South Sudan's central bank says it will use half of the 174.2 million dollars loan from the International Monetary Fund (IMF) to support the budget and cover civil servants' salary arrears.
On Wednesday, the IMF approved a disbursement of $174.2 million to South Sudan under the Rapid Credit Facility (RCF) to address economic challenges due to a fall in international oil prices, the impact of Covid-19, and flooding that affected parts of the country.
South Sudan was expected to receive the amount today, to be refunded in bits without interest rate according to Central Bank Governor Dier Tong.
Addressing journalists during a press conference in Juba on Thursday, Governor Tong said they will use half of the loan for paying salaries.
“We have agreed with the IMF that half of this amount 174.2 will be used for budget support to pay salary arrears. The other part will remain with the Central Bank for the balance of payment support, and the other half will be used by the Central Bank to stabilize the exchange rate and also to stabilize the market,” Governor Tong said.
He notes that they are working on several foreign exchange market reforms to reduce current distortions and inflation.
“Definitely this loan and the other half that I said, the half that is going to the finance, the half that is coming to us is meant to fill our reserves. So it will have a significant impact on our balance of payment in that sense. It will also have a significant impact in reducing inflation,” Tong echoed.
The Bank of South Sudan also says its current primary objective is to unify the official exchange rate with the market rate.
Both civil servants and the army have continued to work for at least six months without salaries. Tong says they plan to clear all arrears and pay civil servants monthly by next year.
A fall in global oil prices, the impacts of the Covid-19 pandemic, desert locusts invasion, and the flooding have continued to weaken South Sudan’s economy.
This is the second loan South Sudan got from the International Monetary Fund since joining it in 2012.
Late last year, South Sudan got its first loan of $52million from the IMF to help stabilize its ailing economy.