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The International Monetary Fund approved a $2.5 billion extended credit facility for Sudan and said the nation is eligible for debt relief under an initiative for poor countries, a step toward helping it clear some of the estimated $60 billion it owes to foreign creditors.
Sudan has reached the so-called decision point in the process for Heavily Indebted Poor Countries, IMF Sudan Mission Chief Carol Baker said in a call with reporters Tuesday. The announcement came after Sudan cleared long-standing arrears to the Washington-based lender, the World Bank and African Development Bank.
“Sudan will be, by three-and-a-half times, the largest HIPC case,” Baker said. “The total amount of debt relief expected to be delivered at the completion point, the end of the HIPC process, is $50 billion.”
Altogether, Sudan's external debt burden is expected to fall from about $56 billion, or 163% of gross domestic product as of the end of 2020, to $6 billion once the completion point is reached and with the participation of all creditors, the IMF said in a statement.
The extended credit facility will last for 39 months, Baker said.
International Isolation
Sudan, where long-time dictator Omar al-Bashir was ousted amid a 2019 popular uprising, is racing to turn around an economy wrecked by decades of mismanagement, sanctions and isolation from global markets. Inflation hit 379% in May as authorities enact a re-balancing of the currency and battle shortages of key commodities.
Prime Minister Abdalla Hamdok described Tuesday as a “historic day” and said Sudan will hold talks with creditors from the Paris Club and others in the coming weeks. “The transitional government has secured a way to forgive Sudan's debts so the burden can be lifted in a very short period,” he said in a statement.
Finance Minister Gibril Ibrahim told Bloomberg this month that Sudan is seeking to clear up to 90% of its overseas debt in the near future, with the remaining commercial arrears taking longer.
Earlier, the U.S. Treasury Department said the U.S. aided Sudan in clearing some $1.4 billion of arrears to the IMF.
It provided Sudan same-day bridge financing of about $1.15 billion in March, at no cost to U.S. taxpayers, the Treasury said in a statement.
“These steps will unlock much-needed financing and will help build the foundation for poverty reduction, inclusive development, and economic growth,” Treasury Secretary Janet Yellen said.
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