Sudan’s Economic Resurrection Gets Boost as Debt Relief Beckons

Mohammed Alamin and Alonso Soto, Bloomberg News

The International Monetary Fund (IMF) headquarters in Washington, D.C., U.S., on Saturday, April 3, 2021. The IMF next week will upgrade its forecast for global economic growth, driven by improved outlooks for the U.S. and China, while warning of high uncertainty and new virus strains that threaten to hold back the rebound. Photographer: Samuel Corum/Bloomberg , Bloomberg

(Bloomberg) -- Sudan got assurances billions of dollars of external debt may be canceled after the clearing of its arrears with the International Monetary Fund, a boost for the impoverished African country emerging from decades of dictatorship.

France, Germany and Norway were among countries signaling their readiness to forego repayment at a Monday conference in Paris that showcased Sudan’s return to the international community. The removal of IMF arrears, facilitated by a $1.5 billion bridge loan from France, clears the way for Sudan to achieve broader relief from global creditors under the so-called Highly Indebted Poor Countries initiative.

Sudan, where long-time ruler Omar al-Bashir was ousted in 2019 amid a popular uprising, is planning sweeping reforms to rescue an economy wrecked by decades of corruption, mismanagement and sanctions. Prime Minister Abdalla Hamdok estimates total debt at $60 billion.

The country’s real gross domestic product contracted 3.6% in 2020, according to the IMF, while inflation is running at over 300%, piling pressure on a transitional government that’s an uneasy coalition of civilian and military figures.

President Emmanuel Macron said late Monday at the conference that France was “in favor of canceling debt close to $5 billion.” Norway announced the cancelation of its bilateral debt in a statement, while Germany’s foreign minister tweeted that Berlin would cancel debts of 360 million euros ($440 million).

Sudanese state TV reported Monday that Saudi Arabia had “affirmed its readiness” to forgive $4.5 billion in debts, without giving any more details. Saudi Arabia’s state news agency said only that the kingdom is providing a $20 million grant to cover part of Sudan’s financing gap with the IMF.

Sudan’s other creditors include China and Kuwait.

Further support came via a World Bank pledge of $2 billion in grants within 10 months and $700 million in financing from the African Export-Import Bank for power and telecommunications projects.