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Ninth Sovereign Debt News Update: IMF's Agreement with Sudan, Somalia and Madagascar in Context

In response to the economic shock following the covid-19 pandemic, South Sudan turned to the International Monetary Fund which itself recently approved the disbursement of US$174,2 Million to South Sudan under its Rapid Credit Facility. Being the second of such disbursement by IMF to South Sudan since 2012 when the country joined the IMF, the expectation is that the funds would be utilized to finance urgent payment needs and other expenses crucial to reduce poverty and enhance economic growth. Noting that the bulk of South Sudan’s deficit is attributable to the sharp decline in oil prices at the international market, it is anticipated that in the coming year there would be a more stable international oil market which will bolster South Sudan’s economic recovery. South Sudan is already engaging in internal restructuring including stricter internal tax regimes as well as a commitment to stronger and accountable governance.

Similarly, the International Monetary Fund has also approved a 40- month Finance package of USD$312.4 Million to Madagascar to support the country’s agenda for sustainable economic reform and poverty reduction. Appreciating Madagascar’s unique disadvantage in terms of vulnerability to climate-related shocks, the expectation is that the funds will help Madagascar, among other things, more easily access additional bilateral and multilateral financial support.

Somalia, a Heavily Indebted Poor Country, has been granted additional interim assistance by the IMF. The additional concession includes the sum of USD$0.97 Million for the term March 25 to March 24, 2022. This is sequel to a previous concession of the sum of USD$1.5 Million for the period March 25, 2020 – March 24, 2021, alongside a three-year arrangement under the Extended Credit Facility and Extended Fund Facility program of the International Monetary Fund.

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