## 1sdnea2021001 - 2021. Once Sudan has reached the Completion Point, it would qualify for irrevocable debt ## Source details **Canonical URL:** [1sdnea2021001 - 2021. Once Sudan has reached the Completion Point, it would qualify for irrevocable debt](https://www.imf.org/-/media/files/publications/cr/2021/english/1sdnea2021001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2021/english/1sdnea2021001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2021/english/1sdnea2021001.pdf.json) --- ### Executive summary and macroeconomic context - Reform agenda objectives: - (i) achieving internal peace based on inclusion, regional equity, and justice; - (ii) stabilizing the economy and correcting the large macroeconomic imbalances; - (iii) providing a foundation for future rapid growth, development, and poverty reduction. - Key milestones: - Peace agreement with almost all internal armed opposition groups in October 2020. - Removal from the United States State Sponsors of Terrorism List (SSTL) on December 14, 2020. - Poverty and social indicators: - Incidence of extreme poverty was 13.5 percent (46.1 percent when the lower-middle income countries poverty line is used) based on the latest household survey (2014/15). - Recent high inflation, decline in economic growth, and the COVID-19 pandemic have likely increased poverty further. - Food security: The 2020–2021 harvest was problematic, contributing to particularly high food prices and threatening food security for much of the population. ### Debt situation and preliminary DRA findings - External PPG debt stock and arrears: - External public and publicly guaranteed (PPG) debt estimated at US$49.8 billion in nominal terms at end-December 2019. - Approximately 86 percent of this external debt was in arrears at end-2019. - Arrears on external PPG debt at end-December 2019 estimated at US$42.6 billion. - Arrears include IDA US$1.0 billion, IMF US$1.3 billion, AfDB Group US$0.4 billion. - NPV after traditional relief and HIPC baseline: - After full application of traditional debt relief mechanisms, Sudan’s NPV of external PPG debt at end-2019 is estimated at US$26.3 billion (reported elsewhere as US$26.4 billion after traditional relief). - This represents 495 percent of the country’s exports of goods and services (three-year average 2017–2019), exceeding the HIPC Initiative threshold of 150 percent. - Preliminary HIPC Initiative debt relief required: - Total HIPC debt relief estimated at US$18.4 billion in end-2019 NPV terms. - Implied Common Reduction Factor (CRF) of 70 percent (mem. Table 4 shows 69.7 percent). - Proportional burden-sharing estimates (US$ billions): Multilateral US$3.9; Bilateral US$13.0; Commercial US$1.4. ### Eligibility, Decision Point requirements, and timing - Eligibility: - Based on the preliminary DRA, Sudan would be eligible for assistance under the Enhanced HIPC Initiative, subject to fulfilling HIPC requirements. - Sudan is eligible for IMF support under the Poverty Reduction and Growth Trust and is an IDA-only country; gross national per capita income of US$590 in 2019. - Key Decision Point requirements: - Prepare a Poverty Reduction Strategy Paper (PRSP): expected to be finalized by end-April 2021; draft to be submitted mid-March 2021 for joint staff advisory note. - Establish a satisfactory track record under an IMF Staff Monitored Program (SMP) meeting Upper Credit Tranche (UCT) conditionality standard for at least six months; SMP endorsed as meeting UCT conditionality standard (September 23, 2020); six-month assessment can be conducted based on performance as of end-March 2021. - Clear arrears to IDA, the IMF, and the African Development Bank (AfDB) and clear or have a plan for clearance of arrears to other external creditors. Sudan intends to clear IDA arrears in March 2021; IMF and AfDB arrears discussions advanced. - Agree on appropriate Completion Point triggers; preliminary set presented and to be finalized with Executive Directors’ feedback. - Possible timing: - Sudan could reach Decision Point by June 2021, contingent on meeting the above requirements, including continued satisfactory implementation of the current IMF SMP. - Technical assumption used in DRA: Decision Point by June 2021 and Completion Point by June 2024. ### IMF financing assurances and arrears clearance mechanics - IMF resource mobilization and assurances: - Financing assurances