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The two international financial institutions determined, back in June 2021, that Sudan had taken the necessary steps to begin receiving debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. The process made Sudan eligible for almost $50bn in relief on its $56bn in debt as well as $2.5bn in IMF funding to help enhance competitiveness, transparency and accountability in an economy dominated by the military and security services.
The following month, the Paris Club signed a multilateral agreement, with Sudan agreeing to write off $14.1bn in debt.
In June 2022, however, the informal group of international creditors said it had suspended the debt removal process in the wake of the 25 October 2021 coup. The World Bank, for its part, took action right after the coup, suspending all aid to Sudan, while the HIPC process remains on pause.
“After the removal of the Transitional Government of Sudan by the military forces, the signature of the bilateral agreements implementing this multilateral one is suspended until the situation improves and the implementation of the IMF program resumes,” the Paris Club said in a statement.
In his address to the UN General Assembly in New York last month, General Abdel Fattah al-Burhan, the head of the military-led ruling Sovereign Council, urged Sudan’s creditors to resume the foreign debt relief process. This past week, Finance Minister Gibril Ibrahim brought the same message to Washington.
“Sudan is here with a regional delegation to see how [we] can […] lift the pause that was put in place as a result of political developments in October 2021,” Ibrahim tells The Africa Report. “We’re talking to the international financial institutions, as well as regional institutions, to reconsider the situation in the country.”
Ibrahim says Khartoum is upholding “all the economic reforms” undertaken under the extended credit facility and the HIPC initiative.
“We’re working hard to meet the requirements,” he says. “But unless we have some support from the international community, it will be difficult to continue to uphold the reforms. That is one of the issues we are trying to tell our colleagues in the World Bank and in the IMF.”
Running out of patience
Sudan, he says, has not been spared by the food, fuel and fertiliser shocks aggravated by Russia’s invasion of Ukraine.
“We’re not living on Robinson Crusoe Island,” Ibrahim says. “Sudan is part of the world economy and we are importing inflation as well.”
With energy prices rising, popular pressure is growing to restore the costly fuel subsidies that Sudan scrapped last year as part of its IMF-backed reform programme.
“You can’t count on the patience of the population indefinitely,” Ibrahim says. “[…] at some point, they might say sorry, minister, we don’t want these policies, so they will ask for subsidies, and then maybe a newcomer will go back to subsidies as well.”
He says: “We think that the World Bank in particular should resume work on those projects. That has nothing to do with politics. They are purely for the population and the most affected section of the population, who are the most vulnerable and the poorest; so we do think it is high time for the international institutions to reconsider the temporary sanctions put on Sudan as a result of political developments in October 2021.”
Sudan also wants help in taming inflation.
“We’re trying to do our best to stabilise exchange rates, also to bring down inflation rates and luckily, for the moment, we succeeded in doing that,” Ibrahim says. “But we’re not sure whether we can continue doing that for long, unless we get some support for the international community. […] We are looking at […] whether the IMF [and] the World Bank can open new windows to support food security for economies in the poorest countries, the most vulnerable countries in the world; so we are here to discuss all those issues and hopefully, we’ll come up with some results.”
Sudan may not be officially ineligible for support, he says, but the country’s pariah status makes donors hesitant to help.
“Maybe the shareholders in the IMF and the World Bank may not like that to happen, unless they see […] political developments in Sudan in the direction they wish,” he says. “The thing is well-connected.”
“If these tensions continue, definitely, it makes it hard for us to keep the reforms going on, and to maintain what we are trying to do right now to bring down inflation at the moment to stabilise the economy, to minimise monetising or borrowing from the central bank. All the efforts we are trying to make may die or be futile if we can’t have some support from the international community. That’s why we’re here to tell friends in the IMF and the World Bank to reconsider their position and to be more time-sensitive.”
‘Not a time-bound process’
Jihad Azur, the director of the Middle East and Central Asia Department at the IMF, says the Fund has only had a “limited engagement” with the Sudanese government since the coup and remains in “pause”. Only after the country completes its HIPC process will the fund be able to provide financial support.
“The HIPC process is a milestone type of process. It’s not a time-bound process. There are a certain number of important reforms and measures that need to be implemented and that were part of the problem set in order for Sudan to reach what we call the completion point and have debt relief concluded,” Azur says. “We urge the authorities to accelerate both the reform agenda and the transition in order to address the issues that have been compounded by the food security shock, the climate issues.”
The IMF, Azur says, does not tie financing to any specific political conditions, but in the case of countries, such as Sudan and Somalia, certain conditions need to be met.
“The conditions … require them to restore good governance, do all these reforms, address some of the issues in the programme that got delayed,” Azur tells The Africa Report. “[in] the end, you need some financial assurances.”
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