June 29, 2021 (KHARTOUM) – Sudan’s foreign debt will be reduced to $6 billion from $56 when the IMF-monitored economic reforms come to an end within three years, said a joint statement released by the World Bank (WB) and the International Monitory Fund on Tuesday.
In a meeting held on Monday 28 June, the international financial institutions – IMF and WB – declared Sudan eligible for debt clearance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
Sudan is the 38thcountry to fulfil the required conditions to benefit from the HIPC process, known as the HIPC Decision Point. In about three years, and after completing a number of economic reforms the country will reach HIPC Completion Point and then its external debt will be reduced to $6 billion.
The joint statement disclosed that Sudan’s total external debt was estimated at $56.2 billion.
In line with the traditional debt relief mechanisms, Sudan’s debt will be reduced to $30.9 billion.
Application of additional debt relief under the enhanced HIPC Initiative will reduce this debt to $23.3 billion, which will be provided by official multilateral, bilateral, and commercial creditors added the statement.
Paris Club creditors have provided financing assurances for interim debt relief to Sudan, said the statement. The largest Paris Club creditors for Sudan are France, Austria, the United States, Belgium, and Italy.
Also, Multilateral Debt Relief Initiative (MDRI) from IDA and the African Development Bank would cancel all remaining claims at the Completion Point.
“Altogether, Sudan’s external debt burden is expected to fall from about US$56 billion (163 per cent of GDP) (…) as of end-2020 to US$6 billion (14 per cent of GDP) once the Completion Point is reached and with the participation of all creditors,” stated the IMF and WB.
In Khartoum, Prime Minister Abdallah Hamdok held a press conference to announce the confirmation of Sudan’s eligibility to receive debt relief under the enhanced HIPC Initiative.
“This decision is an important milestone which will support Sudan’s reform and development agenda and our efforts to move away from the past and foster better lives for our people,” said Hamdok.
“The journey leading to this decision required hard work, dedication and strong partnership with the international community. This is a big day for Sudan and reaffirms that all the efforts and sacrifices of Sudanese people are recognized and rewarded,” he added in a joint statement with the heads of IMF and WB.
Hamdok was criticized by the left forces for taking severe measures that negatively impacted vulnerable families. Also, he was blamed by several political groups for delaying these reforms which he had to implement soon after the formation of his first government.
The World Bank granted Sudan over $2 billion for poverty reduction and sustainable economic recovery.
This grant should be used to enhancing competitiveness, transparency and accountability; increasing investment in irrigation and agriculture to support sustainable livelihoods; supporting access to energy, water, health, and education; creating jobs; and creating entrepreneurship opportunities for women and youth, says the WB.