IMF says Darfur critical to Sudan debt resolution

WASHINGTON, May 25 (Reuters) – International Monetary Fund board members on Wednesday called for a resolution to Sudan’s heavy foreign debt burden and arrears, but some directors said a solution to end the Darfur conflict was needed first.

In an annual review of Sudan’s economy, the IMF said Sudan’s relations with creditors was a challenge given the size of its large stock of external debt and arrears.

At the end of 2003, Sudan’s stock of public and publicly guaranteed debt was about $25 billion, of which about $21 billion was in arrears.

Sudan has warned that servicing its debt will become more difficult amid rising demands on its budget from a new peace accord between the government in the north and rebels in the south, which ended Africa’s longest-running civil war by creating a unity government.

The Jan. 9 peace agreement did not cover the separate ethnic violence in Darfur, labeled as genocide by the United States.

But some IMF directors said “a satisfactory solution of the Darfur crisis and implementation of the peace agreement” was necessary before creditors could weigh in to help resolve Sudan’s debt problem.

“Some Directors noted that it could be premature to enter into detailed discussions of an arrears clearance strategy at this time, some other directors called for early concrete steps toward addressing these issues,” the IMF board said in a statement.

Some directors encouraged Sudan to increase its repayments on arrears to the IMF in 2006. However, others disagreed, saying Sudan’s repayments were “appropriate” given the demands of the new peace process and large social and infrastructure needs.