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Saudi Arabia pushes for sweeping Sudan debt restructuring

May 16, 2021 at 1:49 pm

Crown Prince of Saudi Arabia Mohammad Bin Salman Al Saud (R) talks with Head of the Sudanese Transitional Military Council (TMC), Abdul Fattah al-Burhan (L) during an emergency Arab League Summit at Al Safa Palace in Mecca, Saudi Arabia on 31 May, 2019 [Bandar Algaloud/Saudi Kingdom Council/Handout/Anadolu Agency]

Saudi Arabia will press Sudan’s creditors to reach a broad agreement to reduce the African country’s $50 billion-plus debt pile, said a Saudi official who will be directly involved in the debt-restructuring talks, reports Reuters.

Sudan’s transitional government, led by Prime Minister Abdalla Hamdok, is battling a crippling economic crisis and pushing through aggressive reforms as it seeks relief from the debt owed to foreign states, international financial institutions, and commercial creditors.

“In terms of restructuring, we will push the envelope more for everybody to restructure (debt) and provide Sudan with greater breathing space and support for the reforms,” the Saudi official told Reuters on condition of anonymity ahead of a Paris conference on Monday to promote investment and debt relief for Sudan.

“Deferral alone is not going to help … I would be looking for friends like Saudi Arabia and others to provide (debt) haircuts. We will support whatever efforts there are in the international community to provide that.”

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Saudi Arabia is Sudan’s third-largest creditor with about $4.6 billion in debt, International Monetary Fund figures show.

Sudan is eligible for debt relief under the IMF and World Bank’s Highly Indebted Poor Countries (HIPC) initiative.

After clearing its arrears with the World Bank and African Development Bank, the remaining hurdle for Sudan to reach the HIPC’s so-called “decision point” is the clearing of its IMF arrears. That point could be reached by the end of June.

The IMF last week approved a financing plan to help mobilise resources needed for the fund to cover its share of debt relief to Sudan. Announcements of contributions from member states are expected to emerge from the Paris conference.

Sudan has so far found support for its debt relief drive from creditors including the United States, France, and the United Kingdom.

The Saudi official said his country would utilise its existing special drawing rights within the IMF, as well as a significant cash grant.

“I’m optimistic that by Monday we will bridge the gap and we will make a way forward to a restructuring plan,” the official said.

Sudan is emerging from decades of economic sanctions and isolation under former President Omar al-Bashir, who was ousted by the military in April 2019 after months of popular protests.

In March Saudi Arabia committed to investing $3 billion in a joint fund for investments in Sudan.

“We are very serious about the $3 billion. We’re (now) talking specifics,” the official said.

“But we want also to make sure that it acts as a catalyst for other investments … not only from countries but also from the private sector.”

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