from IMF member countries need to be in place at Decision Point for delivery of interim HIPC assistance and for HIPC and beyond-HIPC debt relief at Completion Point. - The IMF requires that financing assurances be obtained from creditors representing at least 70 percent of HIPC-eligible debt. - An intra-day bridge loan would have to be secured for Sudan to clear its arrears to the IMF at the Decision Point. - Arrears clearance mechanics and timing: - Arrears to IDA to be cleared in March 2021 through a bridge loan provided by a bilateral donor; Sudan will use up to US$1,160 million of the proceeds of the Reengagement and Reform DPF to repay the bridge loan. - Arrears to the IMF expected to be cleared in 2021 through a bridge loan from bilateral donors, which remains to be secured. - Clearance of AfDB Group arrears expected in April 2021, facilitated by a bridge loan under the AfDB Transition Support Facility (TSF) with beneficiary country/donors meeting up to one-third and AfDB meeting minimum two-thirds of obligations (case-by-case proportions). - Discussions on clearance of arrears to other multilateral creditors are ongoing; DRA assumes arrears to these creditors are cleared on terms consistent with Sudan’s limited repayment capacity. - Grant element embedded in arrears clearance operations will be counted toward a creditor’s contribution to HIPC debt reduction. ### MDRI, IMF beyond-HIPC assistance, and projected impact on debt indicators - MDRI and beyond-HIPC: - On reaching Completion Point, Sudan would qualify for Multilateral Debt Relief Initiative (MDRI) relief from IDA and the African Development Fund (AfDF) and for beyond-HIPC assistance from the IMF. - MDRI debt relief from IDA and AfDF would cancel Sudan’s debt owed to these two institutions. - MDRI preliminary estimate if Completion Point in June 2024: US$316 million in end-2023 NPV terms (US$230 million IDA; US$86 million AfDF). - IMF beyond-HIPC assistance would be used to reduce the portion of pre-Decision Point financing not covered by HIPC debt relief; total IMF assistance under HIPC estimated at US$929.0 million in end-2019 NPV terms (US$5.9 million as concessional PRGT interest subsidy; remaining US$923.1 million as grant toward debt relief). - Projected impact on debt indicators (baseline projections and key figures preserved exactly): - Baseline: NPV of debt-to-exports ratio projected to decline from 894 percent at end-2019 to 61 at end-2024, driven mostly by debt relief; stabilizes around 33 percent in the outer years of the projection period. - Debt service-to-exports ratio: expected to peak at 4.7 percent in 2027 and gradually decrease to stabilize at around 2.0 percent in the outer years. - During interim period (post-arrears clearance, pre-Completion Point) DRA estimates debt service payments will average close to US$128 million annually during calendar years 2021–24. - Outstanding obligations to multilateral creditors excluding arrears at end-December 2019: US$2.7 billion; associated debt service under before-HIPC scenario: about US$240 million (equivalent to 7 percent of projected fiscal revenues). - Expected Paris Club beyond-HIPC assistance at Completion Point: US$2.7 billion in end-2023 NPV terms. ### Policy, governance considerations, and questions for Executive Directors - Key programmatic priorities to secure HIPC assistance: - Finalization of PRSP and satisfactory implementation of structural and macroeconomic reforms under the SMP. - Clearance of arrears or credible plans and mobilization of financing assurances from creditors. - Agreement on Completion Point triggers; staff present preliminary set and seek Directors’ views on possible key policy measures (“triggers”) linked to a floating Completion Point. - Questions posed to Executive Directors: - Eligibility: Do Executive Directors agree that Sudan is eligible for assistance under the enhanced HIPC Initiative? - Timing of Decision Point: Do Directors agree that Sudan could reach Decision Point by June 2021, provided: i) a current six-month track record under UCT-standard program; ii) clearance or plans to clear arrears to IDA, IMF, AfDB and other creditors; and iii) agreement on appropriate Completion Point triggers? - Floating Completion Point: What are the Executive Directors’ views on possible key policy measures (“triggers”) linked to the floating Completion Point? ### Background