Paris Club suspends Sudan debt relief due to coup

The Paris Club* has published its annual report for 2021, in which it explained that the multilateral agreement on debt relief for Sudan through the  Enhanced Initiative for Heavily Indebted Poor Countries (HIPC) has been suspended "after the removal of the Transitional Government of Sudan by the military forces".

In its press release, The Paris Club explained that it continued to be very active in promoting coordinated multilateral solutions to sovereign debt problems around the world in 2021. 

It had aimed to support low-income countries also through the implementation of the HIPC for which the Paris Club signed a multilateral agreement with Sudan on July 15, 2021. "However, 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", the statement read.

In the report, the Paris Club explained that it "has continued its actions to implement the Enhanced Heavily Indebted Poor Countries Initiative […] through an agreement to restructure Sudan's external public debt concluded on 15 July 2021".

It explained that this enhanced HIPC initiative consists of a two-phased approach: "The first phase, known as decision point, opens access to interim debt relief; final debt relief is provided at the end of the second phase, completion point". So far, 38 countries including Sudan have reached the decision point of the Enhanced HIPC Initiative and Sudan reached it in June 2021. 

'Paris Club members have collectively assessed that the bilateral agreements cannot be signed until the situation improves'

The report then explained that "in light of the recent events and the removal of the Transitional Government of Sudan by the military forces, Paris Club members have collectively assessed that the bilateral agreements cannot be signed until the situation improves and the implementation of the IMF program resumes".

The Paris Club said it continues to "monitor carefully the situation, in close collaboration with the IMF and the World Bank Group".

Right after the October 25 military coup d'état, the World Bank announced the suspension of all aid to Sudan and halted decisions on any new operations in the country.

* The Paris Club (French: Club de Paris) is a group of officials from major creditor countries whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor countries. As debtor countries undertake reforms to stabilise and restore their macroeconomic and financial situation, Paris Club creditors provide an appropriate debt treatment.