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The Sudan: Key progress on debt relief Sudan

Khartoum

Khartoum, © Federal Foreign Office / P. Herzog

01.07.2021 - Article

Two years after the peaceful revolution, the transition process in the Sudan is advancing. With the HIPC Initiative of the World Bank and IMF, the debt relief process is now beginning in the country and crucial groundwork is being laid for economic recovery and political reforms.

Major challenges following the peaceful revolution

Since the ousting of Bashir, the civilian-led interim government under Prime Minister Hamdok has been focusing on the priority areas of peace and the economy. The conclusion of the Juba Peace Agreement with the majority of the armed groups in October 2020 was a first key milestone. The interim government is now faced with the challenge of implementing the agreement and completing the peace process with the remaining groups in order to pave the way for democratic elections. The formation of an interim parliament and the drafting of a permanent constitution are still pending.

Due to the economic mismanagement of the previous regime, the Sudanese population continues to suffer from the grave economic and supply crisis, which has been further aggravated by the COVID-19 pandemic. The humanitarian situation remains precarious. Around one third of the population is dependent on assistance.

Milestone in the debt relief process: HIPC Initiative of the World Bank and the International Monetary Fund begins

With more than 50 billion US dollars in debts, the Sudan is one of the most highly indebted countries in the world. Now the country has taken an important step forward in the debt relief process. With international assistance, the Sudan was able in late June to fulfil all necessary requirements in order to begin the debt relief process within the framework of the HIPC Initiative (Heavily Indebted Poor Countries) of the World Bank and the International Monetary Fund. The first facilitations regarding access to development funding and debt relief mean that the Sudan will regain more financial leeway to enable it to advance the transition and implement key political and economic reforms which will have a tangible impact on the population. Investment from the private sector will also be key to sustainable economic reconstruction in the long term.

Before this process started, the government had already implemented a groundbreaking economic reform programme in collaboration with the International Monetary Fund, including measures to reduce subsidies and the long-awaited exchange rate reform.

Cornerstone for debt relief: Sudan Partnership Conference in Berlin

The cornerstone for the Sudan’s reintegration into the international community and cooperation with international financial institutions was laid at the Sudan Partnership Conference co-hosted by Germany and held in Berlin last June. Significant political support and financial assistance to the tune of 1.8 billion US dollars were mobilised at this conference.

The high-level Sudan conference held in Paris in May 2021 under the chairmanship of France’s President Macron, and which Foreign Minister Maas also attended, followed on from that: it launched the debt relief process. The German Government and other international partners pledged to help the Sudan on the road to long-term debt relief. Among other things, Germany announced the cancellation of bilateral debts amounting to 360 million euro.

Germany is supporting change in the Sudan: from humanitarian assistance to development cooperation

Germany has supported change in the Sudan from the start. In September 2019, Heiko Maas was the first western Foreign Minister to visit Khartoum after the peaceful revolution. In 2020, bilateral development cooperation was resumed with 140 million euro. The focus here is on mitigating the impact of economic reforms through a targeted social programme which has already helped About 1,000,000 Sudanese families. Moreover, Germany provides humanitarian assistance to the Sudan, allocating 27.5 million euro for this purpose in 2020. Around 13.7 million euro have already been pledged for 2021.

Support for the UN mission UNITAMS

Within the framework of stabilisation measures, Germany is also active in the sphere of the rule of law and in efforts to strengthen the civilian interim government. The new UN mission UNITAMS led by Volker Perthes is supported by Germany politically, financially and in terms of personnel. For a long time, Germany was the only western troop provider engaged in the previous mission UNAMID (African Union and United Nations Mission Hybrid Operation in Darfur), whose mandate ended at the close of 2020 and is to withdraw completely by the end of June.

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