Relief for South Sudan after $52 million boost in pandemic fight

Relief came for South Sudan after the IMF announced on Nov 12 it had approved $52 million in emergency assistance to help the country contain the fiscal impact caused by the COVID-19 pandemic. 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 announcement comes days after two United Nations agencies warned South Sudan and two other African countries could experience famine in the next three months if no urgent action is taken to avert the deteriorating situation.

In the latest "Early Warning Analysis of Acute Food Insecurity Hotspots" report, the Food and Agriculture Organization and the UN World Food Programme describe a toxic combination of conflict, economic decline, climate extremes and the COVID-19 pandemic that is driving South Sudan, Burkina Faso and Nigeria further into the emergency phase of food insecurity.

According to Mitsuhiro Furusawa, IMF deputy managing director, the COVID-19 pandemic has severely affected South Sudan and reversed 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. The authorities' efforts to address the human and economic effects of the pandemic are appropriate and have helped limit its spread. Additional financing from the international community remains critical to close the external financing gap and ease the adjustment burden," Furusawa said.

The IMF noted prior to the COVID-19 pandemic, South Sudan had achieved significant progress due to improved political stability and an uptick in global oil prices. Economic growth rebounded, inflation declined, and the exchange rate stabilized.

However, the pandemic and oil price shocks created severe economic disruption, leading to deterioration in the fiscal and external balances and a sharp decline in growth, reversing some early gains.

According to the Food and Agriculture Organization, parts of the population in South Sudan are already experiencing a critical hunger situation, with the report warning escalations in conflict as well as a further reduction in humanitarian access could lead to famine.

"We are deeply concerned about the combined impact of several crises spearheaded by the pandemic which are eroding people's ability to produce and access food. There is a need to ensure these populations have food and the means to produce food and improve their livelihoods to prevent a worst-case scenario," said Dominique Burgeon, the Food and Agriculture Organization's director of Emergencies and Resilience.

Despite the aid provided to South Sudan people by the IMF's funds, Mitsuhiro said additional financing from the international community remains critical to close the external financing gap and ease the effects of the COVID-19 in the East African country, which is still recovering from a 6-year civil war. He also asked South Sudan authorities to implement public financial management reforms to enhance the budget process and improve governance.