Sudan has settled its debts with the World Bank after nearly three decades, moving the heavily-indebted African country closer to a much-needed international debt relief package, the World Bank and US Treasury Department said on Friday.
World Bank President David Malpass said the move meant Sudan could now access nearly $2 billion in grants from the Bank’s International Development Association (IDA).
Payment of Sudan’s arrears was made possible through a $1.15 billion bridge loan from the US government.
Sudan’s finance minister Gibril Ibrahim said clearance of the arrears would enable the country to secure financing from the World Bank Group and other multilateral institutions and move forward with transformative development projects.
“We are thankful to the US government for facilitating this clearance process, which also supports our drive towards more comprehensive debt relief,” Ibrahim said.
US Treasury Secretary Janet Yellen said Sudan deserved credit for implementing what she called a “robust economic reform program” that underpins the country’s transition to democratic rule 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. “It’s an action that will move Sudan one step closer to securing much-needed debt relief and help the nation reintegrate into the international financial community.”
Sudan’s Civilian-Led Transitional Government took power in April 2019 after the overthrow of veteran Omar al-Bashir, ending years of international isolation.
The country is seeking relief from some $56 billion in external debt owed to international financial institutions, official bilateral creditors and commercial creditors. About 85% of that is in arrears.
Sudan has also made progress on a staff-monitored program with the International Monetary Fund, but its economy remains “extremely fragile” with inflation of up to 300% and shortages of basic goods, the IMF said this month.
The latest move means Sudan could reach the so-called “decision point” for the first phase of a broader debt relief package under the Heavily Indebted Poor Countries initiative as early as mid-2021, said one source familiar with the process.
The US loan announced on Friday has been in the works for months after the United States removed Sudan from its state sponsor of terrorism list in late December.
Sudan fulfilled one of the main conditions demanded by international donors in February, when it took steps to unify its official and black-market exchange rates.
“They have undertaken an enormous level of reform in a very short period of time,” said the source. “We hope that they’re able to continue that progress in the coming weeks and months.”
Helping Sudan settle its arrears with the World Bank would help show the Sudanese people that painful reforms such as ending fuel subsidies were paying off, the source added.
Sudan’s overall debt includes about $2.8 billion owed to the World Bank, the International Monetary Fund and the African Development Bank; $19 billion owed to countries in the Paris Club of official bilateral creditors; $21 billion to non-Paris Club members; and the rest to commercial creditors, according to a source familiar with the matter.
