Paris Club Suspends Sudan’s Debt Relief Process as Khartoum Seeks Arab Funds

Gibril Ibrahim Sudan's Finance Minister

June 17, 2022 (KHARTOUM) – Paris Club countries decided to suspend Sudan’s debt removal process as the finance minister said they seek to attract Arab financial institutions to invest in Sudan.

On 15 July 2021, the Paris Club signed a multilateral agreement with Sudan providing to write off $14.1 billion of $23.5 billion in debt, most of which is composed of arrears and late interests.

The remaining $9.4 billion would be cancelled within after 6-year grace period if Sudan implements the desired reforms.

However, in its annual report for 2021 released on June 15, the 16 sovereign creditors announced the suspension of the cancellation process as a result of the military coup d’état of October 2021.

“After the removal of the Transitional Government of Sudan by the military forces, the signature of the bilateral agreements implementing this multilateral one is suspended until the situation improves and the implementation of the IMF program resumes,” reads the statement.”

“The Paris Club continues to monitor carefully the situation, in close collaboration with the IMF and the World Bank Group,” further added the Club.

The members of the Paris Club are Austria, Belgium, Canada, Denmark, France, Germany, Italy, Ireland, Japan, the Netherlands, Norway, the Russian Federation, Spain, Switzerland, the United Kingdom and the United States of America.

Sudan’s debts to the Paris Club are estimated to make up around 38% of its total $60 billion foreign debt.

Debt cancellation was the main objective of Sudan’s civilian government during its two-year life.

The government implemented political and legal reforms, negotiated the country’s removal from the terror list and joined Abraham Accord to get the support of the international financial institutions particularly the World Bank and the IMF.

Sudanese Finance Minister Gibril Ibrahim confessed on Friday that the international financial institutions have frozen cooperation with his government after the coup.

“For political reasons,” cooperation between the government and the World Bank (WB), and the International Monetary Fund (FMI) is now suspended, he said in a radio talk show with the official Radio Omdurman.

He added that his government’s relationship with the African Development Bank, also; has been greatly affected.

“Therefore, we are not in the best conditions at the level of relations with international financial institutions,” he stressed.

Arab financial institutions

The minister said that relations with Arab and Islamic institutions are greatly improving, before expressing 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 now backing the military coup further disclosed ongoing meetings with the Saudi Public Investment Fund and Kuwait Investment Fund. He added that a delegation from the second would visit the country next week.

He said they continue to meet with the Jeddah-based Islam Development Bank to resume the funding of several projects in Sudan.

(ST)