Sudan to receive $ 2BN in World Bank grants after debt settlement | Debt News

Sudan is still seeking relief from some $ 56bn in foreign debt owed to international financial institutions, official bilateral creditors and commercial creditors.

Sudan has settled its debt with the World Bank after nearly three decades, moving a heavily indebted African country closer to a much-needed international debt relief package, the World Bank and the Treasury said. United States Friday.

World Bank President David Malpass said the move meant Sudan could now receive nearly $ 2bn in grants from the Bank’s International Development Association (IDA). The Sudanese government said $ 635m would be immediately available for budget support and welfare spending.

Clearing the arrears, which go back to the years of former autocrat Omar al-Bashir and earlier, was made possible by a $ 1.15bn bridge loan from the US government.

Sudanese Finance Minister Jibril Ibrahim said the arrears would allow the country to access funding from the World Bank Group and other multilateral institutions and move forward with transformational development projects.

“We are grateful to the U.S. government for making this cleanup process possible, which also supports our drive towards more complete debt relief,” Ibrahim said.

U.S. Treasury Secretary Janet Yellen said Sudan deserved credit for implementing what she called a “strong economic reform program” that underpins the country’s transition to democratic governance after three decades of international isolation.

“The United States is pleased to support these efforts today by helping Sudan clear its arrears to the World Bank,” she said in a statement. Sudan will move one step closer to securing much-needed debt relief that will help the country re-integrate into the international financial community. “

There is still a mountain of debt

The civilian-led Sudanese transition government took power in April 2019 following the overthrow of al-Bashir, ending years of international isolation.

The country is seeking relief from some $ 56bn in foreign debt owed to international financial institutions, official bilateral creditors and commercial creditors.

About 85 percent of that is in arrears.

A source familiar with the matter said that Sudan’s total debt includes around $ 2.8bn to be paid to the World Bank, the International Monetary Fund (IMF) and the African Development Bank; $ 19bn to be paid to countries in the Paris Club of official bilateral creditors; $ 21bn for non-Paris Club members; and the rest for commercial creditors.

Sudan has progressed a program monitored by IMF staff, but its economy remains “very fragile” with inflation above 300 percent and a shortage of commodities, the IMF said this month. .

The latest move brings Sudan closer to the first phase of a broader debt relief package under the Incapacitated Poor Countries (HIPC) initiative as early as mid-2021, one source familiar with the process told a group Reuters news.

The U.S. loan announced Friday had been in the works for months after the U.S. removed Sudan from its “terrorist state supporter” list at the end of December.

Sudan met one of the key conditions demanded by international donors in February when it took steps to unify its official exchange rates and black market.

“They have achieved a major recovery phase in a very short period of time,” the source said, noting that this included painful reforms such as ending subsidies. fuel.

Electricity, fuel and bread have become more expensive in recent months in Sudan, as commodity shortages continue or worsen.

“This impact belongs to the Sudanese people who should be responsible for the economic reforms, which have been compounded by the COVID-19 pandemic,” the Sudanese cabinet said.