Sudan: World Bank arrears payment opens door to $2 billion in grants

Sudan has cleared its arrears to the International Development Association (IDA)*, enabling its full re-engagement with the World Bank after nearly three decades, and paving the way for the country to access nearly $2 billion in grants for poverty reduction and sustainable economic recovery.

Prime Minister Abdalla Hamdok noted on Twitter: “We have paid the arrears of Sudan to the World Bank,” and “have begun the removing of the burden of external debt from our country with the obtaining of grants of $215 million for the budget and $420 million for the Samarat [family support] programme**, and the start of finance for the government development projects with a grant of two billion dollars over two years”.

Hamdouk added that “this is the crowning of a difficult and painful path in which our people have patience, which has led to real victories, including erasing our name from the list of the state sponsors of terrorism and the unifying and stabilising the exchange rate, in order to establish a development economy from which all our citizens benefit, indicating the national project we work for is based on stability and economic prosperity as it is based on political consensus.”

Sudan’s arrears payment was facilitated by an emergency loan from the US treasury, which was secured in January.

Heavily Indebted Poor Country (HIPC) Initiative

In a statement from Washington on Friday, the World Bank confirms that by clearing its arrears, Sudan has also completed a key step for receiving comprehensive external debt relief under the Heavily Indebted Poor Country (HIPC) Initiative.

“This is a breakthrough at a time when Sudan needs the world’s help to support its development progress,” said World Bank Group President David Malpass. “Steps taken so far, including settlement of arrears and exchange rate unification, will put Sudan on the path to debt relief, economic recovery and comprehensive development.”

Dr Gibril Ibrahim, Sudan’s Minister of Finance and Economic Planning said that “with the clearance of these arrears we look forward to securing financing from the World Bank Group and other multilateral institutions to strengthen our economy and reach all corners of Sudan with transformative development projects.” Minister Ibrahim expressed thanks to the US government for facilitating the clearance process, “which also supports our drive towards more comprehensive debt relief.”

* IDA is the World Bank’s fund for the poorest countries. The payment of these arrears was made possible through a $1.15 billion bridge loan from the United States government. IDA is supporting Sudan’s reform agenda through a Reengagement and Reform Development Policy operation. The reforms aim to support Sudan’s economic growth and poverty reduction program, to make the Sudanese economy more competitive, enhance transparency, increase investments, create jobs and strengthen social protection.

** The Sudan Family Support Programme (SFSP) is supported by several development partners through the Sudan Transition and Recovery Support (STARS) Multi-Donor Trust Fund, which includes Canada, European Union, Finland, France, Germany, Ireland, Italy, Kingdom of Saudi Arabia, Netherlands, Norway, State and Peace Building Trust Fund, Sweden and United Kingdom. Together these donors are matching the support provided by the World Bank’s pre-arrears clearance grants to bring total support for the SFSP to $820 million.