Peace needed for Sudan to clear arrears, says IMF
WASHINGTON, Sept 3 (Reuters) – The International Monetary Fund said on Friday a peace agreement in Sudan’s Darfur region could create conditions for it to clear its arrears to the global lender and give the government access to IMF aid.
In a review of countries in protracted arrears to the fund, the IMF said Liberia, Somalia and Sudan account for 88 percent of all overdue debt obligations, with Sudan making up more than 52 percent of total arrears at the end of June 2004.
Other smaller debtors are Iraq, which owes the fund $80 million, and Zimbabwe which is $291 million in default.
The fund said total arrears to the fund at the end of June was about $3 billion.
“Mobilizing the necessary financial resources to address the external debt and arrears problems for Liberia, Somalia and Sudan will be a major challenge,” the fund said in a statement following a review of its strategy on overdue financial obligations.
Member countries that fail to pay the IMF are barred from using fund resources and their voting rights are suspended after a certain period of warning.
The IMF said Sudan, which owes the fund about $1.56 billion, had made payments in excess of obligations falling due and was cooperating to pay off its debts, but that a “comprehensive peace agreement” would create conditions for clearing its arrears to the fund.
Fighting broke out last year in Sudan’s Darfur region between nomadic Arab tribes and African farmers over scarce resources. The United Nations has threatened Khartoum with sanctions unless it disarms the Arab Janjaweed.
On Iraq’s arrears, the IMF said it started talks with the new Iraqi interim government of Prime Minister Iyad Allawi on emergency post-conflict funding for the country, which would be approved once it has paid off its debt to the IMF.
Iraq’s overdue debts to the fund have not been discussed formally by the IMF’s board, because not enough information has been available to fully assess the issue, the fund said.
A preliminary debt sustainability analysis by the IMF has indicated that Iraq would need “substantial debt relief” to achieve external and fiscal viability.
The assessment was discussed by the Paris Club of creditor nations on June 8 and July 21, but no decision has been made on how much of Iraq’s $120 billion in foreign debt should be canceled.
The IMF said Zimbabwe was making small payments to clear its arrears of $291 million, after its voting rights were suspended in June 2003 for failing to pay the fund.
Liberia’s IMF voting rights were suspended in March 2003 when the country failed to make debt payments amid a worsening security situation and a renewed outbreak of fighting among several rebel groups. Liberia owes the fund about $738 million.
But with an interim government in place in Liberia, the IMF resumed technical assistance to the country on March 1, 2004.
The lender said overdue debt obligations to the fund imposed a significant financial cost on the IMF and its membership which shared the burden of the arrears.
“As of the end-June 2004, total burden-shared deferred charges of members in protracted arrears to the fund amounted to about SDR1 billion ($1.46 billion), SDR16 million ($23.3 million) higher than the level recorded at end June 2003,” the IMF said.