary exchanges
of assets that are equivalent to fully collateralized loans under which the obligor is
required to repay the funds, and usually pay interest, by repurchasing the collateral
from the buyer in the future (such as repurchase agreements and official swap
arrangements);
(ii) suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer
payments until sometime after the date on which the goods are delivered or services
are provided; and
(iii) leases, i.e., arrangements under which property is provided which the lessee has
the right to use for one or more specified period(s) of time that are usually shorter
than the total expected service life of the property, while the lessee retains the title to
the property. For the purpose of the guideline, the debt is the present value (at the
inception of the lease) of all lease payments expected to be made during the period of
the agreement excluding those payments that cover the operation, repair, or
maintenance of the property.
• Under the definition of debt set out in this paragraph, arrears, penalties, and
judicially-awarded damages arising from the failure to make payment under a contractual
obligation that constitutes debt are debt. Failure to make payment on an obligation that is
not considered debt under this definition (e.g., payment on delivery) will not give rise to
debt.
REPUBLIC OF SOUTH SUDAN
STAFF REPORT 2023 ARTICLE IV CONSULTATION, AND
FIRST AND SECOND REVIEWS UNDER STAFF-MONITORED
PROGRAM WITH BOARD INVOLVEMENT—
INFORMATIONAL ANNEX
Prepared By The African Department (in consultation with other departments)
RELATIONS WITH THE FUND __________________________________________________________ 2
RELATIONS WITH OTHER INTERNATIONAL FINANCIAL INSTITUTIONS ____________ 5
STATISTICAL ISSUES ___________________________________________________________________ 6
CONTENTS
May 20, 2024
REPUBLIC OF SOUTH SUDAN
2 INTERNATIONAL MONETARY FUND
RELATIONS WITH THE FUND
(As of April 30, 2024)
Membership status: Joined on April 18, 2012. Article XIV member.
General Resources Account SDR Million % Quota
Quota 246.00 100.00
Fund Holdings of Currency 246.00 100.00
Reserve Tranche Position 0.00 0.00
SDR Department SDR Million % Allocation
Net Cumulative Allocation 341.19 100.00
Holdings 9.10 2.67
Outstanding Purchases and Loans SDR Million % Quota
RCF Loans 246.00 100.00
Latest Financial Commitments
Outright Loans:
Type Date of
Commitment
Date
Drawn/Expired
Amount Approved
(SDR Million)
Amount Drawn
(SDR Million)
RCF Mar. 01, 2023 Mar. 03, 2023 86.10 86.10
RCF Mar. 30, 2021 Apr. 01, 2021 123.00 123.00
RCF Nov. 11, 2020 Nov. 13, 2020 36.90 36.90
Projected Payments to Fund (SDR million; based on current use of resources and present holdings
of SDRs):
Forthcoming
2024 2025 2026 2027 2028
Principal 19.68 31.98 40.59
Charges/Interest 10.21 13.64 13.64 13.64 13.65
Total 10.21 13.64 33.32 45.62 54.24
Exchange Rate Arrangement
South Sudan introduced its currency (the South Sudanese Pound) upon independence in July 2011.
In September 2011, the Bank of South Sudan (BoSS) pegged the exchange rate at 2.95 SSP per
U.S. dollar. The de jure exchange rate arrangement was a “conventional peg” against the U.S. dollar.
In the first week of the new currency, after independence, the exchange rate was determined by a
central bank auction. However, this system was abandoned after it resulted in a jump of the rate
from 2.9 to 3.5 SSP/US$, and the exchange rate was fixed again at 2.96 SSP/US$. The exchange rate
remained fixed to the US dollar from 2011 to mid-December 2015, even when foreign exchange
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 3
receipts fell; first during the 2012 government’s shutdown of oil production and then again when oil
prices and production fell in 2014.
In mid-December 2015 the authorities introduced a de jure floating exchange rate regime, which led
to an 84 percent depreciation of the exchange rate. Under the new regime, the BSS supplied foreign
exchange to commercial banks in auctions and an indicative market rate was determined from the
auction rate and the rate charged by commercial banks. All government transactions were carried
out using the official (indicative) rate. The reform was successful in reducing the spread between the
official (indicative) and parallel market rates. The reform also included the abolishment of exchange
controls. However, excessive expansionary monetary policy continued to exert downward pressure
on the exchange rate and undermined convergence of the official (indicative) and parallel market
rates. Despite liberalization of the exchange rate regime towards the end of 2015, continued
deterioration in the security and economic situation led the re-introduction of the multiple
exchange rate system with the BoSS abolishing its foreign exchange auctions in 2017.
The BoSS introduced policies to reform the FX market and unify FX rates under a Staff Monitored
Program (SMP) that was approved on March 30, 2021. The reform liberalized the FX markets,
allowed all market participants to transact at market rates, re-introducing of the BoSS auction
system with auctions taking place on a weekly basis, and gradually adjusting the official (indicative
rate) until it was fully replaced by a market-based reference rate. The reform resulted in the
convergence of parallel and official reference exchange rates by August 2021.
At the turn of 2024, the exchange rate started to depreciate sharply, driven by a severe disruption to
oil production and export and subsequent monetary financing. Around the same time, the BoSS
began awarding foreign currency at auctions to the lowest, rather than the highest, bidders. This has
contributed to a widening of the gap with the parallel market rate, which stood at about 60 percent
in late-April 2024, compared to an average of below 5 percent during
August 2021–December 2023.
The de jure exchange rate arrangement is “floating,” and the de facto exchange rate arrangement is
classified as “other managed,“ reflecting the fact that BoSS varies the frequency and volume of FX
auctions to lean against sharp changes in the exchange rate.
South Sudan maintains one exchange restriction under the transitional arrangements of Article XIV.
The exchange restriction arises from imposing absolute ceilings on the availability of foreign
exchange for certain invisible transactions (travel, remittances for living expenses of students and
families residing abroad, transfers of salaries by foreign workers).
South Sudan also maintains one exchange restriction subject to Fund approval under Article VIII.
The exchange restriction arises because of prioritization of foreign exchange allocation by the BoSS
for external government payments and payments for certain essential commodities.
REPUBLIC OF SOUTH SUDAN
4 INTERNATIONAL MONETARY FUND
Article IV Consultation
The last Article IV consultation with South Sudan was concluded on July 29, 2022 (IMF Country
Report No. 22/266).