on eligibility, political economy, and social conditions - Political and historical context: - Periods of instability since independence in 1956; two civil wars culminating in secession of South Sudan in 2011. - Added to U.S. SSTL in 1993; under comprehensive U.S. sanctions 1997–2017; U.N. sanctions since 2005. - Macroeconomic deterioration: - Loss of over 75 percent of oil production to South Sudan; maintained overvalued exchange rate and commodity subsidies. - Fuel subsidies grew to 11.8 percent of GDP more than 100 percent of government revenues plus grants in 2019, and more than twice all tax revenues. - Annual inflation averaged over 50 percent in 2018–2019; high inflation of 269 percent as of December 2020 driven by monetization of large fiscal deficits and financing of commodity subsidies. - Social and human development indicators (preserved exactly): - Extreme Poverty Rate ($1.9 in 2011 PPP) (%) 13.5 2014 - Lower Middle-Income Poverty Rate ($3.2 in 2011 PPP) (%) 46.1 2014 - School Enrollment, Primary (% gross) 65 2019 - School Enrollment, Primary, Female (% gross) 69 2019 - School Enrollment, Primary, Male (% gross) 63 2019 - Human Capital Index 160 2020 - Human Development Index, Global Ranking 170 2020 - Under-five mortality (per 1,000 births) 60 2018 - Life expectancy at birth (years) 65.1 2018 - Labor Force participation rate (%) 53.0 2014 - Unemployment rate (%) 11.0 2014 - COVID-19 impacts and surveys: - As of February 20, 2021, 28,038 recorded COVID-19 cases, including 1,864 fatalities. - June 2020 High Frequency Monitoring Survey: about 40 percent respondents reported either a reduction or total loss in income due to COVID-19; 67 percent respondents had to stop working because of lockdown measures; only 29 percent reported having received their full salary. ### Macroeconomic reforms, PFM, and donor coordination - Key structural reforms implemented or underway: - Fuel subsidy reduction and elimination: Government spending on fuel subsidies decreased in 2020 to 3.8 percent of GDP from 10.5 percent in 2019; 2021 budget programs fuel subsidy spending at 0.3 percent of GDP. - Exchange rate liberalization: banks and foreign exchange bureaus permitted to set exchange rates in line with market conditions; implemented on February 21, 2021 (Central Bank of Sudan Circular No. 1/2021); customs exchange rate expected to be unified in mid-2021/end-June 2021. - Social protection (SFSP): IDA PACGs up to US$410 million for SFSP; SFSP will grant equivalent of US$5 per capita to roughly 80 percent of the population. - PFM and anti-corruption: central government budget published on MoF website in 2020; Decree No.92 requires timely publication; PEFA 2020 provides foundation for reform. - Tax reform: tax revenues to central budget were 3 percent of GDP in 2020; abolition of ministerial-granted tax exemptions as of 2020; 2021 budget plans progressive personal income tax starting in 2021 and other measures. - PFM weaknesses (PEFA 2020 highlights): - Weaknesses in quality and timeliness of data, lack of organized checks and balances, insufficient publication and transparency, lack of medium-term fiscal framework implementation, incomplete Single Treasury Account (TSA) implementation. - Donor coordination and pledges: - Partners pledged over US$1.8 billion at Berlin conference; close to US$393 million pledged for SFSP through STARS; additional US$42 million from the United States and Germany via WFP. - As of February 2021, pledges to STARS amounted to US$569.5 million; actual contributions received by February 2021 amount to US$301 million, with US$284 million soft-earmarked for SFSP. - UAE pledged US$50 million for community infrastructure; Saudi Arabia pledged $US10 million for COVID-19 health crisis. - IDA providing additional PACGs up to US$410 million; first approved October 2020; second tranche submitted to Executive Board in late February. ### Macroeconomic outlook, inflation, growth anchors, and fiscal assumptions - Growth: - Following contraction in 2018–20, growth expected to pick up slowly; Sudan projected to reach its 2017 level of GDP in 2024. - Medium-term growth projected in the 4–5 percent range. - Inflation anchors: - Rate of inflation exceeded 300 percent in early 2021. - End-year 2021 annual inflation projected at 111 percent. - 2022 inflation expected to be less than 30 percent, then steadily decline thereafter. - Long-run