June 17, 2022 (KHARTOUM) – Paris Club countries have decided to suspend Sudan’s debt cancellation process as the finance minister says they are seeking to induce Arab financial institutions to invest in Sudan.
On July 15, 2021, the Paris Club signed a multilateral agreement with Sudan to cancel $14.1 billion out of $23.5 billion in debt, most of which is made up of arrears and interest. delay.
The remaining $9.4 billion would be canceled after a 6-year grace period if Sudan implements the desired reforms.
However, in its annual report for 2021 made public on June 15, the 16 sovereign creditors announced the suspension of the cancellation process following the October 2021 military coup.
“After the overthrow of the transitional government of Sudan by military forces, the signing of bilateral agreements implementing this multilateral agreement is suspended until the situation improves and the implementation of the IMF program resumes” , we read in the press release.
“The Paris Club continues to closely monitor the situation, in close collaboration with the IMF and the World Bank Group,” added the Club.
Members of the Paris Club are Austria, Belgium, Canada, Denmark, France, Germany, Italy, Ireland, Japan, Netherlands, Norway, Russian Federation , Spain, Switzerland, the United Kingdom and the United States of America.
Sudan’s debts to the Paris Club are estimated to be around 38% of its total external debt of $60 billion.
Debt cancellation has been the main objective of the Sudanese civilian government during its two years of existence.
The government has implemented political and legal reforms, negotiated the country’s removal from the terrorism list, and joined the Abraham Accord to gain support from international financial institutions, particularly the World Bank and IMF.
Sudanese Finance Minister Gibril Ibrahim confessed on Friday that international financial institutions froze cooperation with his government after the coup.
“For political reasons”, the cooperation between the government and the World Bank (WB) and the International Monetary Fund (IMF) is now suspended, he said in a radio program with the official Omdurman radio.
He added that his government’s relationship with the African Development Bank, too; was greatly affected.
“Therefore, we are not in the best conditions in terms of relations with international financial institutions,” he said.
Arab financial institutions
The Minister indicated that relations with Arab and Islamic institutions are improving greatly, before expressing the hope that they will fill part of the void created by the absence of international financial institutions.
The chairman of the Justice and Equality Movement (JEM), a former rebel group that now supports the military coup, also revealed ongoing meetings with the Saudi Arabian Public Investment Fund and the Investment Fund Kuwaiti. He added that a delegation from the second would visit the country next week.
He said they continue to meet with the Jeddah-based Islamic Development Bank to resume funding for several projects in Sudan.