June 23, 2020 / 11:12 PM / 18 days ago

IMF, Sudan reach agreement on macroeconomic policies structural reforms

CAIRO (Reuters) - International Monetary Fund (IMF) staff and Sudan have reached agreement on macroeconomic policies structural reforms that would underpin a 12-month staff-monitored program, the fund said in a statement on Tuesday.

Sudan said earlier in June that it began talks with the IMF on a non-funded programme that could pave the way for international financial support.

Khartoum is in desperate need of financial help to reorganise its economy. Inflation has been exceeding 100% and the currency tumbling as the government prints money to subsidise bread, fuel and electricity.

With Sudan’s economy at risk of freefall, the government is pinning its hopes on a conference of potential donors in Berlin this week.

An IMF mission led by Daniel Kanda held virtual meetings with the Sudanese authorities from 8-21 June to discuss their reform package.

“The Sudanese authorities and IMF staff have reached a staff-level agreement on policies and reforms that can underpin an SMP (staff-monitored program), subject to approval by the IMF’s management and Executive Board,” the statement quoted Kanda as saying at the end of the mission.

“The SMP aims at narrowing large macroeconomic imbalances, reducing structural distortions that hamper economic activity and job creation, strengthening governance and social safety nets, and making progress towards eventual (Heavily Indebted Poor Country) HIPC debt relief,” he added.

Sudan presented a package that includes “reforming energy subsidies to create room for increased spending on social programs,” the IMF said on Tuesday.

Until now Sudan has been unable to tap the IMF or the World Bank for support because it is still listed by the United States as a state sponsor of terrorism and has $1.3 billion of IMF arrears.

The U.S. indicated after President Omar al-Bashir was removed from power in April 2019 that it was willing to work to remove Sudan from the terrorism list.

Reporting by Hesham Abdul Khalek and Aidan Lewis; Writing by Mahmoud Mourad; Editing by Leslie Adler and Grant McCool

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