The Executive Boards of the World Bank’s International Development Association (IDA) and the International Monetary Fund (IMF) have determined that Sudan has taken the necessary steps to begin receiving debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Sudan is the 38th country to reach this milestone, known as the HIPC Decision Point.
Debt relief will support Sudan in implementing essential reforms to improve the lives of its people by allowing the freeing up of resources to tackle poverty and improve social conditions. Sudan’s external public debt will be irrevocably reduced—through HIPC debt relief and other debt relief initiatives anchored to the HIPC initiative—by more than US$50 billion in net present value terms, representing over 90 percent of Sudan’s total external debt—if it reaches the HIPC Completion Point in about three years’ time.
In addition, as Sudan continues on its path towards peace, stability and development after more than 30 years of isolation from the international financial system, the normalization of its relations with the international community will enable access to critical additional financial resources to strengthen the economy and improve social conditions.
“Today marks an important milestone that will enable Sudan to significantly reduce its debt burden. This is a potentially transformative outcome for a nation of 44 million people that has suffered conflict, instability, and economic isolation for decades,” said World Bank Group President David Malpass following the World Bank Executive Board discussion on June 28, 2021. “The World Bank has been providing pre-arrears clearance grants to Sudan and supporting the Sudan Family Support Program, and I am looking forward to further scaling up our engagement to improve the living conditions of the Sudanese people.”
“I would like to congratulate the Sudanese government and people for their steadfast efforts over the past year leading to this historic milestone under challenging conditions exacerbated by the COVID-19 pandemic,” said Kristalina Georgieva, IMF Managing Director. “Successful reform efforts have laid the groundwork for fostering inclusive economic growth and addressing the needs of the most vulnerable people. Sudan needs to sustain and expand the implementation of these reforms—and in doing so it can count on the IMF’s continuous support to secure a more prosperous future.”
“This decision is an important milestone which will support Sudan’s reform and development agenda and our efforts to move away from the past and foster better lives for our people,” said Abdallah Hamdok, Prime Minister, Republic of Sudan. “The journey leading to this decision required hard work, dedication and strong partnership with the international community. This is a big day for Sudan and reaffirms that all the efforts and sacrifices of Sudanese people are recognized and rewarded. The Government of Sudan expresses its appreciation to the IMF, the World Bank Group, and other partners for their unwavering support and to the Sudanese people for their resilience, patience, and dedication in these trying times.”
Sudan is committed to strengthening macroeconomic stability; implementing policies to reduce poverty; and putting in place a set of reforms focused on fiscal sustainability, exchange rate flexibility, expanding the social safety net, strengthening the financial sector and improving governance and transparency, in order to reach the HIPC Completion Point. The World Bank and the IMF will continue working together to provide the technical assistance and policy guidance needed by the authorities to achieve these goals, including in the context of the new, 39-month IMF financial arrangement.
In addition, following the arrears clearance, the World Bank has unlocked substantial project financing through IDA, which will provide nearly US$2 billion in grants for poverty reduction and sustainable economic recovery—with a focus on enhancing competitiveness, transparency and accountability; increasing investment in irrigation and agriculture to support sustainable livelihoods; supporting access to energy, water, health, and education; creating jobs; and creating entrepreneurship opportunities for women and youth.