The International Monetary Fund (IMF) said Thursday it had approved about 52.3 million dollars (6.8 billion South Sudanese pounds) in emergency assistance to help South Sudan contain the fiscal impact caused by the COVID-19 pandemic.
IMF Deputy Managing Director Mitsuhiro Furusawa said this in Juba in a statement.
The IMF said the funds would help South Sudan to contain the fiscal impact of the shock brought by the COVID-19 pandemic and also provide critical fiscal space to maintain poverty-reducing and growth-enhancing spending.
“The COVID-19 pandemic has severely affected South Sudan and reversed early gains from political stability,” said Furusawa.
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The disbursement, under IMF’s Rapid Credit Facility, is the first lending to the world’s youngest nation since it joined the IMF in 2012.
The IMF said prior to the COVID-19 pandemic, South Sudan had achieved significant progress due to improved political stability and an uptick in global oil prices.
But the coronavirus pandemic and oil price shock had created a severe economic disruption, leading to a sharp decline in South Sudan’s growth and reversing some early gains from political stability.
“The health and economic impact of the pandemic, coupled with the decline in oil prices, led to a collapse of revenues and have created an urgent balance of payments and fiscal financing needs,” said Mitsuhiro.
According to the IMF, the economy is projected to contract by 3.6 per cent in FY20/21, about 10 percentage points below the pre-pandemic baseline.
Mitsuhiro said additional financing from the international community remains critical to close the external financing gap and ease the effects of the COVID-19 on the east African country which is still recovering from a six-year civil war.