Sudan says IMF agreed to negotiate debt relief

May 20, 2010 (WASHINGTON) – The Sudanese government revealed today that the International Monetary Fund (IMF) agreed to start talks on the country’s outstanding debt but warned that any potential relief may take years to materialize.

Sudan’s state Minister for Finance and National Economy Lual Deng, in statement to state media described the IMF’s approval to begin negotiations as a “serious movement” and “promising start” towards resolving its heavy debt burden.

Deng said that Sudan’s external debt as of December, 31 2009 stood at about $35.68 billion. The figure he said was obtained through the efforts of a tripartite committee comprised of his ministry, central bank and the IMF.

Less than a year ago, Khartoum formally requested that the IMF establish a monitoring program (SMP) of the country’s economic performance and policies to achieve a set of goals including sustaining economic growth, maintaining macroeconomic stability, and rebuilding foreign exchange reserves.

In its latest SMP note, the IMF said that most of Sudan’s debt is in arrears and that it is not sustainable in the absence of debt relief.

The Sudanese official said that analysis shows that the original debt amounted to $15.4 billion, interest in arrears worth $3.8 billion and late payment penalty on the interest valued at $16.5 billion.

The total debt to non-members of the Paris Club was $13.3 billion with $11.2 billion to members of the Paris Club, $4.5 billion to commercial banks and $1.4 billion to international suppliers.

The major debtors of Sudan include the IMF, World Bank, Kuwait, Saudi Arabia, Austria and the United States.

Deng said that during the last 13 years, Sudan has been working diligently to address the debt challenge with the IMF which recommended a set of fiscal and monetary policies to manage the Sudanese economy.

He also expressed regret that despite significant improvement in economic indicators, Sudan has been unable to take advantage of debt relief initiatives offered to countries with high debt and poverty levels adding that elimination to any portion of the external debt is a lengthy process that could take up to five years.

Sudan remittances towards satisfying the IMF debt amounted to $50 million in 2008 and declined to $10 million in 2009 “reflecting the severe impact of the global crisis and the low levels of foreign exchange reserves”. The IMF reported that Sudan along with Zimbabwe and Somalia remained in protracted arrears.

The Sudanese government committed that its payment to the IMF would be significantly improved in 2010 should the foreign exchange reserve position improves. Deteriorating relations with Western governments have prevented Sudan from enjoying debt forgiveness programs similar to other countries.

(ST)