This archive report was first published on 30 June 2021.
On June 29, 2021, the International Monetary Fund (IMF) made a significant move in support of Sudan's economic recovery by approving a substantial debt relief package worth nearly $56 billion. This decision comes as part of the Highly Indebted Poor Countries (HIPC) initiative, which aims to provide relief to countries struggling with overwhelming debt burdens.
As a result of this approval, Sudan will see a significant reduction in its foreign debt burden, from an estimated $56.6 billion to $6 billion over the next three years. This substantial debt relief will be made possible through the HIPC program, which will provide Sudan with the necessary financial support to stabilize its economy.
Additionally, the IMF has committed to providing Sudan with a new funding of $2.5 billion over three years under its Extended Credit Facility. This funding will be used to support Sudan's economic recovery and help the country overcome its current economic challenges.
One of the key factors that led to this decision was Sudan's successful clearance of its $1.4 billion arrears to the IMF. As a result, the IMF immediately disbursed $1.4 billion of the total debt relief package to repay France, with the remaining amount to be disbursed over the next 39 months.
Sudan's economic crisis is a pressing concern, with inflation rates reaching nearly 400%, a shortage of basic goods and services, and a rise in food insecurity. The country's economic woes can be attributed to the massive arrears accumulated under the previous regime of President Omar al-Bashir, who was ousted in April 2019.
According to a March report by the IMF, Sudan owed a significant amount to various countries and organizations, including $19 billion to Paris Club countries and the same amount to non-Paris Club countries, such as Kuwait, Saudi Arabia, and China, as of the end of 2019. The country's large commercial debts of at least $6 billion are roughly matched by what it owed to multilateral organizations.
France has also announced plans to cancel Sudan's $5 billion debt, providing further relief to the country's economic situation.
