JUBA – South Sudan President Salva Kiir has directed the cancellation of a $650 million sovereign guarantee loan, paving way for the country to engage international financial institutions.
In a letter dated September 24, 2021, the Executive Director of the Presidential Office informed Finance Minister Athian Dingg Athian that Kiir authorized the cancellation of the loan following mounting pressure on his administration to live up to the norms and practices of public financial performance.
“I write to you on the directive of his Excellency the President, Salva Kiir Mayardit, authorizing you to cancel with immediate effect the sovereign guarantee of 650 million dollars which has recently threatened to roll back gains we have made with our population and development partners”, wrote Jems Deng Wal Achien in a letter seen by the Sudan Tribune on Friday evening.
The letter cited the work of the public financial performance management oversight committee which draw membership from a host of the international financial institutions and key representatives of the key international donors.
It pointed to trust and policy credibility the government has reportedly built in the last years, resulting in the strengthening of the local currency over dollars.
The letter said that the involvement of the internationally supported oversight committee had resulted in the building of relations with key partners, including the International Monetary Fund (IMF).
“With this issue resolved and behind us, you should be on your way to completing the Staff Monitored Program (SMP) review and moving to the next level of engagement with International Monetary Funds, World Bank, and African Development Bank,” reads the letter.
The SMP is an informal agreement between national authorities and IMF staff to monitor the country’s economic reforms to redress its economy. Also, the IMF can work with the national authorities to build a track record of reform implementation under this agreement.
When the IMF monitored reforms are successfully achieved South Sudan can benefit from development programs funded by the World Bank agencies including the African Development Bank.
International financial institutions threatened to withhold loans if the government continues to borrow without disclosing the terms of the agreement to the public.
The SMP also includes reforms aiming to prevent money laundering and transparency in the management of the oil revenue which is the only source of income for the landlocked country.