Sudan’s finance minister says debt situation ‘frightening’
January 4, 2012 (KHARTOUM) – The Sudanese finance and national economy minister Ali Mahmood sounded the warning bell over the country’s debt levels describing it as a “frightening” situation.
He added that there are efforts underway to payoff foreign debts to free it from restrictions on obtaining credit.
The Sudanese official stressed that the government intends to enforce strict adherence to the 2012 budget particularly in terms of cutting spending including areas such as of ministers’ foreign travel and restructuring embassies attaches abroad.
Mahmood complained that airlines, hotels and telecommunication sectors are transferring their profits abroad in the form of hard currency causing a negative impact on the domestic exchange rate.
Since the oil-rich south seceded last July, Sudan lost its main foreign currency source causing a steep drop in the exchange rate of the pound against the major currencies. At one point the dollar traded for 4.8 Sudanese pounds which is almost twice the official rate of 2.7.
Sudan implemented an economic emergency program that is focused mainly on austerity measures.
Because of US sanctions as well as Sudan’s crippling $38 billion debt, borrowing options for the East African nation are severely limited.
Sudan and South Sudan have yet to agree on splitting up the national debt. Southern Sudanese officials have in the past said that they do not accept to share the country’s foreign debts, stressing that the money was borrowed to finance the northern army to fight southerners in the civil war.
Last month it was revealed that UK will move to cancel all of Sudan’s $1.2 billion debt by 2014.
Most of Sudan’s debt dates back to the days of president Ja’afar Nimeiri. It grew from $9 billion in 1985 to $38 billion. The majority of it is owed to the Arab Gulf States of Saudi Arabia and Kuwait.
(ST)