Sudan to access $ 2 billion in World Bank grants after paying off debts | Debt News

Sudan continues to seek relief of some $ 56 billion in external debt owed to international financial institutions, official bilateral creditors and commercial creditors.

Sudan has settled its debts with the World Bank after nearly three decades, bringing the heavily indebted African country closer to a much-needed international debt relief program by the World Bank and the United States Treasury Department. , the World Bank and the US Treasury Department announced on Friday.

World Bank President David Malpass said the move enabled Sudan to access nearly $ 2 billion in grants from the Bank’s International Development Association (IDA). The Sudanese government said $ 635 million would be immediately available for budget support and social spending.

The clearance of arrears, which date back to the years of former autocrat Omar al-Bashir and earlier, was made possible by a $ 1.15 billion bridge loan from the United States government.

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

“We thank the US government for facilitating this clearance process, which also supports our move towards more comprehensive debt relief,” Ibrahim said.

US Treasury Secretary Janet Yellen said Sudan deserves to be commended for implementing what she called a “robust economic reform agenda” that underpins the country’s transition to regime. democratic after three decades of international isolation.

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

The mountain of debt remains

Sudan’s civilian-led transitional government seized power in April 2019 after the overthrow of al-Bashir, ending years of international isolation.

The country is seeking relief of some $ 56 billion in external debt owed to international financial institutions, official bilateral creditors and commercial creditors.

About 85 percent of that amount is past due.

A source familiar with the matter said that Sudan’s overall debt includes about $ 2.8 billion owed to the World Bank, the International Monetary Fund (IMF) and the African Development Bank; $ 19 billion owed to Paris Club countries from official bilateral creditors; $ 21 billion to non-Paris Club members; and the rest to commercial creditors.

Sudan has made progress on a staff-watched program with the IMF, but its economy remains “extremely fragile” with inflation over 300 percent and commodity shortages, the IMF said this month.

The latest move brings Sudan closer to the first phase of a larger debt relief program under the Heavily Indebted Poor Countries (HIPC) Initiative as early as mid-2021, a source said. of the process at the Reuters news agency.

The US loan announced on Friday had been outstanding for months after the United States removed Sudan from its list of “sponsor states of terrorism” at the end of December.

Sudan fulfilled one of the main conditions demanded by international donors in February by taking steps to unify its official exchange rates and those of the black market.

“They undertook a huge level of reform in a very short period of time,” the source said, noting that this included painful reforms such as ending fuel subsidies.

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

“This victory belongs to the Sudanese people who shoulder the burden of economic reforms, which have been made difficult by the COVID-19 pandemic,” the Sudanese cabinet said.

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