Resident Representative
The Fund’s Office in Juba, South Sudan, is headed by the current Resident Representative, Mr. Guy
Jenkinson who was appointed in April 2022.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 5
RELATIONS WITH OTHER INTERNATIONAL FINANCIAL
INSTITUTIONS
The World Bank work program can be found on the following website:
http://www.worldbank.org/en/country/southsudan
The African Development Bank work program can be found on the following website:
https://www.afdb.org/en/countries/east-africa/south-sudan/
REPUBLIC OF SOUTH SUDAN
6 INTERNATIONAL MONETARY FUND
STATISTICAL ISSUES
Data provision has serious shortcomings that significantly hamper surveillance. With the exception of
monetary and exchange rate data, other macroeconomic data have important weaknesses in terms of
availability, quality, periodicity, and timeliness. Some progress with data quality and compilation has
been made since the end of the civil war due to resumption of technical assistance.
Real Sector Statistics:
Prices: A monthly Consumer Price Index (CPI) covering Juba, Wau, and Malakal is compiled (data for
Malakal have been imputed since 2014 because of the conflict), based on the 2009–10 Household
Budget Survey. The CPI calculation and compilation methodology, however, is outdated and unreliable
due to limited geographical coverage and lack of technical and financial resources. To ensure
appropriate weights are used, a new household survey needs to be conducted. Monthly CPI figures are
issued and published on the National Bureau of Statistics (NBS) website, albeit with lags and the results
are of low quality.
National Accounts: NBS compiles GDP by expenditure but these have not been published regularly
due to challenges with source data. Work on source data for GDP estimates is a priority which will
require, several surveys and continued technical assistance. National accounts TA missions were
provided in September 2020 and November 2021 on the estimation of GDP by expenditure and
production. Progress on this area is seriously hampered by lack of resources both staff and financial
resources. TA support on real sector statistics will be stepped up with an improvement in resources at
the NBS.
Government Finance Statistics (GFS):
The authorities have made progress in compiling and reporting of GFS. In March 2024, the
authorities disseminated GFS transactions data for budgetary central government (BCG) for
financial years 2021/22 and 2022/23 through the IMF’s annual GFS database. Several data
challenges including limited institutional coverage, low levels of data granularity, inadequate
source data and inconsistences between above-the-line and below-the-line transactions remain.
STA together with AFRITAC East continue to support the authorities in strengthening the quality
and coverage of GFS and PSDS. Recent GFS TA missions were conducted by AFRITAC East in July
2023 and March 2024.
Monetary and Financial Statistics:
The Bank of South Sudan (BSS) reports the Standardized Report Forms (SRFs) 1SR for the central bank,
2SR for the other depository corporations, 5SR for monetary aggregates, and 6SR for interest rates for
publication in the IMF’s International Financial Statistics (IFS) on monthly basis. Data for the other
financial corporations (OFCs) are not available. STA will support BSS to expand MFS coverage to OFCs
for improved macroeconomic analysis.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 7
Financial Soundness Indicators (FSIs):
With technical assistance from the IMF’s Statistics Department, the BSS has compiled 11 of the 12 core
FSIs and 6 of the 13 encouraged FSIs for deposit takers, with quarterly frequency. The BSS has
published FSIs through December 31, 2021. STA is working with BSS to align the FSI compilation to the
2019 FSI Guide methodology.
External Sector Statistics (ESS):
The BSS submits balance of payments (BOP) standard report to STA once a year, though data are
available on quarterly bases as well. In 2022, an IMF’s technical assistance mission provided
recommendations on the further improvement of BOP statistics and compilation of ESS stock
indicators. However, IIP, external debt, and other ESS stock indicators are not currently being compiled
which should be seen as a priority. Compilation of BOP heavily relies on International Transactions
Reporting System (ITRS) data. The current ITRS system needs to be revamped, and the BSS staff is
working on this issue with the support of the IMF and East African Community. External trade data are
received from customs authorities regularly starting in 2023; however, data for previous years suffer
from submission gaps. Gold extraction occurs in the form of artisanal mining, and the export is not
captured in the official statistics. Pilot FDI survey is an important checkpoint in improving BOP statistics
and compilation of ESS stock indicators. Some data on external debt were received from the Ministry
of Finance and Economic Planning, but the format is not compatible for the ESS data calculations.
Data Standards and Quality
South Sudan does not yet subscribe to the General Data Dissemination System (GDDS).
REPUBLIC OF SOUTH SUDAN
8 INTERNATIONAL MONETARY FUND
Table 1. Republic of South Sudan: Common Indicators Required for Surveillance
(As of May 2024) 1
Date of
Latest
Observation
Date
Received
Frequency
of Data
Frequency
of
Reporting
Frequency
of
Publication
Exchange Rates Current Current D M M
International Reserve Assets
and Reserve Liabilities2
Current Current D D M
Reserve/Base Money Mar 2024 May 2024 M M M
Broad Money Mar 2024 May 2024 M M M
Central Bank Balance Sheet Mar 2024 May 2024 M M M
Consolidated Balance Sheet
of the Banking System
Mar 2024 May 2024 M M M
Interest Rates Mar 2024 May 2024 M M M
Consumer Price Index Mar 2024 May 2024 M M M
Revenue, Expenditure,
Balance, and Composition of
Financing––Central
Government 3
Dec 2023 Mar 2024 Q Q N/A
External Current Account 2018 Mar 2019 A A A
Exports and Imports of
Goods and Services
2018 Mar 2019 A A A
GDP/GNP 2017 Oct 2018 A A A
Domestic Government Debt N/A N/A N/A N/A N/A
Gross External Debt Jun 2023 Dec 2023 A A A
International Investment
Position
N/A N/A N/A N/A N/A
1 Daily (D); Monthly (M); Quarterly (Q); Annually (A); Not Available (N/A).
2 Any reserve assets that are pledged or otherwise encumbered should be specified separately.
3 Data on composition of financing not yet available.
REPUBLIC OF SOUTH SUDAN
STAFF REPORT 2023 ARTICLE IV CONSULTATION, AND
FIRST AND SECOND REVIEWS UNDER STAFF–MONITORED
PROGRAM WITH BOARD INVOLVEMENT—DEBT
SUSTAINABILITY ANALYSIS
Joint Bank-Fund Debt Sustainability Analysis
Risk of external debt distress High
Overall risk of debt distress High
Granularity in the risk rating Sustainable
Application of judgment No
The baseline in this Debt Sustainability Analysis update (DSA) reflects minor changes with
respect to the previous DSA of February 2023, including updating the current year and first
year of projections from 2022 to 2023 as well as updates in macroeconomic projections with
respect to changes in global macroeconomic assumptions. The financing assumptions,
including the debt agreements, are mostly unchanged. South Sudan’s debt remains assessed
to be sustainable with a high risk of debt distress for both external and overall public debt.1
Three of the four key indicators of public and publicly guaranteed external debt breach the
threshold in the short/medium term. The present value of overall debt-to-GDP ratio
decreases below the benchmark starting in FY2028/29. The ratios of debt service-to-exports
and to revenue continue to slightly exceed the threshold until FY2029/30. There are several
downside risks to the sustainability assessment, including global external financing
conditions, decreased oil revenues from drops in production due to climate-related disasters,
the war in Sudan, damages to the oil pipeline, disruption in maritime traffic due to the Red
Sea crisis, volatility in global oil prices, slow implementation of reforms, in particular on
public financial management, and a breakdown in the peace process and the resumption of
large-scale civil conflict.
