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IMF Says Could Soon Reach Loan Deal With South Sudan
26/09/2013
WASHINGTON (Reuters) - The International Monetary Fund on Wednesday said it could reach a loan deal with South Sudan in the coming days to help the African oil producer promote economic stability and attract support from other donors and investors.
The landlocked country has been on an austerity budget to weather a 16-month shutdown of its oil production in a row with neighboring Sudan, through which it has to transport its oil.
Oil, the main source for South Sudan's budget, has been flowing again since April, but output is down at 240,000 barrels a day, still below levels before the shutdown. The government said it plans to borrow about $1.6 billion to fund its 2013/14 budget.
The IMF said it was discussing a rapid credit facility for South Sudan, which is meant to provide support for low-income countries recovering from a shock or natural disaster.
The IMF, a multilateral lender based in Washington, said South Sudan's economic outlook was improving as oil production rose, and inflation was declining, and welcomed the government's plans to end the austerity budget as oil continues to flow.
South Sudan's economy should grow 32.1 percent this year and 49.2 percent the next, some of the highest growth rates in the world, according to IMF forecasts made in April. But consumer prices are likely to rise 15.5 percent this year.
"The mission agreed with the authorities that, with the gradual resumption of oil production, policies that promote economic stability will remain essential, together with an environment of good relations with Sudan and the pursuit of national unity," the IMF said after a visit to the country that ended on Tuesday.
South Sudan should focus first on good fiscal and foreign exchange policies and better transparency in government and oil operations, the IMF said, but over the longer term it should also make sure to invest in health, education and infrastructure.
Western donors and the UN have poured billions of dollars into South Sudan, which won independence in 2011 after decades of war with northern rulers in Khartoum, becoming the world's newest country and a large African oil producer in its own right. But the nation still has far to go in developing a functional, prosperous state, lagging in infrastructure and provision of basic services.
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