Policy adjustment needed to stabilize South Sudan economy – IMF
March 19th 2019 (Nyamilepedia) – A visiting team from the International Monetary Fund (IMF) said an urgent policy adjustment is needed in war-torn South Sudan to reestablish economic stability and credibility.
The world’s youngest nation plunged into a brutal civil war in December 2013 following a flare-up of violence at a national convention for the country’s ruling Sudan People’s Liberation Movement (SPLM) in Juba. South Sudan’s army split along ethnic lines with Dinka members of the army supporting President Salva Kiir, an ethnic Dinka, while the Nuer supporting former Vice President, Dr. Riek Machar, an ethnic Nuer.
A team from the IMF which visited South Sudan’s capital Juba last week led by Jan Mikkelsen to conduct discussion on how to stabilize the country’s economy came to the conclusion that the resumption of war in July 2016 had negative implications on the economy.
“The resumption of hostilities in July 2016 severely impaired the South Sudanese economy, which led to a substantial loss of income, high inflation, foreign exchange shortages, and acute deterioration in humanitarian conditions,” the team said.
“Moreover, the conflict has led to the loss of fiscal discipline and weakening of public institutions. The country is in a deep economic crisis and policy adjustments are urgently needed to reestablish economic stability and credibility,” the team added.
The team however said the signed of the revitalized peace agreement in September 2018 increases hopes that that the South Sudan’s economy could be resuscitated paving for the return to a positive economic growth.
“The peace agreement signed in September 2018 has significantly increased the prospects for lasting peace, restoring macroeconomic stability, and returning to positive economic growth,” it said.
“The implementation of the peace agreement, including the cessation of hostilities in large parts of the country, have contributed to a peace dividend in the form of increased daily oil production of about 20 percent. Another positive development is the decline in inflation to about 40 percent by end-2018 from triple digits previously,” the team added.
During its visit, the team met with the First Vice-President Deng Gai, Minister of Finance Salvatore Mabiordit, Central Bank Governor Ngor and other high-level government officials.