1 South Sudan’s debt-carrying capacity remains rated “weak” with composite indicator score of 1.39 according
to the latest vintage of World Economic Outlook (October 2023) and the Country Policy and the 2022
Institutional Assessment index of the World Bank.
Approved By:
Catherine Pattillo (IMF, AFR),
Guillaume Chabert (IMF, SPR), and
Manuela Francisco (WB, MTI) and
Hassan Zaman (WB, IDA)
Prepared by the staffs of the International
Monetary Fund (IMF) and the International
Development Association (IDA)
May 20, 2024
REPUBLIC OF SOUTH SUDAN
2 INTERNATIONAL MONETARY FUND
BACKGROUND
1. The DSA is limited to central government debt, as data access and availability remains weak.
Debt data collection and compilation present serious weaknesses in South Sudan. SOEs are omitted from
the DSA as information about SOE debt and government guarantees is incomplete or unavailable.2 External
debt is defined using the currency criterion. The analysis for the contingent liability stress test includes SOE
debt, financial market shocks, and a 5 percent shock to GDP to include the potential repayment of salary
arrears to embassies’ staff, and other potential arrears or financing shocks.
2. South Sudan’s total public debt was estimated at US$3,722.9 million (51.2 percent of
GDP) as of June 2023, with external public debt representing about two thirds of the total
(Text Table 2). Debt to the World Bank amounted to US$93.2 million on IDA terms, while debt to
the African Development Bank (AfDB) amounted to US$18.6 million. Debt to the IMF includes the
three disbursements under the Rapid Credit Facility (RCF) of November 2020, April 2021 and
March 2023, and the use of US$150 million from the SDR allocation for budget support in 2021 Q3.3
The debt stock with Afrexim Bank was estimated at US$435.4 million. Bilateral creditors include
China Exim Bank through two different facilities with a total remaining debt estimated at
US$367 million.4 Amongst commercial creditors, the outstanding liability to the Qatar National Bank
2 Addressing the lack of coverage of SOE will require significant effort in terms of data gathering and possibly
technical support. There are only a few SOEs in South Sudan with significant economic activity, the largest being
Nilepet—the state-owned National Oil and Gas Company of South Sudan.
3 The authorities used US$150 million from the SDR allocation to finance spending, mostly to reduce salary arrears.
This amount, consistent with the Guidance Note of August 2021 on the treatment and use of SDR allocations, has
been included in the external debt stock starting in FY2021/2022 for the purposes of this DSA.
4 One facility with a remaining debt of US$135 million was included in the previous DSA. Another facility with a
remaining debt estimated at US$237 million at end-December 2021 came to light during the debt stocktaking
exercise conducted by an international auditing firm.
Text Table 1. Republic of South Sudan: DSA Coverage of Public Debt
Subsectors of the public sector Sub-sectors covered
1 Central government X
2 State and local government
3 Other elements in the general government
4 o/w: Social security fund
5 o/w: Extra budgetary funds (EBFs)
6 Guarantees (to other entities in the public and private sector, including to SOEs)
7 Central bank (borrowed on behalf of the government) X
8 Non-guaranteed SOE debt
1 The country’s coverage of public debt The central government, central bank
Default
Used for the
analysis
2 Other elements of the general government not captured in 1. 0 percent of GDP 5.0
3 SoE’s debt (guaranteed and not guaranteed by the government) 1/ 2 percent of GDP 2.0
4 PPP 35 percent of PPP stock 0.0
5 Financial market (the default value of 5 percent of GDP is the minimum value) 5 percent of GDP 5.0
Total (2+3+4+5) (in percent of GDP) 12.0
1/ The default shock of 2% of GDP will be triggered for countries, whose government-guaranteed debt is not fully captured under the country’s public debt definition (1.). If it is already included in the
government debt (1.) and risks associated with SoE’s debt not guaranteed by the government is assessed to be negligible, a country team may reduce this to 0%.
Reasons for deviations from the default settings
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 3
was estimated at US$540.8 million as of end-June 2023. The debt stock also included an outstanding
debt of US$550 million owed to oil companies, and US$89 million owed to National Investment and
Development Bank (NIDB) at the end of FY22/23. Domestic debt is mostly owed to the central bank
but also includes a relatively small share of debt due to local commercial banks (around 20 percent).
Text Table 2. Republic of South Sudan: Decomposition of Public Debt by Creditor
FY 22/23–FY 24/25 1/
3. Preliminary information suggests that the domestic salary payments from November 2023
to April 2024 are in arrears, amounting to about 2.7 percent of GDP. Accumulation of salary arrears
reflect both cash constraints and changes in the procedure for salary payments that includes approval by
special committees for every government agency in an effort to minimize payment to ghost workers. There
are also outstanding payments to foreign missions, which amount to approximately USD 150 million
(roughly 2 percent of GDP). Nevertheless, the Ministry of Finance and Planning (MoFP) is ensuring the
payment of salaries for employees in foreign missions and is working towards settling these outstanding
balances. An extra 5 percent of GDP has been allocated to the contingency liability test to accommodate
the repayment of salary arrears to diplomats in foreign missions and other potential obligations, including
the discovery of additional legacy debts or arrears related to goods and services.
