Sudan is projected to record a gross domestic product growth of 3.1 per cent in 2014, the International Monetary Fund (IMF) has said.
Following the conclusion of Article IV Consultation in the country, IMF said that although economic conditions in Sudan are mixed, growth in anticipated at 3.1 per cent supported by gold extraction and a strong harvest.
“Economic conditions are mixed. Preliminary data suggest that economic growth at 3.1 per cent supported by gold extraction and a strong harvest is broadly in line with expectations for the year,” said Lodewyk Erasmus, Sudan IMF Resident Representative.
The IMF mission was headed by Edward Gemayel and met with Minister of Finance and National Economy Bader Eldin Mahmmood Abbas Mukktar, Governor of the Central Bank of Sudan Abdelrahman Hassan Abdelrahman Hashim, and other senior government and central bank officials.
The mission also met with members of the Finance and Budget Committee of the National Assembly, as well as donors and members of the business community.
According to the mission, fiscal consolidation is helping to contain the large deficits and reduce reliance on central bank financing of the deficit.
External imbalances are gradually declining as a result of last September’s exchange rate adjustment and the improvement in the fiscal position.
It however noted that monetary policy needs to be further tightened considering that inflation has remained high at about 46 per cent.
Though this is partly due to the one-off effect of the September 2013 price adjustments of fuel prices, the injection of excess liquidity by the central bank through gold purchases at the parallel market rate is significantly contributing to inflation while also adding to the wide gap (52 per cent) between the parallel and official exchange rates.
“Performance under the authorities’ economic reform program is broadly satisfactory. All of the end-June quantitative targets, with the exception of the indicative target on reserve money growth, were met,” said Erasmus.
Also, the authorities have met their end of June structural benchmarks with the exception of the restructuring plan of Omdurman bank, which is underway.
Erasmus also noted that the implementation of the government’s medium-term program faces challenges, including a lack of access to external financing, an unsustainable external debt burden and economic and financial sanctions against the country.
In addition, the impact of recent actions against a major international bank for violating U.S. financial sanctions is having a significant impact on foreign correspondent banking relations with Sudan, which could have a negative implication on medium-term growth.
The mission observed tha resolving Sudan’s unsustainable external debt is of paramount importance for the successful adjustment to the impact of South Sudan’s secession, implementation of the government’s poverty reduction policies and for supporting inclusive growth.
While Sudan has made some progress toward meeting the requirements for debt relief, the mission reiterated the importance of securing broad support for comprehensive debt relief from Sudan’s bilateral external creditors.
In this regard, the mission urged the authorities to reach out to their external creditors, including under the framework of the Joint Approach with South Sudan and the African Union High-level Implementation Panel.
International Monetary Fund (IMF)