France pledges $1.5 billion loan to help Sudan pay off IMF debt

Issued on: 17/05/2021 – 18:07

French President Emmanuel Macron was hosting the event for Gen. Abdel-Fattah Burhan, head of Sudan’s ruling sovereign council, and Prime Minister Abdalla Hamdok. The heads of state of neighboring Egypt and Ethiopia were attending, as well as the International Monetary Fund Managing Director Kristalina Georgieva and African Union Commission Chairman Moussa Faki Mahamat.

Burhan praised a “historic opportunity” for Sudan and shared a “message of peace and of cooperation” after 30 years of international isolation. A popular uprising in the African nation led to the military’s overthrow of longtime autocrat Omar al-Bashir in 2019.

Macron’s office said the event Monday aims at having talks on how to boost investment in Sudan and negotiate debt relief.

Sudan’s transitional government has taken a set of measures in recent months to transform the country’s economy and rejoin the international community after over two decades of isolation. That measures included a managed flotation of the Sudanese pound in an unprecedented step that led to hikes in the price of fuel and other essential goods.

The flotation was a key demand by the IMF, with which Sudan is expected to end in September a 12-month program to win relief on its foreign debt, which is at $70 billion.

“It’s important that the direction of courageous economic reforms you have started implementing continues to guide the transition,” Macron said. “The reduction of the Sudanese debt that we’ll start soon is a first result of these reforms and the return of Sudan in the international community must be strengthened at the economic and political level.”

France will provide $1.5 billion loan to clear Sudan’s arrears to the IMF and is considering additional grants if needed, Finance Minister Bruno Le Maire said.

Inflation soared past 300%

Cash-stripped Sudan has for years struggled with an array of economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples. The country’s annual inflation soared past 300% last month, one of the world’s highest rates.

The country plunged into an economic crisis when the oil-rich south seceded in 2011 after decades of war, taking with it more than half of public revenues and 95% of exports.

Sudan was also an international pariah after it was placed on the United States’ list of state sponsors of terror in the 1990s. This largely excluded the country from the global economy.

Former President Donald Trump removed Sudan from the blacklist after the transitional government agreed to pay $335 million in compensation for victims of attacks carried out by Osama bin Laden’s al-Qaida network while the terror leader was living in Sudan. The removal also was an incentive for Sudan to normalize ties with Israel.

Dr. Suliman Baldo, senior advisor at The Sentry, a watchdog group, said the Sudanese transitional government continues to make “encouraging progress” but “this progress risks being undone unless it is rooted in a tangible shift away from the opaque and corrupt system operated for decades by the former regime.”

“The transitional government must deal with this legacy with more resolve than it has shown to date,” Baldo said.

On Tuesday, another summit hosted by Macron will focus on ways to finance African economies to help them recover from huge economic losses due to the pandemic.

(AP)