FY22/23 FY23/24 FY24/25 FY22/23 FY23/24 FY24/25
(In US$ mn) (Percent total debt) (Percent GDP)
Total 3,722.9 100.0 51.2 233.8 336.3 653.4 3.7 6.8 9.7
External 2,528.6 67.9 34.8 209.9 330.3 647.3 3.3 6.7 9.6
Multilateral creditors 2 1,070.6 28.8 14.7 1.3 211.7 209.7 0.0 4.3 3.1
IMF 523.5 14.1 7.2 0.2 13.7 18.3 0.0 0.3 0.3
World Bank 93.2 2.5 1.3 1.1 1.1 1.1 0.0 0.0 0.0
ADB/AfDB/IADB 18.6 0.5 0.3 0.0 3.0 3.0 0.0 0.1 0.0
Other Multilaterals 435.4 11.7 6.0 0.0 193.9 187.3 0.0 3.9 2.8
o/w: AFREXIM 435.4 11.7 6.0 0.0 193.9 187.3 0.0 3.9 2.8
Bilateral Creditors 367.0 9.9 5.0 0.1 23.7 23.7 0.0 0.5 0.4
Paris Club 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Non-Paris Club 367.0 9.9 5.0 0.1 23.7 23.7 0.0 0.5 0.4
o/w: EXIM-CHINA 367.0 9.9 5.0 0.1 23.7 23.7 0.0 0.5 0.4
Commercial creditors 1,090.9 29.3 15.0 208.5 94.9 414.0 3.3 1.9 6.1
o/w: QNB 540.8 14.5 7.4 0.0 82.0 79.4 0.0 1.7 1.2
o/w: Oil Companies 550.1 14.8 7.6 0.0 12.9 334.6 0.0 0.3 5.0
Other international creditors 0.0 0.0 0.0 208.5 0.0 0.0 3.3 0.0 0.0
Domestic 1,194.4 32.1 16.4 23.9 5.9 6.1 0.4 0.1 0.1
o/w: Held by residents, total 1,194.4 32.1 16.4 23.9 5.9 6.1 0.4 0.1 0.1
o/w: Held by non-residents, total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Memo items:
Collateralized debt3 1,526.3 41.0 21.0 … … … … … …
Contingent liabilities 4 na na na … … … … … …
Nominal FY GDP (US$ million) 7275.4 … … 7,275.4 6,045.2 7,083.5 … … …
Debt Stock (end of period) Debt Service
FY2022/23
(In US$ mn) (Percent GDP)
1
As reported by country authorities according to their classification of creditors, including by official and commercial. Debt coverage is the same as the DSA.
2
Multilateral creditors” are simply institutions with more than one official shareholder and may not necessarily align with creditor classification under other IMF
policies (e.g. Lending Into Arrears).
3
Debt is collateralized when the creditor has rights over an asset or revenue stream that would allow it, if the borrower defaults on its payment obligations, to rely
on the asset or revenue stream to secure repayment of the debt. Collateralization entails a borrower granting liens over specific existing assets or future
receivables to a lender as security against repayment of the loan. Collateral is “unrelated” when it has no relationship to a project financed by the loan. An
example would be borrowing to finance the budget deficit, collateralized by oil revenue receipts. See the joint IMF-World Bank note for the G20 “Collateralized
Transactions: Key Considerations for Public Lenders and Borrowers” for a discussion of issues raised by collateral.
4
Guaranteed debt is included in public debt.
REPUBLIC OF SOUTH SUDAN
4 INTERNATIONAL MONETARY FUND
4. While the Transitional Financial Arrangement (TFA) between South Sudan and Sudan was
concluded in February 2022, South Sudan continued to transfer the same quantity of crude oil or
cash to Sudan as before, resulting in an accumulation of credit. The amount of credit accumulated with
Sudan reached about US$658.7 million as of end-June 2023 (about 9 percent of GDP), and the amount of
oil lifted by Sudan without payment in excess of transit fees is projected to be about 5.2 percent of GDP in
FY2023/24. The schedule for Sudan’s repayment of the accrued credit is currently unknown.
5. The Bank of South Sudan (BoSS) has been taking steps to develop the domestic
financial market. In the spring of 2022, BoSS introduced a term deposit facility (TDF). Following
initial experiments and consultations with banks, the facility successfully absorbed 24 billion SSP in
four consecutive auctions from early September to late November 2022, with average annualized
interest rates below 10 percent. This uptake by banks indicates an improvement in private-sector
confidence in the authorities’ macroeconomic management, and there is significant interest in BoSS
extending the range of maturities under the TDF beyond the 14-day and 28-day maturities.
Accordingly, as of the first quarter of 2023, BoSS has begun the implementation of auctions with
84-day maturities. Furthermore, as of September 2023, the BoSS has introduced auctions with
maturities of 336 days. This represents a crucial step toward reintroducing treasury bills as a
potential source of domestic financing.
UNDERLYING ASSUMPTIONS
6. This DSA presumes that financing gaps will be addressed through non-concessional external
loans. Representing a worst-case scenario5 in which concessional financing does not materialize, this
analysis projected non-concessional external borrowing throughout the projection period to fulfill financing
requirements. From CY2023 onwards, this analysis projects new disbursements from bilateral, non-Paris
Club lenders with an 8-percent interest rate, 7-year maturity, and 2-year grace period. Additionally, it is
assumed that medium-long term domestic debt will be issued contingent upon maintained
macroeconomic stability and an enhanced fiscal position. As seen in previous instances, the remaining
financing gaps are assumed to be addressed using non-concessional loans with an 8-percent interest rate,
5-year maturity, and 1-year grace period. The assumptions regarding the terms of non-concessional
borrowing from unidentified external sources align with existing debt instrument terms and the global
tightening of borrowing conditions. Were non-concessional borrowing to be collateralized by future oil
revenue, continued high volatility in oil production would adversely affect the terms and availability of
future external borrowing.
7. The medium-term outlook is for modest economic growth amidst elevated levels of
uncertainty (Text Table 3). Real GDP growth is forecast to contract by 8.5 percent in FY2023/24 as
damages to the oil pipeline that transports South Sudan’s crude oil exports through Sudan have reduced
oil production since February 2024 to less than one-third relative to their previous level. This decline in oil
production would more than offset the strong recovery in non-oil GDP, which is projected to grow by
about 7.1 percent in real terms relative to FY2022/23, due to a continued expansion of the harvest
5 The Program Monitoring with Board Involvement (PMB) has a zero target on new non-concessional external borrowing.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 5
area after the historic floods in 2021–22. Growth from FY2024/25 onward will be driven by
continued recovery in oil production once the pipeline gets repaired and better agricultural
production as domestic security conditions improve.
