First: Macroeconomic reform programs supported by the Arab Monetary Fund over the period 2015-2021
Macroeconomic program supported by Ordinary Loan to the Republic of Sudan 2019
The Arab Monetary Fund (AMF) Fund, pursuant to the Board of Executive Directors’ resolution number (1) of 2019, extended an Ordinary Loan to the Republic of Sudan with the amount of AAD 27.4 million (about US$ 115 million ), to be withdrawn in two tranches, equivalent to 100 percent of its share in the Fund’s paid-up capital in convertible currencies. The loan supported a macroeconomic reform program covering the year 2019. The second tranche of the loan, with the amount of AAD 10.960 million (equivalent to about US$ 46 million), was withdrawn following a Fund’s mission to monitor the implementation of the agreed program.
The program supported the efforts of the Sudanese government geared towards the implementation of macroeconomic reforms and expanding the scope of structural reforms to achieve macroeconomic balance, thus contributing to enhancing economic stability, expanding and diversifying the production base, and enhancing the role of the private sector, through mobilizing efforts and exploiting the latent capabilities in the Sudanese economy, in order to achieve national visions and goals. The program aimed to enhance financial and economic stability and create a conducive macroeconomic environment, to achieve sustainable and inclusive economic growth, through increasing real growth rates, reducing inflation rates, containing fiscal deficit, and maintaining budget financing from the Central Bank of Sudan within the established legal limits, in addition to reducing current account deficit and strengthening foreign exchange reserves. To achieve these goals, the program included a set of policies and measures in the field of fiscal policy, public finance management, monetary policy, the external sector, the financial and banking sector, and the real sector.
Regarding fiscal policy, the program aimed to strengthen the fiscal position, by boosting revenues, rationing public spending, and reducing borrowing from the Central Bank of Sudan. With regard to public finance management, the measures in the program included setting strategic plans for revenues and expenditures, implementation of a medium-term fiscal framework, enforcing the financial and accounting procedures law and the procurement and contracting law, initiating the implementation of program budgeting, in addition to expanding fiscal digitalization and generalizing electronic tax collection system. As for monetary policy, the program included adopting a restrictive monetary policy to absorb excess liquidity, in order to reduce inflation rate and maintain purchasing power of the domestic currency. Regarding the external sector, the program included measures to ration imports, encourage import substitution industries, increase export earnings from manufacturing and extractive industries, maximizing value added of the agricultural exports, and establishing free zones with landlocked neighboring countries. With respect to the financial and banking sector, the program included measures to strengthen the supervisory and regulatory frameworks of the non-banking financial institutions. As for the real sector, the program included efforts aimed at enhancing production capacity of the main sectors, including agriculture, forestry, and fishing; mining and quarrying; manufacturing and handicrafts; and trade.
Macroeconomic reform program supported by Extended Loan to the Republic of Sudan 2015
The AMF provided an Extended Loan to the Republic of Sudan with a value of AAD 39.9 million (equivalent to about US$ 166 million), representing 175 percent of the Republic of Sudan’s share in the Fund’s paid-up capital in convertible currencies, according to the Board of Executive Directors’ resolution number (14) of 2015. The loan extended to support a comprehensive macroeconomic reform program, covering the years 2016 and 2017. The mentioned resolution stipulated the withdrawal of the loan in three tranches, considering the progress of implementing the agreed upon measures.
The program sought to achieve a number of objectives included consolidating financial and economic stability and enahcing macroeconomic environment to achieve sustainable and inclusive growth rates, reduce the inflation rate, contain the current account deficit of the balance of payments, and enhance official foreign currency reserves. The program included various fiscal, monetary and financial measures to achieve the set objectives.
