International Monetary Fund on Monday said it stood ready to help Sudan as it moves toward a broader package of debt relief after Washington’s removal of the country from its list of state sponsors of terrorism.
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Carol Baker, IMF mission chief for Sudan, said removal of Sudan from the US list eliminated one of the hurdles toward debt forgiveness under the Heavily Indebted Poor Countries (HIPC) initiative launched in 1996.
But Sudan remains in arrears to the IMF, the World Bank and the African Development Bank, and cannot receive fresh funds from them until it clears up those debts, she said.
To reach that point, four other key conditions must be met that are outside the control of the IMF, including strong performance by Sudanese authorities under an IMF staff-monitored economic program for at least six months, Baker said.
In addition, Khartoum needs the support of a majority of donors, including the US, to clear its debts; a plan to settle arrears with the international financial institutions; and an external debt reconciliation that clarifies what debt is owed by Sudan to whom and on what terms.
“These steps will take time and will require patience and diligence from the Government and its partners in the international community,” Baker said, adding, “I am hopeful that these steps can be achieved.”
The IMF is slated to carry out its first formal review of Sudan’s 12-month program of economic reforms in February 2021, following a staff visit in November.
The IMF and the World Bank launched the HIPC initiative to ensure that no poor country faces a debt burden it cannot manage. But the process can take years to complete.
Sudan, saddled by $60 billion in external debt, urgently needs financial help to reorganize its economy. Inflation hit 167 percent in August and the currency has tumbled as the government prints money to subsidize bread, fuel and electricity.