8. Import projections are anticipated to be marginally lower in terms of GDP than
previously estimated in the short term and continue to decline in the medium term. The
ongoing payments to Sudan exceeding the TFA agreement are expected to diminish the
government’s fiscal capacity in the short to medium term, affecting the resources accessible for
supporting imports. This is further influenced by the Ukraine conflict’s impact on international aid
and the potential consequences of reduced aid on food and other commodity imports. Export levels,
after reaching their peak in FY2024/25 due to increased forecasted oil prices, are expected to
gradually decrease. This decline is attributed to the assumption of lower global oil prices in the
medium term and outer years.
Text Table 3. Republic of South Sudan: Key Macroeconomic Assumptions Comparison with
the Previous Debt Sustainability Analysis
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28
Real GDP growth (annual percentage change)
May 2024 DSA -8.0 -2.4 -8.5 21.1 5.2 5.1 5.4
Feb 2023 DSA -2.9 -0.4 4.6 4.8 5.2 5.3 5.6
Real oil GDP growth (annual percentage change)
May 2024 DSA -14.8 -6.8 -16.6 30.9 3.5 3.0 2.9
Feb 2023 DSA -7.4 -3.8 3.3 3.2 3.1 3.0 2.9
Current account balance (percentage of GDP)
May 2024 DSA -1.6 8.3 4.3 7.1 7.3 6.4 4.6
Feb 2023 DSA -1.3 6.8 6.3 6.2 3.7 0.3 1.9
Exports of goods and services (percentage of GDP)
May 2024 DSA 65.6 62.8 57.3 61.4 58.2 55.2 52.7
Feb 2023 DSA 68.0 65.8 63.5 61.7 58.1 54.8 51.9
Imports of goods and services (percentage of GDP)
May 2024 DSA -72.8 -64.8 -68.7 -69.2 -67.4 -65.7 -64.5
Feb 2023 DSA -75.1 -68.6 -69.9 -69.8 -69.4 -69.7 -64.9
Primary balance (percentage of GDP)
May 2024 DSA -6.2 8.4 4.4 4.8 4.5 4.6 4.2
Feb 2023 DSA -6.3 3.8 7.9 8.3 7.5 4.9 2.3
Revenue and grants (percentage of GDP)
May 2024 DSA 30.5 33.7 31.0 33.0 31.7 30.5 29.7
Feb 2023 DSA 30.2 31.6 31.0 30.6 29.4 28.3 27.0
Primary non-interest expenditures (percentage of GDP)
May 2024 DSA 36.7 25.3 26.6 28.3 27.1 26.0 25.5
Feb 2023 DSA 36.4 27.9 23.1 22.3 21.9 23.3 24.7
SSD oil price (US$/barrel)
May 2024 DSA 86.5 88.5 79.6 76.1 72.1 69.6 69.4
Feb 2023 DSA 86.5 89.1 79.5 74.8 70.9 67.7 67.0
Projection
Sources: South Sudanese Authorities and IMF staff projections.
REPUBLIC OF SOUTH SUDAN
6 INTERNATIONAL MONETARY FUND
9. Oil price estimates have been adjusted slightly upwards compared to the previous DSA
analyses, to align with the most recent oil market predictions. Over the medium term, oil prices
are anticipated to be marginally higher, owing to a more favorable price for South Sudan’s crude oil
than previously projected. Prior estimations also assumed a discounted price for South Sudan’s oil
relative to global benchmarks.
10. Non-oil revenue estimates in FY2025/26 and FY2026/27 have been adjusted to be in
line with the tax-to-GDP targets in the South Sudan Revenue Authority (SSRA) 5-year
strategic plan. The SSRA recorded 4.1 percent tax-to-GDP ratio in FY2022/23, surpassing their
2.9 percent target. The ratio is projected to reach 5.8 percent in FY2023/24, which is one year earlier
than the targeted year. The updated estimates assume that the SSRA targets will be achieved as
planned by FY2026/27 and non-oil revenue grows at the pace of non-oil GDP growth from
FY2027/28 onwards.
11. Inflation is anticipated to experience a temporary surge, rising to an average of
42.2 percent in FY2023/24, primarily due to the recent depreciation of the SSP. However, over
the medium term, inflation is projected to gradually decline to single digits. This is contingent on the
BoSS stabilizing money growth at below 10 percent per year, in line with proposed PMB quantitative
targets and the stated BoSS policy.
12. The fiscal adjustment realism tool highlights the decline in the primary balance, with a
three-year adjustment higher than 4 percentage points of GDP. This is partly due to decline in
oil revenue as a share of GDP and recording of transfers to Sudan above the line as higher transit
fee expenditure from FY2024/25 onwards. The oil-for-infrastructure project is assumed to continue
until 2024/25, with other capital spending growing proportionally with nominal GDP. After the
project’s completion, budgetary capital spending is expected to increase and stabilize around
5 percent of GDP in the long run. Assumptions also include disbursements related to the peace
process, although these expenditures are not expected to persist beyond 2024. Downside risks
include the breakdown of the peace process and the resumption of large-scale conflict.
13. The fiscal multiplier realism tool suggests an upward trend in growth. This trajectory is
expected to be slightly affected by fiscal adjustments since the enhancements in the primary
balance are largely due to cutting down on low-multiplier spending. For instance, the reduction of
excessive transfers to Sudan has been a significant factor in these improvements.
COUNTRY CLASSIFICATION AND DETERMINATION OF
STRESS TESTS
14. SSD’s debt carrying capacity remains classified as weak (Text Table 4). The Composite
Indicator (CI) score for South Sudan is currently assessed at 1.39, reflecting a slight increase from the
previous score observed in the last vintage DSA update. The CI score is derived from a combination of
factors, including the World Bank’s Country Policy and Institutional Assessment (CPIA), real GDP growth,
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 7
and foreign exchange reserves’ import coverage. This most recent evaluation of South Sudan’s CI score is
based on data from the October 2023 World Economic Outlook (WEO) and 2022 CPIA.
15. This DSA incorporates a tailored stress test for reduced oil prices and an additional
5 percent of GDP in the contingent liability test. The commodity price stress test involves a one
standard deviation decrease in oil prices and a 6-year timeframe for closing the emerging financing
gap. The market financing tailored test is not yet applicable to South Sudan and therefore not
included in this DSA. The contingent liability stress test has been adjusted to incorporate an extra
5 percent of GDP to account for arrears owed to diplomats in foreign missions, estimated to be
around US$150 million, and other potential obligations such as the discovery of more legacy debt or
Text Table 4. Republic of South Sudan: Debt Carrying Capacity and Thresholds
Applicable Thresholds
Country South Sudan
Country Code 733
Debt Carrying Capacity Weak
Final
Classification based on
current vintage
Classification based on the
previous vintage
Classification based on the
two previous vintages
Weak Weak Weak Weak
1.39 1.36 1.29
Note: Until the October 2018 WEO vintage is released, the previous vintage classification and corresponding score are
based solely on the CPIA per the previous framework.
