Sudan hopes to entice investors and secure pledges to pay off its arrears to the International Monetary Fund at a conference in Paris on Monday, paving the way for wider relief on the external debt of at least $50 billion.
Sudan built up huge arrears on its debt, but recently made rapid progress towards having much of it forgiven under the IMF and World Bank’s Highly Indebted Poor Countries (HIPC) scheme.
If IMF members pledge to cover Sudan’s $1.33 billion in arrears to the fund, it is expected to move forward to a “decision point” that would unlock the HIPC process in June and allow Sudan access to cheaper international financing.
Sudan recently cleared arrears to the World Bank and the African Development Bank with bridge loans from Western states.
Sudan is emerging from decades of economic sanctions and isolation under former President Omar al-Bashir, who was ousted by the military in April 2019 after an uprising.
A transitional government appointed under a military-civilian power-sharing deal is trying to pull the country out of a deep economic crisis with inflation at over 300% and shortages of basic goods.
Key recent reforms under an IMF monitoring program include cutting fuel subsidies and sharply devaluing the currency.
One of the Paris conference’s goals is to drum up investment interest. Projects worth billions of dollars in energy, mining, infrastructure, and agriculture would be on offer, said Khalid Omar Youssef, Sudan’s minister for cabinet affairs. Enticing international banks after financial sector reforms is another key objective.
On debt, the conference aims to deal with arrears to international lenders before moving on to bilateral creditors, a French presidency official said. Of Sudan’s bilateral debt, about half is with Paris Club members. Some 10-14% of its external debt is commercial debt, an unusually high proportion, an IMF official said.
China, a major creditor, has reduced and forgiven some debt and will push for the international community to do the same, said Hua Chunying, a foreign ministry spokeswoman. Saudi Arabia, another big creditor, has also said it will press for a broad agreement on debt.
The Conference Kick-off
The French capital, Paris, has witnessed yesterday (Monday) the kick-off Paris International Conference to Support Democratic Transition in Sudan. The conference aimed at completing Sudan’s normalization with the international community besides enlightening the foreign investors on the economic reforms of the Sudanese government, besides displaying the investment potentials in Sudan.
France announced that it will lend Sudan US$1.5 billion to help in paying off its massive debt to the International Monetary Fund as it emerges from decades of authoritarian rule.
According to the French Finance Minister, President Macron will confirm later today that France will provide the US$1.5 billion bridge loan to clear Sudan’s arrears to the IMF.
He added at the opening of an international conference aimed at helping Sudan in its transition to a democratic government.
Sudan’s Prime Minister Abdalla Hamdok is attending the Paris conference, seeking help in paying off a US$60 billion foreign debt bill and also hoping to secure investment deals.
Hamdok is pushing to rebuild and reform a crippled economy and end Sudan’s international isolation under former strongman Omar Al-Bashir, whose three decades of rule were marked by economic hardship and international sanctions.
On Tuesday, French President Emmanuel Macron will join Hamdok and other African leaders for an economic summit for the continent, hoping to fill a financing shortfall of nearly $300 billion caused by the Covid-19 pandemic. Sudan’s debts to the Paris Club, which includes major creditor countries, are estimated to make up around 38 percent of its total $60 billion foreign debt. Sudan was taken off Washington’s blacklist of state sponsors of terrorism in December, removing a major hurdle to foreign investment.
Meanwhile, Prime Minister, Abdalla Hamdok hailed the efforts of France in supporting the democratic transition in Sudan, expressing appreciation to the French President for organizing the conference. Hamdok said in his addressing the opening session of the conference that Sudan is heading to peace, democracy, and good governance despite the challenges, pledging to achieve the aspirations of the Sudanese people.
He pointed out that Sudan needs more support to achieve the transitional period goals, including achieving sustainable peace through economic and security reform. And pledged to go ahead overcoming the challenges especially the economic challenge represented by the decline in taxation (less than 66) and the foreign debts which amount to some US$60 bn, besides the urgent needs.
He said that removing Sudan from the SST list should be utilized to the maximum, affirming their intention to continue the reform track, pointing out the challenge of COVID-19, expressing appreciation to the countries which provided Sudan with the vaccine.
On the peace issue, Hamdok said that they entered into accords with the SRF in Juba, pointing out the importance of joining the non-signatories (al-Hilu and Abdulwahid) to the peace process, lauding the role of France in this regard.
Hamdok pointed to the economic reforms including taxation and the efforts of joining the WTO to boost the economic growth opportunities.
He also spoke about the reforms in Health and minerals sectors, besides the formation of the anti-corruption commission. Expressing the aspirations of the Sudanese people in international investments.