On the fiscal side, the program aimed to strengthen the government’s fiscal position, by increasing public revenues and diversifying their sources, thus increasing the flexibility of the budget and its ability to absorb various shocks; controlling public spending while enhancing capital and social expenditures, in order to support economic growth and reduce poverty. The program also aimed at reducing the government borrowing from the Central Bank of Sudan to finance the budget deficit, in order to mitigate the macroeconomic risks arising from such financing. With respect to monetary policy, the program included adopting a restrictive monetary policy, consistent with the macroeconomic objectives of reducing inflation rate and unifying the exchange rate while aligning it to supply and demand factors governing foreign exchange. As for the external sector, the program encompassed measures aimed at reducing the current account deficit, through rationing imports, developing import-substitution industries, and increasing export earnings from the manufacturing, extractive and mining industries. The program also included measures to raise the efficiency of public finance management, including enhancing budget comprehensiveness, implementing program budgeting, improving fiscal planning framework, developing public debt management, and strengthening tax and customs administrations. In addition, the program included measures to develop the financial and banking sector, aiming at enhancing financial stability and soundness, strengthening financial supervisory frameworks in accordance with best practices, developing credit information systems, modernizing payment and settlement systems, strengthening banking infrastructure, and promoting access of small and medium sized enterprises to finance and financial services.
Second: Supporting emergency financing needs of member countries over the period 2015-2021
The Hashemite Kingdom of Jordan
- Compensatory Loan 2021
In pursuant to the Board of Executive Directors’ resolution number (16) of 2021, the AMF extended a Compensatory Loan to the Hashemite Kingdom of Jordan, with a value of AAD 14.770 million (equivalent to about US$ 63 million), representing 100 percent of its share in the Fund’s paid-up capital in convertible currencies. The loan contributed to financing the balance of payments deficit during 2020, resulting from the decline in commodity and service export revenues due to the impacts of Covid-19 pandemic, essentially the decline in global demand, repercussions of the lockdowns, and the impacts on travel and transport. The loan amount was withdrawn in one tranche during the year 2021 after the signing of its agreement.
- Automatic Loan 2020
The AMF extended an Automatic Loan to the Hashemite Kingdom of Jordan with the amount of AAD 10 million (equivalent to about US$ 41 million), representing 68 percent of its share in the Fund's paid-up capital in convertible currencies. The loan aimed to finance the balance of payments deficit, thereby contributing to the government efforts to strengthen the external position in light of the challenges facing the Jordanian economy, as a result of the unfavorable impacts of the Covid-19 pandemic, including the negative effects on productive activities, tourism revenues, external transfers, and the fiscal stance. The loan amount was withdrawn in one tranche during the year 2020 after the signing of its agreement.
- Compensatory Loan 2017
According to the Board of Executive Directors’ resolution number (1) of 2017, the AMF extended a Compensatory Loan to the Hashemite Kingdom of Jordan with the value of AAD 13.400 million (nearly US$ 56 million), representing 97 percent of the country’s share in the Fund’s paid-up capital in convertible currencies, to support the external position in view of the emerging contraction of goods and services exports, due to plummeting external demand and decreasing prices of primary commodities in international markets. The loan amount was withdrawn in one tranche during 2017 after the signing of its agreement.
- Automatic Loan 2016
The AMF extended an Automatic Loan to the Hashemite Kingdom of Jordan with the amount of AAD 9.964 million (equivalent to about US$ 40 million), which represented 75 percent of the country’s share in the Fund’s paid-up capital in convertible currencies. The loan was withdrawn in one payment after signing its agreement. The provision of the loan came within the framework of meeting the financing needs of the balance of payments deficit during 2016, thereby strengthening the reserve position and providing an appropriate policy space for the government to take policies aiming to accelerate economic growth and support the positive results achieved due to reform efforts implemented.
The Arab Republic of Egypt
- Compensatory Loan 2021
The AMF, pursuant to the Board of Executive Directors’ resolution number (15) of 2021, agreed to provide a compensatory loan to the Arab Republic of Egypt with the amount of AAD 87.7 million (equivalent to about US$ 368 million), representing 100 percent of the country’s share in the Fund’s paid-up capital in convertible currencies. The loan aimed to enhance the country’s external position in face of the challenges arising from the Covid-19 pandemic, including the decline in the proceeds of goods and services exports, due to the decline in external demand and the lockdowns procedures.