APPLICABLE APPLICABLE
EXTERNAL debt burden thresholds TOTAL public debt benchmark
PV of debt in % of
PV of total public debt in
percent of GDP 35
Exports 140
GDP 30
Debt service in % of
Exports 10
Revenue 14
New framework
Cut-off values
Weak CI ≤ 2.69
Medium 2.69 < CI ≤ 3.05
Strong CI > 3.05
REPUBLIC OF SOUTH SUDAN
8 INTERNATIONAL MONETARY FUND
confirmation of arrears on goods and services (see ¶3). The arrears to diplomats and those on goods
and services do not prompt an in-debt distress assessment: although a repayment schedule has not
yet been confirmed, the government has begun clearing these arrears and is providing salaries to
employees in foreign missions.
EXTERNAL DEBT SUSTAINABILITY ANALYSIS
16. The risk of external debt distress for South Sudan is assessed as high given the
baseline projections with the current borrowing assumptions. The PV of external-debt-to-GDP
ratio under the baseline scenario breaches the threshold until FY2027/28 when it falls below it (Figure 1,
and Tables 1 and 3). The PV of debt-to-exports ratio remains below the threshold throughout the period in
the baseline analysis. The debt service-to-revenue ratio and debt service-to-exports ratio indicators
breach the thresholds in the medium term (Figure 1, and Tables 1 and 3). In the baseline scenario,
the external debt service-to-exports ratio surpasses the threshold from FY2024/25 until FY2025/26
and continues to exceed the threshold from FY2028/29 until FY2029/2030. The debt service-to-
revenue ratio remains above the threshold until FY2029/30.
17. The external debt indicators for South Sudan are highly sensitive to fluctuations in
commodity prices and contingent liability shocks. The most severe shock within the tests is a
decline in commodity prices, particularly the price of oil, which significantly impacts the South
Sudanese economy. The debt-service-to-exports and debt-service-to-revenue indicators are the
most vulnerable under this scenario, as the majority of exports and revenues are derived from oil.
Moreover, the historical scenario surpasses the threshold in three out of four external debt
indicators, emphasizing the importance of maintaining policies that ensure macroeconomic stability
and promote strong, inclusive growth for South Sudan’s debt sustainability. Indicators of external
debt are also sensitive to the commodity price and contingent liabilities shocks.
PUBLIC DEBT SUSTAINABILITY ANALYSIS
18. The risk of public debt distress for South Sudan is assessed as high. The PV of the total
public debt-to-GDP ratio is projected to surpass the benchmark until FY2026/27 under the baseline
scenario, as depicted in Figure 1 and Table 4. The indicator is anticipated to exceed the threshold at
71 percent in FY2022/23, before gradually declining to 37.5 percent in FY2026/27 and 32.8 percent in
FY2027/28.
19. The results of the bound tests highlight the need to shore up and diversify revenues.
The most severe scenario amongst the bound tests is the primary balance scenario, in which the PV
of debt-to-GDP ratio breaches the benchmark through FY2032/33.
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INTERNATIONAL MONETARY FUND 9
RISK RATING AND VULNERABILITIES
20. South Sudan’s debt remains assessed as sustainable, however there are substantial
downside risks to the baseline scenario. Under the baseline scenario, all debt indicators are projected to
fall below their respective thresholds after FY2029/30 in the external analysis. The external debt
service-to-revenue ratio, which remains above the benchmark through FY2029/30, is partly attributable to
the costly debt service repayments in the medium term and conservative assumptions regarding financing
terms to address the estimated financing needs. The nation’s debt financing outlook heavily relies on
mobilizing non-concessional financing from external sources, presenting a significant risk in the context of
increasing global borrowing costs, expanding risk premiums, and capital flow volatility. Efforts are currently
underway to enhance debt management, public financial management practices, domestic revenue
mobilization, and the development of a domestic market. This includes an external debt stock-take by an
international auditor as a one-time exercise, with Fund and World Bank technical assistance supporting the
strengthening of debt management within the MoFP. Authorities are recommended to conduct and
publish an internal stock-take on a quarterly basis. These reforms are crucial to avoid high-cost loans,
enable currently non-viable financing options such as domestic borrowing, and improve debt-carrying
capacity over time. Furthermore, limiting the monetization of the deficit and maintaining prudent money
growth is essential for gradually reducing inflation to single digits. Maintaining these reforms in the
medium term, along with other ongoing macro-fiscal reforms to establish fiscal discipline, is critical for the
debt sustainability assessment. Improvements in data quality will also be important due to continued
weaknesses in data access and availability, as well as non-negligible residuals in projections.
21. The deterioration in global conditions presents further challenges to South Sudan’s
debt sustainability. The ongoing conflicts in Ukraine and the Middle East have resulted in increased
food and refined fuel prices, exacerbating the already precarious food access situation in the fragile
nation. Furthermore, the wars in Ukraine and Middle East are likely to adversely impact international
aid, which South Sudan heavily relies on, as donors may reallocate funds and reduce aid due to
constrained domestic fiscal conditions. The conflict in Sudan poses a significant risk, as
demonstrated by the damage since mid-February 2024 to oil pipeline that two-thirds of South
Sudan’s oil to international markets. A potential flaring up of the Red Sea crisis that has disrupted
commercial shipping in recent months and has led to an increase in maritime rates, poses
substantial risks for South Sudan oil exports. The tightening of global financial conditions could also
create difficulties for South Sudan in obtaining external financing, consequently making debt service
more costly. Alongside these factors, weak governance over reforms and expenditures, as well as
climate-related natural disasters, heightens the potential for social unrest, civil conflict, and
escalating violence. These elements are particularly concerning as South Sudan approaches its
2024 election process, which could be a critical juncture for the nation’s stability and ongoing peace
efforts. In summary, South Sudan has minimal capacity to withstand such shocks and remains at a
high risk of debt distress.
REPUBLIC OF SOUTH SUDAN
10 INTERNATIONAL MONETARY FUND
AUTHORITIES’ VIEWS
22. The authorities concurred with the DSA’s evaluation. They acknowledged the significance
of maintaining up-to-date debt payments, ceasing oil advances, steering clear of excessively
non-concessional loans, and implementing prudent fiscal and monetary policies as outlined in the
staff report to enhance South Sudan’s debt sustainability.
