Weary Sudan Sees Fresh IMF Program as Path to Economic Salvation

SUDAN (Capital Markets in Africa) — Sudan is seeking its first staff-monitored International Monetary Fund program since 2014 as the one-time pariah works toward reintegrating with the global economy.

Agreeing to the non-financial initiative in June talks and persuading the U.S. to drop its long-standing listing of Sudan as a state sponsor of terrorism are key planks of the transitional government’s plan, Finance Minister Ibrahim El-Badawi said in emailed comments.

A new IMF advisory program would be “a significant step toward arrears clearance, resumption of IDA support and eventual debt relief,” El-Badawi said, referring to the International Development Association, a World Bank agency that gives financing to poorer nations.

Sudan is $1.3 billion in arrears to the IMF and external debt will reach $57.5 billion this year, sums that must be settled in some way before key Western lenders will re-engage. While Saudi Arabia and the United Arab Emirates pledged $3 billion in aid shortly after President Omar al-Bashir’s overthrow by the army in April 2019, Prime Minister Abdalla Hamdok has said Sudan’s needs are much higher. Further large-scale funding hasn’t appeared.

The IMF’s representative in Sudan, Abdikarim Farah, confirmed the planned talks, which come as the North African nation’s transitional government confronts the legacies of Bashir’s three decades of repressive rule. The $34.5-billion economy contracted 2.5% in 2019, according to the IMF. That’s compounded a fiscal crisis that had already sent living costs soaring and sparked the mass protests that eventually led to Bashir’s ouster.

Inflation surged to 99% in April, its highest level since the mid-1990s, as food prices spiked and a shutdown enacted to curb the coronavirus pandemic took its toll. The vast, revolt-wracked country has struggled to stage an economic recovery after the 2011 secession of South Sudan, which took with it three-quarters of the united nation’s crude reserves.

Sudan says the U.S.’s lifting of its terrorism-sponsor designation is essential to attract foreign investment and rejoin the international banking system after most long-running U.S. sanctions were removed in 2017. Reforming an economy blighted by years of mismanagement, corruption and bloated security spending is key to seeing off further popular unrest and securing a democratic transition in 2022 elections.

The joint civilian-military government is moving toward scrapping subsidies for fuel products that would trim about $2.5 billion from the budget, El-Badawi said, declining to give a timescale. He didn’t respond to follow-up questions.

Authorities are also looking at giving discounts on 10 key, though unspecified, commodities for consumers. A family-support project funded by the World Food Programme aims to provide about 80% of the population with a monthly 500 Sudanese pounds ($9) stipend.

Assets judged to have been illicitly gained by Bashir and his family could boost state coffers, although estimates they’re worth $3.5 billion-$4 billion may be excessive, according to the minister. Much of that figure may be land and property, which is more difficult to liquidate during the Covid-19-related recession, El-Badawi said.

Sudan is also reckoning with one of the thorniest legacies of Bashir’s regime — its alleged support for al-Qaeda’s 1998 bombings of U.S. embassies in Kenya and Tanzania that killed more than 200 people. Settling this could be key to securing the country’s terror-spondor delisting. One proposal involves Sudan paying $320 million to those affected, Gavriel Mairone, a lawyer representing victims, told Bloomberg.

“The last big obstacle is finding a source of revenue” to pay the claims against Sudan in U.S. courts, said Cameron Hudson, an analyst with the Washington-based Atlantic Council and a former U.S. State Department official.

Source: Bloomberg Business News