CPI inflation projected to settle in a 5–6 percent range; medium- to long-term inflation anchor described as a 4.5 percent range over the long-term in related text. - Fiscal and external assumptions: - Foreign grants expected at an exceptionally high level of 4.2 percent of GDP in 2021 (majority earmarked for SFSP). - Domestic revenue expected to increase from 7 percent to 10 percent following Decision Point, with further long-run rise to around 12 percent. - Grants decline gradually over time to around ½ percent of GDP over the long-term. - Non-oil primary deficit expected to shrink to the 1–2 percent of GDP range over time. - Domestic debt stock expected to rise to about 20 percent of GDP over the medium-term. - Annual external borrowing rising to about 1 percent of GDP over the medium-term (limited concessional borrowing assumed). ### Debt relief simulations, scenarios, and sensitivity analysis - Baseline scenario assumptions: - Decision Point by June 2021 and Completion Point by June 2024. - Conditional HIPC, MDRI, and IMF and bilateral beyond-HIPC assistance delivered per assumptions. - Baseline projections (preserved exact figures): - NPV of debt-to-exports ratio: 894 percent at end-2019 to 61 at end-2024; stabilizes around 33 percent in outer years. - Debt service-to-exports ratio: peak 4.7 percent in 2027; stabilizes around 2.0 percent in outer years. - Alternative scenarios and impacts: - Climate shock (two consecutive years of climate-related shocks reducing output and exports): - NPV of debt-to-exports ratio deteriorates, sharply increasing by 38 and 82 percentage points during the two years of the shock; debt service-to-exports ratio also deteriorates; difference with baseline narrows as real GDP returns to baseline in 2025. - Limited progress in strengthening business climate (permanently lower growth): - By end of projection period, dollar GDP is only 65 percent of its baseline level. - NPV of debt-to-exports is, on average, about 32 percentage points higher over 2022–2030 than baseline, and about 16 percentage points higher over the long term. - Debt service-to-exports deteriorates significantly, reaching a peak in 2027 at about 7 percent. - Creditor-specific delivery and modalities (selected exact figures): - Other multilateral creditors’ expected HIPC relief: US$1.7 billion (end-2019 NPV terms). - Paris Club expected HIPC relief: US$5.7 billion (end-2019 NPV terms). - Non-Paris Club bilateral and commercial creditors expected HIPC relief: US$8.7 billion (end-2019 NPV terms). - IDA assistance under HIPC and MDRI estimated at about US$1.2 billion in end-2019 NPV terms (close to an 85 percent reduction in NPV of debt to IDA as of cutoff); 93 percent of IDA’s debt relief estimated to be delivered through an arrears clearance operation in March 2021 financed with grants. - AfDB Group’s HIPC Initiative debt relief estimated at US$341 million in end-2019 NPV terms delivered through an arrears clearance operation in April 2021. - IDA bridge-repayment from DPF proceeds: up to US$1,160 million. - DPF budget support component: US$215 million. - Average annual debt service during 2021–24 under enhanced HIPC assistance: close to US$128 million. - MDRI preliminary estimate if Completion Point in June 2024: US$316 million in end-2023 NPV terms (US$230 million IDA; US$86 million AfDF). - Expected Paris Club beyond-HIPC assistance at Completion Point: US$2.7 billion in end-2023 NPV terms. ### Annex key figures and tables (selected exact entries) - End-2019 nominal stock: US$49.8 billion. - Composition of external debt by creditor group (end-2019 reported shares): IDA 3%; IMF 3%; AfDB 1%; Other Mult. 5%; Paris Club 38%; Non-Paris Club 38%; Commercial 12%. - Debt stock by creditor (Table A1) — end-2019 (US$ million and percent): - Total nominal debt stock: 49,795.1 (100.0 percent). - Arrears stock: 42,632.0 (100.0 percent). - NPV of debt before traditional debt relief: 49,744.0 (100.0 percent). - NPV of debt after traditional debt relief: 26,364.2 (100.0 percent). - Multilateral (nominal): 5,648.0 (11.3 percent). - Bilateral (nominal): 38,191.1 (76.7 percent). - Commercial (nominal): 5,956.0 (12.0 percent). - Selected macro and financial indicators (Table 2 excerpts, exact values): - Real GDP growth at market prices (%) : 2017 = 0.7; 2018 est = -2.3; 2019 = -2.5; 2020 est. = -3.6; 2021 proj. = 0.9 - Inflation, period average (%) : 2017 = 32.4; 2018 est = 63.3; 2019 = 51.0; 2020 est. = 163.3; 2021 proj. = 191.4 - Inflation, end of period (%) : 2017 = 25.2; 2018 est = 72.9; 2019 = 57.0; 2020 est. = 269.3; 2021 proj. = 111.4 - Central government revenue and grants (% of GDP) : 2017 = 6.9; 2018 est = 8.9; 2019 = 7.8; 2020 est. = 4.8; 2021 proj. = 11.7 - Public debt (% of GDP) : 2017 = 152.9; 2018 est = 185.6; 2019 = 200.3; 2020 est. = 249.1; 2021 proj. = 203.5 - Reserves (in months of imports) : 2017 = 0.3; 2018 est = 0.2; 2019 = 0.2; 2020 est. = 0.3; 2021 proj. = 0.4 *Prepared by the staffs of the International Monetary Fund and the International Development Association.