Troika Cautions Bank Of South Sudan On Monetary Financing Of Budget Deficit

Troika Cautions Bank Of South Sudan 
OpenLife Nigeria reports that Troika, a group formed by the European Commission, the European Central Bank and the International Monetary Fund, has stressed that Sudanese
continued respect for the moratorium on incurring new non-concessional debt will spare ordinary citizens the burden of higher taxes or reduced public spending in the future.
This is a concern arising from the recent important appointments related to South Sudan’s economic management, which comes at a critical time for the reform process, as South Sudan is preparing to exit an IMF Staff Monitored Program and hopes to access a new loan in coming months.
The Troika underscores that a faster pace is needed in the implementation of Public Financial Management reforms. In this regard the Troika stresses the importance of continuing and further strengthening the current reforms, which will demonstrate the Government’s commitment to the reform process and enhance trust with international partners.
South Sudan has made important progress in the last year and a half on Public Financial Management reforms, including prudent monetary policy, successful foreign exchange reform and steps towards sounder public cash management. These steps have already benefitted South Sudan’s people through a more stable exchange rate and slower inflation. We urge the Government of South Sudan and those now charged with leading economic recovery to continue such reforms, in line with R-ARCSS and South Sudan’s commitments under the IMF Staff Monitored Program.
The Troika stresses that continued respect for the moratorium on incurring new non-concessional debt, including not issuing letters of guarantee, will spare ordinary citizens the burden of higher taxes or reduced public spending in the future. The Troika further emphasizes that sound monetary policy is key to maintaining low inflation and a stable exchange rate, both of which will help shield the people of South Sudan from rising prices: this means that the Bank of South Sudan must refrain from any monetary financing of the budget deficit. The Troika also stresses the need for the budget to be debated and passed by the TNLA, and highlights that a fully functional Cash Management Committee is key to sound spending in line with budgetary allocations.
The Troika looks forward to providing continued support to the Government of South Sudan, including recent appointees, on enhancing transparency and accountability for the benefit of all South Sudanese. In achieving this we stress that fiscal data – including on oil and non-oil revenues – should be published on the Ministry of Finance and Planning website regularly and without delay. Information should also be made public on any outstanding balance owed to Sudan on the Transitional Financing Arrangement and on any debt Sudan may now owe South Sudan from the oil it receives in kind each day. The Troika anticipates a full and complete audit of the second tranche of the IMF RCF loan, as well as further progress on anti-money laundering reforms as per the FATF Action Plan.

The South Sudanese economy remains fragile and the gains that have been made could quickly be reversed, at great cost to its people. The Troika reiterates its commitment to a peaceful and prosperous South Sudan, in which the population benefits from public services, underpinned by transparent and accountable public financial management. To that end, the Troika looks forward to working with the new appointees in advancing and deepening Public Financial Management reforms.
SOURCE: U.S Embassy in South Sudan