UK to cancel all of Sudan’s debt by 2014: report
December 28, 2011 (KHARTOUM) – The British government intends to forgive more than $ 1 billion in debt owed by Sudan over the next few years, according to a report by the Financial Times.
Officials at the UK Department for International Development told the Financial Times that cancelling the debt of countries such as Sudan would be counted as part of the target to spend 0.7% of national income on foreign aid by 2014.
The newspaper said that Britain is expected to relieve Sudan of £740 million ($1.2 billion) in debt.
It noted that Sudan defaulted on its £173m debt to the UK in 1984 under the rule of late President Ja’afar Nimeiri, and ever since it has not made a single repayment.
But with astronomical interests rates that ranged between 10%-12% annually the debt now stands at £678 million ($1.0 billion).
The UK-based Jubilee Debt Campaign, which says that debt repayments and loan conditions cripple economic development in poor countries, criticized the move on Sudan’s debt and suggested that it is simply a smoke screen.
“Any debt cancellation for Sudan is not aid,” said Tim Jones, policy officer at the Jubilee Debt Campaign.
“Most of the debt is made-up money based on ridiculously high interest rates. The debt should be cancelled because it is unjust and unpayable, not used to meet targets and massage figures” he said.
But the UK Department for International Development defended its debt cancellation policy.
“By cancelling debts, we are freeing up money that can then be spent tackling poverty and providing essential services such as schools and hospitals to their people” it argued.
Sudan has been lobbying the international community intensively to have its debt canceled as a reward for letting South Sudan secede peacefully last July.
Sudan and South Sudan are negotiating how to split up the national debt but no progress has been made up so far.
Legal experts say that until a deal is reached between Sudan and South Sudan on splitting up national debt, Khartoum is liable for making the necessary payments.
Most of Sudan’s debt dates back to the days of president Nimeiri. It grew from $9 billion in 1985 to $37.8 billion. The majority of it is owed to the Arab Gulf States of Saudi Arabia and Kuwait.
Last September, the Sudanese foreign minister Ali Karti wanted of economic collapse in his country unless the international community steps in to assist particularly with regards to debt relief.
“We are working also on debt relief with France and others, because debt servicing incurs more than $1 billion annually,” Karti told reporters in Paris at the time following a meeting with his French counterpart Alain Juppe.
He said that the world could not simply stand back and watch the economy collapse describing the economy’s woes as “really serious”.
South Sudan took 75% of the country’s oil reserves that existed under a united Sudan which meant that the north lost billions of dollars in revenues that have helped fuel an economic boom particularly since a peace agreement was signed between Khartoum and southern rebels in 2005.
The North African nation is now witnessing chronic shortage in foreign currency, soaring inflation rates and decline in value of the pound.
(ST)