REPUBLIC OF SOUTH SUDAN
INTERNATIONAL MONETARY FUND 11
Figure 1. Republic of South Sudan: Indicators of Public and Publicly Guaranteed
External Debt Under Alternatives Scenarios, FY2023–2033 1
Table 1. Republic of South Sudan: External Debt Sustainability Framework, Baseline Scenario, FY2022–2043
(In percent of GDP, unless otherwise indicated)
REPUBLIC OF SOUTH SUDAN
12 INTERNATIONAL MONETARY FUND
Table 2. Republic of South Sudan: Public Sector Debt Sustainability Framework, Baseline Scenario, FY2022–2043
(In percent of GDP, unless otherwise indicated)
INTERNATIONAL MONETARY FUND 13
REPUBLIC OF SOUTH SUDAN
REPUBLIC OF SOUTH SUDAN
14 INTERNATIONAL MONETARY FUND
Figure 2. Republic of South Sudan: Indicators of Public Debt Under Alternative
Scenarios, FY2023–2043
REPUBLIC OF SOUTH SUDAN
NTERNATIONAL MONETARY FUND 15
Table 3. Republic of South Sudan: Sensitivity Analysis for Key Indicators of Public
and Publicly Guaranteed External Debt, FY2023–2043
(in percent)
REPUBLIC OF SOUTH SUDAN
16 INTERNATIONAL MONETARY FUND
Table 4. Republic of South Sudan: Sensitivity Analysis for Key Indicators of Public
Debt FY2023–2033
REPUBLIC OF SOUTH SUDAN
NTERNATIONAL MONETARY FUND 17
Figure 3. Republic of South Sudan: Drivers of Debt Dynamics––Baseline Scenario1
REPUBLIC OF SOUTH SUDAN
18 INTERNATIONAL MONETARY FUND
Figure 4. Republic of South Sudan: Realism Tools
Statement by Mr. Willie Nakunyada and Mr. Morekwa Esman Nyamongo
on Republic of South Sudan Executive Board Meeting
June 7, 2024
Introduction
1. Our South Sudanese authorities appreciate the constructive engagements with Fund
staff during the 2023 Article IV Consultations, and the mission for the first and second
reviews under Staff-Monitored Program with Board Involvement (PMB). They broadly share
the staff’s assessment of macroeconomic developments and policy priorities. The authorities
also appreciate the provision of emergency support under the Food Shock Window (FSW)
that helped avert a humanitarian crisis.
2. South Sudan is facing significant macroeconomic challenges compounded by the
spillovers from the conflict in Sudan and adverse climate shocks. Specifically, oil pipeline
damages, and difficult oil export conditions owing to the disruption of the Red Sea shipment
services, have severely undermined fiscal and export earnings and created sizeable financing
gaps. At the same time, the country is hosting over 650,000 refugees and returnees from
Sudan, further straining the social service delivery system, and worsening the already dire
humanitarian situation, in the context of food shortages occasioned by 5 consecutive years of
adverse climate events. Against this background, the authorities are grappling with fiscal and
external imbalances, persistent currency pressures on the back of depleted reserve buffers,
and the resurgence of inflation. Despite these unanticipated challenges, the authorities have
made determined efforts to keep the PMB on track and view continued Fund support and
flexibility as indispensable in tackling the complex set of challenges. Importantly, they
continue to uphold the September 2018 Revitalized Agreement on the Resolution of the
Conflict in the Republic of South Sudan (R-ARCSS), brokered by Intergovernmental
Authority on Development (IGAD), to preserve an enabling political environment.
Performance Under the PMB
3. Program performance under the PMB arrangement, which was initially strong,
encountered headwinds from the repercussions of conflict spillovers. Nonetheless, the
authorities kept the program on track and met seven quantitative targets (QTs) for end-March
and end-June 2023. However, the QT on the floor on social spending was missed, while the
one on reserve money growth was missed by a small margin.
2
4. Several structural benchmarks (SBs) were met with a delay against the backdrop of
challenging circumstances. Nevertheless, following management approval of two extensions
to the program the following three SBs, which are prior actions for the completion of the
first and second reviews, were met: (i) an audit of the FSW-financed expenditure was
finalized and published in April 2024; (ii) the Board of the Bank of South Sudan (BoSS) has
adopted the external audit for the BoSS financial statements for FY2021; and (iii) budget
execution reports for the first two quarters of FY2023/24 have been completed and
published. However, the SB on publication of all signed oil production sharing agreements
with oil extracting companies was not met because oil companies consider it a breach of
contractual obligations.
5. Considering that the authorities have kept the PMB arrangement on track under
exceptionally difficult circumstances, and met prior actions, they seek Executive Board
support in completion of the combined first and second reviews. They also request a 6-month
extension of the PMB to enable them to implement the outstanding reforms and fortify the
foundations for a UCT-quality arrangement. Going forward, the authorities plan to deepen
Fund engagement through a 3-year arrangement under the Extended Credit Facility (ECF)
that would effectively tackle their protracted BOP challenges and catalyze additional donor
support. They view the envisaged transition to a UCT-quality program, as essential to
support key priorities on public financial management and governance reforms. Reform
priorities under a Fund financial arrangement would also include increased oil-sector
transparency, strengthening the debt management framework and expenditure controls,
regular reporting on debt and fiscal operations, and enhancing the AML/CFT framework to
ensure financial integrity.
Recent Economic Developments and Outlook
6. Real GDP growth is projected to contract by 8.5 percent in FY2023/24, largely
reflecting the oil export disruptions as well as unfavorable weather conditions which affected
agriculture production. Going forward, economic activity is expected to rebound to 21.1
percent in FY2024/25, before averaging 5.4 percent in the medium-term against the backdrop
of the resumption of oil exports through the Red Sea, and strong growth in agricultural
output. That said, the growth outlook remains intricately bound to the evolution of the
conflict in Sudan and the developments in the Red Sea. A further escalation could delay
timely completion of repairs to the pipeline which transports oil through Sudan while
continued attacks on international shipping in the Red Sea could also further disrupt oil
exports. However, higher than projected global oil prices could improve export earnings and
public finances.
7. Meanwhile, inflation, which stood at 25.3 percent in FY2022/23, is expected to
accelerate to 42.2 percent in FY2023/2024 mainly driven by significant depreciation of the
exchange rate. The exchange rate continues to depreciate mostly by disruptions to oil
production and exports from the wars in Sudan and the Middle East. Against the background
of weak export performance, reserve buffers remain low at 0.7 months of import cover in
FY2023/24.