* ### 2021. Once Sudan has reached the Completion Point, it would qualify for irrevocable debt ### 1sdnea2021001 - 2021. Once Sudan has reached the Completion Point, it would qualify for irrevocable debt ### Executive summary and macroeconomic context - Sudan is pursuing a transformational reform agenda focused on: (i) achieving internal peace based on inclusion, regional equity, and justice; (ii) stabilizing the economy and correcting the large macroeconomic imbalances; and (iii) providing a foundation for future rapid growth, development, and poverty reduction. - Key recent milestones: - Peace agreement with almost all internal armed opposition groups in October 2020. - Removal from the United States State Sponsors of Terrorism List (SSTL) on December 14, 2020. - Poverty and social indicators: - Incidence of extreme poverty was 13.5 percent (46.1 percent when the lower-middle income countries poverty line is used) based on the latest household survey (2014/15). - Recent high inflation, decline in economic growth, and the COVID-19 pandemic have likely increased poverty further. - Food security: The 2020–2021 harvest was problematic, contributing to particularly high food prices and threatening food security for much of the population. ### Debt situation and preliminary DRA findings - External public and publicly guaranteed (PPG) debt was estimated at US$49.8 billion in nominal terms at end-December 2019. - Approximately 86 percent of this external debt was in arrears at end-2019. - After full application of traditional debt relief mechanisms, Sudan’s net present value (NPV) of external PPG debt at end-2019 is estimated at US$26.3 billion. - This represents 495 percent of the country’s exports of goods and services, exceeding the HIPC Initiative threshold of 150 percent. - Preliminary HIPC Initiative debt relief required to reduce the NPV debt-to-exports ratio after traditional relief to 150 percent: - Total HIPC debt relief estimated at US$18.4 billion in end-2019 NPV terms. - Implied Common Reduction Factor (CRF) of 70 percent. - This would be the largest HIPC debt operation thus far. ### Eligibility, requirements, and timing - Based on the preliminary DRA, Sudan would be eligible for assistance under the Enhanced HIPC Initiative, subject to fulfilling HIPC requirements. - Key requirements to reach the HIPC Decision Point: - Prepare a poverty reduction strategy: Sudan’s Poverty Reduction Strategy Paper is expected to be finalized by end-April 2021; a draft is expected to be submitted to the Bank and the IMF by mid-March 2021 for a joint staff advisory note. - Establish a satisfactory track record of performance under an IMF Staff Monitored Program (SMP) that meets Upper Credit Tranche (UCT) conditionality standard for at least six months. The current SMP has been endorsed by the IMF Board as meeting UCT conditionality standard; the six-month assessment can be conducted based on performance as of end-March 2021. - Clear arrears to IDA, the IMF, and the African Development Bank (AfDB) and clear or have a plan for clearance of arrears to other external creditors. Sudan intends to clear its arrears to IDA in March 2021; discussions on IMF and AfDB arrears are at an advanced stage. - Agree on appropriate Completion Point triggers; a preliminary set is presented in the document and will be finalized with Executive Directors’ feedback. - Possible timing: - Sudan could reach Decision Point by June 2021, contingent on meeting the above requirements, including continued satisfactory implementation of the current IMF SMP. ### IMF financing assurances and arrears clearance mechanics - The IMF needs to mobilize adequate resources to provide its share of debt relief to Sudan. - Financing assurances