- Compensatory Loan 2016
The AMF, pursuant to the Board of Executive Directors’ resolution number (21) of 2016, exteded a Compensatory Loan to the Arab Republic of Egypt with the amount of AAD 81,820 million (equivalent to about US$ 330 million), representing 100 percent of the country’s share in the Fund's paid-up capital in convertible currencies. The loan came within the framework of meeting the financing needs of the balance of payments during the fiscal year 2015/2016, in light of the high current account deficit resulting from the decline in the proceeds of exports of goods and services during the mentioned year due to contracting tourism revenues. The loan amount was withdrawn in one tranche during 2016 after the signing of its agreement.
- Automatic Loan 2015
The Fund provided an Automatic Loan to the Arab Republic of Egypt with the amount of AAD 59.160 million (equivalent to about US$ 250 million), representing 75 percent of the country’s share in the Fund's paid-up capital in convertible currencies. The loan aimed to contribute to financing the balance of payments deficit during 2015 and provide a suitable space to meet the needs of enhancing economic stability and fostering economic development. The loan amount was withdrawn in one tranche during 2015 after the signing of its agreement.
The Republic of Tunisia
- Compensatory Loan 2021
The Fund, pursuant to the Board of Executive Directors’ resolution number (14) of 2021, extended a Compensatory Loan to the Republic of Tunisia, amounting AAD 19.175 million (equivalent to about US$ 82 million), and representing 100 percent of the country’s share in the Fund’s paid-up capital in convertible currencies. The loan was withdrawn in one payment during 2021 after signing its agreement. The objective of the loan was to ease pressures on the balance of payments caused by the rise in food prices in global markets.
- Automatic Loan 2020
The Fund extended an Automatic Loan to the Republic of Tunisia with the amount of AAD 14,381 million (equivalent to about US$ 59 million), representing 75 percent of the country’s share in the Fund’s paid-up capital in convertible currencies, to contribute to strengthening the external position in light of the challenges facing the Tunisian economy due to the repercussions of Covid-19 pandemic. The loan amount was withdrawn in one tranche during the year 2020 after the signing of its agreement.
- Compensatory loan 2018
The Fund, pursuant to the Board of Executive Directors’ resolution number (22) of 2017, extended a Compensatory Loan to the Republic of Tunisia with the value of AAD 18.532 million (equivalent to about US$ 78 million), representing 100 percent of the country’s share in the Fund's paid-up capital in convertible currencies. The loan amount was withdrawn in one tranche after signing its agreement. The loan came within the framework of contributing to meeting the needs of the country’s external financing during 2017, considering the high food import bill due to the rise in international food prices.
The Kingdom of Morocco
- Automatic Loan 2020
The Fund extended an Automatic Loan to the Kingdom of Morocco with the amount of AAD 30.844 million (equivalent to about US$ 127 million), representing 75 percent of the country’s share in the Fund’s paid-up capital in convertible currencies, to assist the country in facing the challenges of the Covid-19 pandemic, including the unfavorable repercussions on productive activities, tourism revenues, trade movement and investment flows. The loan amount was withdrawn in one payment during the year 2020 after signing its agreement.
The Republic of Sudan
- Compensatory Loan 2019
The Fund, pursuant to the Board Executive Directors’ resolution number (2) of 2019, extended a Compensatory Loan to the Republic of Sudan with the amount of AAD 27.4 million (equivalent to about US$ 115 million), representing 100 percent of the country’s share in the Fund’s paid-up capital in convertible currencies. The loan contributed to financing the balance of payments deficit during 2019, in light of the high current account deficit due to the decline in agricultural and livestock export revenues. The loan amount was withdrawn in one tranche during 2019 after signing its agreement.
The Islamic Republic of Mauritania
- Compensatory Loan 2016
The Fund, pursuant to the Board of Executive Directors’ resolution number (1) of 2016, extended a Compensatory Loan to the Islamic Republic of Mauritania, amounting AAD 12.340 million (equivalent to about US$ 50 million), and representing 100 percent of the country’s share in the Fund’s paid-up capital in convertible currencies. The loan contributed to the financing of the balance of payments deficit during 2016. The balance of payments deficit was due to the rise in the current account deficit, resulting largely from the decline in the proceeds of the main Mauritanian exports during the mentioned year, caused by falling international prices. The loan amount was withdrawn in one payment during 2016 after the signing of its agreement.