Dr. Yassir M. Alobaid
The problem of external debt is one of the challenges that impose itself on the Sudanese economic crisis, which must be overcome in order to establish a fertile environment that supports the sustainability of high economic growth.
The accumulation of foreign debts is considered a major obstacle to the Sudanese economy in facing the impact of financial shocks and imbalance in the macroeconomic structure, especially since the external debt has exceeded the level of sustainability.
The accumulation of the principal of debt and contractual and penal benefits began with the emergence of the international debt crisis in the mid-eighties of the last century, and stopped all new loans flows.
The size of Sudan’s debt in 1993 amounted to $ 16,321 billion, and penal and contractual interest represented more than 70% of the original debt amounting to $ 7,234 billion at the time.
Due to the stopping of loan flows from international and regional institutions and donor’s countries, economic and social development projects and infrastructure had to be stopped, and the implementation of projects financed from these loans slowed down, and this affected the country’s ability to repay its obligations with international financial institutions, which exacerbated the problem of sustaining the accumulated debt, reaching a total external debt, in the year 2010, of about 37,805 billion dollars, which increased to 39,800 billion dollars by the end of 2011, reaching about 64 billion dollars by 2020.
Most of these increases are owed to debt fatigue and penalties from delaying payment, knowing that the original debt is only 16,300 billion dollars and the rest is interest imposed by international institutions.
The Importance of Financing
Some studies conducted by the World Bank and some United Nations organizations concerned with fighting poverty in Sudan showed that there is a close relationship between the ability to access sources of finance and the fight against poverty in Sudan through financing capital goods to build the infrastructure for education, health services, means of livelihood, etc…
The study confirmed that the increase in growth in 70 developing countries led to a decrease in the poverty rate to 3%. The services provided by financial sector institutions in developing countries also affected the growth of business sector institutions in terms of innovation and investment in achieving balance.
Access to international financing institutions, Foreign Direct Investment, and international banks – both direct and conservative – requires a solid plan to mobilize internal and external resources, which need to arrange the internal house and apply financial governance to accommodate the movement of national and transcontinental companies, determine priorities for the optimal utilization of local resources, and conduct studies for the economic, technical and environmental feasibility, especially if the quality of the conditions for the movement of the external account is an important indicator of the movement of capital and foreign investment.
As the active movement of capital leads to reviving the national economy and creating a boom in the movement of the national banking system, the financial sector in the country must also contain the deficit, especially since the most important indicators of weak foreign assets are the decline of the total external assets of the economy to the total of external obligations in order not to expose the economic conditions to financial risks.
These foreign assets and liabilities include the liabilities and assets of the Central Bank and commercial/specialized banks.
What is Required
The ability of the Sudanese banking system to meet the requirements of the plan to mobilize internal and external resources needs integration and keeping pace with the implementation stages of the resource mobilization plan between structural reforms aimed at achieving safety and banking governance and the need to add flexibility to monetary and financial policies and the policies of buying, selling and exporting gold.
Here is the balance and compatibility between policies and interim goals with the structural adjustment program for the economy, including reforming the financial system conditions as part of the components and inputs of the comprehensive program for resource mobilization.
Current situation of financing investments in Sudan must be studied well, as there are great opportunities to revitalize the available and existing investments at the public and private levels, although it suffers from structural difficulties related to the form of resources and the expected financial flows that are hoped to take place from international financial institutions and some foreign companies in transit.
The rapid and sustainable return to growth in Sudan requires modernization of financial sectors and diversification of their tools internally and externally.
Rapid reforms must be made to place these sectors in acceptable standards and make them attractive for investment and private savings (resident, non-resident and international) by working to attract Sudanese money, remittances and savings of expatriates, and activating social security funds and pension funds by making measures that urge coverage of risks and establishing regional partnerships with the Gulf countries, especially sovereign funds with very large surpluses of funds, establishing joint investment funds and savings funds, activating the banking market in addition to expanding the financial market, etc…
Hopes for the Future
In the international and regional financial environment, it extends to the core of knowledge and the awareness of the garden within it.
The global financial context is prepared for this and in a way that helps with the emergence of a new economic power that seeks to diversify its companies, and Sudan is more prepared for that, especially since its land is rich in resources and natural resources, and this fertile atmosphere must be invested in focusing on new axes for investment and international exchanges in particular and accompanied in a large way South-South countries, where some of them are characterized by great vitality in direct trade exchanges.
Sudan will become more attractive, especially after developing legal and regulatory frameworks and good governance, enhancing economic freedoms and modernizing the fiscal and financial administration while providing real opportunities for growth and guaranteed profits for investments in strategic sectors such as the technology sector.
That and the telecommunications, infrastructure, energy, agriculture, financial markets, tourism, and the real estate sectors; especially since there are sectors that are still virgin in Sudan, such as cutting commercial services to support investments and medium and small-term financing and gradually attracting capital and technology to enhance the mobilization of resources to create sustainable growth in the manner of emerging economies in Asia, Brazil and South Africa, which are considered as a part of the BRICS countries.