March 26, 2021 (KHARTOUM) – Sudan has fulfilled needed qualifying conditions for clearing its $50 billion external debt under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative, said the World Bank and the International Monetary Fund (IMF) on Friday.
On Friday, the US Treasury Department provided a loan bridge of $1.15 billion to clear its arrears at the World Bank and be eligible to borrow from the World Bank’s International Development Agency (IDA).
This step was the last requirement for Sudan to be the 38th and largest country to qualify for HIPC relief.
Following the statement of the U.S. Treasury, the World Bank and the IMF issued a joint statement to praise the difficult reforms the Sudanese government implemented for this qualification.
The World Bank and the IMF “agreed that Sudan could be eligible for assistance under the Enhanced HIPC Initiative based on the preliminary assessment,” read the joint statement.
“This assessment is an important step towards forgiveness by all creditors of most of Sudan’s total external debt, which was estimated at US$49.8 billion at the end of 2019,” further stressed the World Bank and the IMF.
“Sudan could qualify in the coming months to have nearly all of its estimated $50 billion in external debt cleared. After fulfilling its requirements,” said the World Bank on Friday, after the U.S. Treasury’s announcement.
The debt relief will enable the Sudanese government to implement economic reforms to address major macroeconomic imbalances with the support of the international financial institutions to achieve inclusive growth.
In Khartoum, the Sudanese prime minister Abdallah Hamdok hailed the country qualification to borrow from the IDA for the first time in 30 years saying it represents a “major victory” on the path towards debt relief.
Hamdok added that the arrear clearance allows giving his country immediate access to $635 million grants from the World Bank group including $215 million in direct budget support and $420 million for the family support program.
Also, the prime minister disclosed that Sudan and the World Bank will start discussions in April to get $2 billion grants to finance infrastructure, health, education, agriculture projects in the next two years.
Despite strong internal opposition, the Hamdok government liberalized the Sudanese pound, cancelled subsidies to fuel and a number of basic commodities. These challenging reforms were part of the steps to be taken for the HIPC’s qualification.
Sudan’s removal from the terror list on 14 December 2020 was needed before moving towards HIPC eligibility.
Next May, France will hold a conference to encourage public and private international investors to work in Sudan.