Sudan steps closer to debt relief after second IMF review
The International Monetary Fund (IMF) said it has reached a staff level agreement with Sudan, a step that brings the North African country closer to debt relief.
A strong sustained performance under the staff-monitored program is one of the conditions for Sudan to reach the “decision point” to qualify for debt relief under the Very Poor Country Initiative. indebted (HIPC), the Washington-based lender said in a statement.
“Despite very difficult conditions which are exacerbated by the Covid-19 pandemic, the Sudanese authorities continue to make sustained progress in their ambitious reform agenda,” said Carol Baker, IMF chief of mission.
The agreement following the completion of the fund’s second and final review under the staff-controlled program is subject to IMF management approval, the statement said.
With this review, Sudan moved closer to qualifying for the World Bank and IMF HIPC Initiative aimed at canceling most of its external debt, which stands at $ 49.8 billion. Swift action on the measures required under the IMF staff-monitored program, which began in September, could see Sudan benefit from debt relief by the end of June, the IMF said more early this year.
The adoption of the second IMF review “opens the way to [Sudan] to reach the HIPC decision point which will hopefully translate into substantial debt relief for [Sudan] as well as new lines of credit, Gebreil Ibrahim, Sudanese Minister of Finance and Economic Planning, said on Twitter.
Sudan faces multiple economic challenges following the political upheavals that ended the reign of former President Omar Al-Bashir and the start of the Covid-19 pandemic.
Its economy, which contracted 8.4% last year, is expected to shrink another 2.3% in 2021, according to the IMF.
To qualify for debt relief, Sudan has established a six-month record of satisfactory performance under the current program monitored by IMF staff. It also removed large fuel subsidies and broadened the tax base in September.
In March, the IMF urged the authorities to clear their arrears to multilateral creditors or agree on a strategy to do so.
The United States removed Sudan from its list of terrorist sponsoring states in December after about three decades.
This improved the country’s prospects of receiving much-needed external financing. In December, the United States announced it would provide the World Bank with a $ 1.15 billion bridging loan to help clear the country’s arrears to the institution.