from IMF member countries need to be in place at Decision Point for delivery of interim HIPC assistance and for HIPC and beyond-HIPC debt relief at Completion Point. - An intra-day bridge loan would have to be secured for Sudan to clear its arrears to the IMF at the Decision Point. - Satisfactory assurances from Sudan’s other creditors for delivery of HIPC debt relief must be received for the IMF to provide interim HIPC assistance following Decision Point. - The IMF requires that financing assurances be obtained from creditors representing at least 70 percent of HIPC-eligible debt. ### MDRI, beyond-HIPC assistance, and projected impact - On reaching Completion Point: - Sudan would qualify for Multilateral Debt Relief Initiative (MDRI) relief from IDA and the African Development Fund (AfDF) and for beyond-HIPC assistance from the IMF. - MDRI debt relief from IDA and AfDF would cancel Sudan’s debt owed to these two institutions. - MDRI debt relief could amount to US$316 million in 2023 NPV terms. - IMF beyond-HIPC assistance would be used to reduce the portion of pre-Decision Point financing not covered by HIPC debt relief. - Expected impact on debt indicators (projections): - Sudan’s NPV of debt-to-exports ratio is projected to decline from 894 percent at end-2019 to 61 at end-2024, driven mostly by debt relief. - The ratio would continue to decline gradually thereafter to stabilize at around 33 percent in the outer years of the projection period. - Debt service-to-exports ratio: relative reductions are modest due to rescheduling of large arrears and resumption of debt service. - This ratio is expected to peak at 4.7 percent in 2027 and gradually decrease to stabilize at around 2.0 percent in the outer years of the projection period. - Constraints and vulnerabilities: - Sudan’s debt outlook depends critically on preservation of sound fiscal policy, strict limits on non-concessional borrowing, and strengthening the business climate. - The outlook will remain vulnerable to climate shocks. ### Policy and governance considerations; issues for Executive Directors - Key policy and programmatic considerations to secure HIPC assistance: - Finalization of PRSP and satisfactory implementation of structural and macroeconomic reforms under the SMP. - Clearance of arrears or credible plans and mobilization of financing assurances from creditors. - Agreement on Completion Point triggers; staff present a preliminary set and seek Directors’ views on possible key policy measures (“triggers”) linked to a floating Completion Point. - Questions posed to Executive Directors (staff seek views and guidance): - Eligibility: Do Executive Directors agree that Sudan is eligible for assistance under the enhanced HIPC Initiative? - Timing of Decision Point: Do Directors agree that Sudan could reach Decision Point by June 2021, provided: i) a current six-month track record under UCT-standard program; ii) clearance or plans to clear arrears to IDA, IMF, AfDB and other creditors; and iii) agreement on appropriate Completion Point triggers? - Floating Completion Point: What are the Executive Directors’ views on possible key policy measures (“triggers”) linked to the floating Completion Point? *Prepared by the staffs of the International Monetary Fund and the International Development Association.* ### 5. This paper is organized as follows. Section II provides background information on Sudan’s ### BACKGROUND ON ELIGIBILITY FOR HIPC INITIATIVE ASSISTANCE ### A. Poverty Reduction Growth Trust and IDA Status - Sudan is eligible for support from the IMF under the Poverty Reduction and Growth Trust and is an International Development Association (IDA)-only country. As such, it meets the HIPC Initiative income eligibility criterion. - Sudan has embarked on a home-grown reform agenda in the context of an IMF SMP, which was endorsed by the IMF Executive Board as meeting the Upper Credit Tranche (UCT) conditionality standard on September 23, 2020. - With satisfactory implementation of the SMP, the government of Sudan is expected to build the strong track record of macroeconomic reforms for the minimum 6-month period required to reach the Decision Point. - IMF members are mobilizing financing resources needed to clear Sudan’s arrears to the Fund and quota payment related to the 14th quota increase, which are estimated at SDR 964.36 million and SDR 115.13 