3
Fiscal Policy and Debt Management
8. Despite the challenging macroeconomic environment, the authorities remain
committed to prudent fiscal management underpinned by domestic revenue mobilization
efforts and restraint on spending and contracting of non-concessional external debt. To this
end, the authorities exercised prudence in the execution of the FY2023/24 budget, supported
by higher than anticipated oil, and non-oil revenues, and curtailed expenditures, resulting in
an increase in the primary surplus. The authorities also made notable progress on increasing
revenues under their 5-year plan, although non-oil revenue remains significantly below
potential. They plan to continue efforts on tax and customs reforms, which include the
introduction of VAT over the medium term and further strengthening of revenue
administration.
9. On the expenditure front, the authorities plan to contain non-priority spending to
accommodate higher spending on health, education, and other social and humanitarian
support. To this end, the authorities acknowledge that containment of non-priority spending
would entail moderation of outlays earmarked for the oil-for-roads initiative, given the
limited fiscal space. Relatedly, they plan to make issuance of sovereign guarantees by the
BoSS subject to the same approval process as specified in the PFM Act for external loans,
consistent with the amended BoSS Act. That said, the war in Sudan has significant effects on
the budget, with the authorities continuing to reallocate spending away from non-critical
areas to facilitate provision of food and shelter for returning refugees, in cooperation with
international aid agencies.
10. Notwithstanding the primary surplus realized, significant financing needs remain. The
financing gap, estimated at 5.3 percent of GDP in FY2023/24, follows a significant decline in
revenue due to pipeline damages and large negative external financing. Although the
significant increase in salaries exerted additional pressure on the budget, the authorities
consider this as important to reverse the erosion of real public sector wages in recent years,
which had left public salaries at exceptionally low levels. The wage bill as a share of GDP
had fallen from about 5.5 percent of GDP in FY2017/18 to about 3.1 percent of GDP in
FY2022/23, as nominal wage adjustments fell below inflation during this period. While this
increase would bring the wage bill as a share of GDP to the FY2017/18 level, the pay for
most public servants remains well below regional and international standards.
11. The authorities reiterate their commitment to ensuring medium-term debt
sustainability. South Sudan’s debt is assessed to be sustainable with a high risk of debt
distress for both external and overall public debt. Notwithstanding the downside risks to the
debt outlook, the authorities are committed to maintaining up-to-date debt service payments,
ceasing oil advances, steering clear of excessively non-concessional loans, and implementing
prudent fiscal and monetary policies in line with staff recommendations. In this vein, they
adopted a strategy for avoiding non-concessional borrowing except in the context of debt
management operations to improve liquidity or solvency indicators without adversely
affecting the risk rating; and taking up loans to finance critical investment projects with high
social and economic returns that are embedded in the national development program, and for
which concessional financing is unavailable.
4
Monetary, Exchange Rate, and Financial Sector Policies
12. To curtail monetary growth and thaw down inflationary pressures, the authorities
continue to operationalize the reserve money targeting framework. Given the lack of a well-
functioning interbank FX market, and the low reserve levels, the authorities view the reserve
money targeting framework as appropriate. In this context, the authorities continue to target
an annual single digit reserve money growth rate. They endeavor to pause the regular
conduct of FX auctions as a liquidity management tool and do so on a need basis to support
price discovery while publishing auction data on the BoSS website in a timely manner to
foster market confidence.
13. The BoSS reaffirms its commitment to strengthen the monetary and operational
framework. Accordingly, the central bank is committed to containing money supply growth
and managing liquidity consistent with the overarching objective to restore price stability.
The BoSS is also committed to enhancing coordination with the Ministry of Finance and
Planning (MoFP), including on cash management, and stands ready to take appropriate
actions should the impact of higher salary payments to civil servants, generate
macroeconomic instability. The MoFP also plans to improve the auditing framework and
implement the new national payment system in the near term. At the same time, they plan to
roll out their action plan on the modernization of the monetary policy framework once it is
endorsed by the Council of Ministers.
Data for Surveillance and Capacity Development
14. While data provision for surveillance remains a challenge, our authorities have
remained open to the technical assistance from the IMF and other institutions. We note that
the staff acknowledged that monetary and exchange rate data are sound notwithstanding
weaknesses in the other datasets.
15. The authorities appreciate that continued Fund CD and TA support remains vital to
support reform implementation. The capacity development needs in South Sudan are
significant, spanning many sectors notably, PFM, fiscal governance, revenue administration,
monetary operations, and macroeconomic statistics. To this end, our authorities appreciate
the leading role of the IMF in providing physical and virtual TA from HQ, AFRITAC East,
and coordinated support with other organizations such as the World Bank. Relatedly, they
acknowledge that data provision continues to have serious shortcomings that hamper
surveillance, but they are committed to improving its quality, periodicity, and timeliness.
Specifically, our authorities endeavor to provide crucial information for surveillance on oil
production, revenues, and debt to development partners through the PFM Oversight
Committee, as well as budget execution.
Structural and Governance Reforms
16. Structural reforms continue to rank high on the authorities’ agenda to ensure a
gender-inclusive and greener growth. The authorities place a high premium on. Specifically,
they are working closely with the Fund on building resilience to climate change, enhancing
financial inclusion, and promoting gender-inclusive growth. In this connection, the country’s
climate agenda remains guided by the analysis contained in the 2022 Article IV report, which
5
emphasized the importance of consolidating macroeconomic gains and building reserve
buffers, to create the fiscal space to cushion volatility from natural disasters or commodity
shocks. In addition, the authorities recognize the need to strengthen governance and improve
the transparency of government revenue and spending, particularly in the oil-for-
infrastructure scheme. They are also taking steps to appoint an external audit firm with
experience in central bank audits to conduct an audit on the BoSS financial statements for
FY2022 and FY2023. On financial inclusion, the authorities are focusing on banking sector
reforms, while gender-inclusive and growth-friendly reforms are being implemented under
various government programs.
Conclusion
17. Our South Sudanese authorities reaffirm their commitment to implement sound
macroeconomic policies to achieve program objectives. They look forward to Executive
Directors’ support in completion of the 2023 Article IV Consultation as well as the First and
Second reviews under PMB. They also look forward to further support to transition to an
ECF arrangement in future to support economic recovery and resolve underlying BOP
challenges.