IMF Welcomes Sudan Austerity But Urges More Reforms

Sudan is in an economic crisis that has triggered anti-government protests, and needs to bridge a budget gap of 6.5 billion Sudanese pounds after losing much of its oil production when South Sudan became independent a year ago.

The mission underscores the need for continued policy reforms to ensure medium-term macroeconomic stability that would enable more inclusive economic growth, boost job creation and contribute to poverty reduction, the IMF said in a statement after consultations with the government.

Annual inflation hit 37.2 percent in June, more than double the level in the same month last year, mainly due to imported price rises as Sudan imports much of its food needs.

Oil is the main source of state revenues and also the main way for the country to get the dollars it needs to pay for its imports, but South Sudan took away three-quarters of the oil production when it broke away last year.

Khartoum last month began scaling back fuel subsidies, cutting state jobs and raising tax and customs duties to overcome the budget crisis.

The central bank also drastically devalued the pound against the dollar to try to bridge a rising spread over black market rates.

The implementation of these measures will contribute to restoring fiscal sustainability over time, the IMF said after Article IV consultations in Khartoum.

The austerity measures have triggered small protests against the 23-year rule of veteran President Omar Hassan al-Bashir, but the turnout has been much smaller than in Egypt or other Arab countries.