JUBA – South Sudan government said it will use part of the International Monetary Fund (IMF) loans of US$ 174.2 million meant to combat the coronavirus pandemic to clear salaries of civil servants, the country’s central bank chief said.
The IMF Executive Board on Wednesday approves US$ 174.2 Million Emergency Assistance for South Sudan to address the deadly virus.
The country’s economy has been hit hard by the COVID-19 pandemic and economic activity is projected to contract by 4.2 percent in FY20/21.
The pandemic-related oil price shock and devastating floods have led to an economic downturn.
Speaking to reporters in Juba on Friday, Dier Tong Ngor, Governor of the Central Bank said half of the IMF money will be used to support the budget and the other half will be used to meet the balance of payment needs.
“Half of the money will be used to pay salaries and foreign components will be used to stabilize the markets,” Tong told reporters.
Ngor revealed the monetary policy will reduce salaries arrears by the end of June this year.
“Our agreement with the IMF is very clear; we intention to significantly reduce salary arrears by the end of June this year, and by the end of next year’s budget. We want to eliminate all the arrear and therefore salaries will be paid on a regular basis,” Ngor said.
“It will have significantly positive impact on reducing inflation because we are a net-importing economy, we import most of the things from outside and when you import things from outside the exchange rate will have impact on inflation, so this loan will help us to stabilized the exchange rate and prices,” he said.