It said the practice typically involves taking substantive short-term loans, typically two to three months long, from oil companies or the oil traders who are paid in kind.
The IMF chief of mission for South Sudan, Jan Mikkelsen, said more investment opportunities were coming up as more oil field reopened.
“There are ongoing investments to reopen more oil wells in the fields that have not been producing because of the war and it is anticipated that production could increase further, possibly by another 25,000 barrels per day, possibly by the end of the year,” Jan said in a statement seen by APA on Sunday.
The IMF estimated that 87 percent of South Sudan’s budget was funded from oil revenues.
“It confuses management of the budget, because it is difficult to anticipate the exact revenues that come to the budget after repayment of advances”.
He added that the advances were expensive in terms of fee and interest payments.
IMF said it was seeing South Sudan’s oil output rising as wells reopen in most designated blocks in the country.
Earlier, South Sudan’s oil Minister Ezekiel Lol said the production would increase by the end of the year as government plan to open more wells.
South Sudan is one Africa’s youngest countries with a very rich oil reserve.
The country plunged into civil conflict in 2013 hindering production of its crude oil.
The government and rebel leaders signed a peace accord in September as they sought to end the war.
The conflict halved the country’s oil production to about 120,000 barrels per day, down from 350,000 barrels at South Sudan’s independence in 2011.
Since signing the deal, oil production had risen to 145,000 barrels a day, according to the IMF.