Sudan has to pay back around $16 billion owed to creditors before it would be considered for more lending or debt relief, the World Bank has said. This comes on the back of Prime Minister Abdalla Hamdok’s call for relief so that Khartoum can access loans from international lenders to revive the ailing economy.
“The government needs to pay arrears to financial institutions and sovereign creditors of between $15 billion and $16 billion,” said Kari Turk, the World Bank’s Country Director for Ethiopia, Eritrea, Sudan, and South Sudan, during a recent stakeholder dialogue in Khartoum.
Turk added that the International Monetary Fund (IMF) is willing to support Sudan’s poverty and economic reforms. However, there has to be a commitment to pay arrears. “Reform is required at all levels,” she said. “A commitment not to engage in other debts and the sustainability of the economy are a necessary component of debt relief.”
Sudan’s severe economic crisis is believed to have been triggered when former President Omar al Bashir implemented reforms recommended by the World Bank. Measures such as the removal of subsidies on basic items, cost-sharing in social services and public sector wage reforms triggered nationwide demonstrations that lasted for months, eventually leading to the removal of Bashir.
Hopes of reviving the economy have increased with the new government, The East African says. Hamdok, who came to power in August, has pledged to improve living conditions, reform the civil service and build the economy’s productive capacity.
Estimates suggest that Sudan needs up to $10 billion to fix its economy, 20 percent of which is to protect the local currency from being battered by international ones. But apart from humanitarian aid, Khartoum is not getting support from other international financial institutions presently.
Further compounding Sudan’s problems of renegotiating its huge debt – estimated at between $50 billion and 60 billion totally – is the reluctance of the United States (U.S.) to remove the country from the state sponsors of terrorism blacklist.
Sudan was designated as a sponsor of terrorism back in 1993, based on allegations that former President Bashir’s government was supporting groups considered by the U.S. to be terrorists.
Bashir, who is wanted by the International Criminal Court (ICC) over atrocities committed in Darfur, was ousted in April. A transitional government has since been installed, which is expected to return the country to democratic rule over a three-year transition period.
Being on the blacklist means American companies, as well as non-U.S. companies that have business ties with Washington, cannot invest in Sudan. It also makes Sudan ineligible for the desperately-needed financing from lenders such as the IMF and the World Bank.
Prime Minister Hamdok while speaking at the recent United Nations General Assembly asked for Sudan to be removed from the list. This joined similar calls by other countries such as France and Saudi Arabia as well as humanitarian agencies.
“I want to reiterate that Sudan has never been a sponsor of terrorism,” Dr. Hamdok said when he addressed the 74th session of the assembly. “It should be removed from this list as it is distracting us from the urgent business of peacebuilding and reconciliation.”
While removal would potentially open the door for desperately-needed foreign investment, the U.S. earlier this month said it was not yet ready to heed international calls for Sudan to be lifted from the blacklist.
Considering this, and the new condition by the World Bank for renegotiation of its debts, Sudan faces a long road to economic recovery and re-integration in the global financial system.