million, respectively. - With an established track record and financing assurances in place, Sudan could re-gain access to a Fund-supported financing arrangement and reach Decision Point in the near future. The expected new Fund arrangement would aim to support: - transition towards economic stability, - an enhanced social safety net and governance and transparency, - attraction of needed foreign investments, - faster and more inclusive growth. - Sudan is an IDA-only country with a gross national per capita income of US$590 in 2019. - The World Bank Group (WBG) Country Engagement Note (CEN) aims to help Sudan stabilize its economy and support progress towards the clearance of arrears to IDA and access to HIPC debt relief. The CEN has two focus areas: re-engagement and contributing to a renewal of the social contract; cross-cutting theme: promoting inclusion and citizen engagement. - Under the CEN, IDA has provided financing to Sudan for the first time since 1991 through exceptional pre-arrears clearance grants (PACGs) for the Sudan Family Support Program (SFSP). - IDA is providing PACGs of up to US$410 million through the SFSP. - The SFSP will grant the equivalent of US$5 per capita to roughly 80 percent of the population. - The CEN envisages exceptional support from the IDA19 arrears clearance set aside to help finance the Reengagement and Reform Development Policy Financing (DPF) in grant terms to facilitate clearance of Sudan’s arrears (standing at US$1.1 billion) in March 2021. - The DPF package will also include a request for Turn Around Allocation support. A WBG Country Partnership Framework (CPF) is expected to be developed once reengagement with Sudan is complete. ### B. Background, and Political and Poverty Developments - Historical and political context: - Sudan has experienced political instability, conflict and isolation since independence in 1956, with a period of relative calm between 1972–1983. - Two civil wars culminated in the secession of South Sudan in 2011. - Conflicts are grounded in structural and regional imbalances with a Khartoum-based economic and political power “center” and more “peripheral” areas in the west, east, and south. - In 1993, Sudan was added to the United States (U.S.) State Sponsors of Terrorism List (SSTL). From 1997 to 2017, Sudan was under comprehensive U.S. sanctions and, since 2005, under U.N. sanctions involving an arms embargo, travel bans, and asset freeze for selected individuals and entities. - These sanctions resulted in disengagement from the international community and accumulation of arrears to IFIs and almost all external creditors starting in the 1980s. - Economic contraction and policy failures: - Following the loss of over 75 percent of oil production to South Sudan, Sudan maintained an overvalued exchange rate and commodity subsidies it could no longer afford. - Between 2012–2017 the pace of GDP growth slowed to under 2 percent. - Fuel subsidies alone grew to 11.8 percent of GDP more than 100 percent of government revenues plus grants in 2019, and more than twice all tax revenues. - An overvalued official exchange rate and multiple exchange rate system were maintained, rationing forex to fuel and other priority imports. - Annual inflation rate averaged over 50 percent in 2018–2019. - High inflation of 269 percent as of December 2020 was driven by monetization of large fiscal deficits and financing of commodity subsidies. - Investment and structural bottlenecks: - Private investments remained at bay in the last decade despite significant opportunities. - FDI hampered by decades of macroeconomic and political instability, pockets of civil conflicts, US sanctions until October 2017, economic mismanagement and governance shortcomings. - Structural bottlenecks include a non-level playing field (discretionary tax regime), limited access to finance, energy and infrastructure, and a cumbersome and costly investment climate (labor market distortions and skills mismatch). - Domestic investment constrained by absence of medium-term financing options and absence of conventional banking, limiting access to credit to well established firms. - Post-secession debt arrangement: - After secession of South Sudan, Sudan agreed to retain all external debt under the “zero-option” (September 2012), conditional on firm commitments by the international community to deliver debt relief within two years; absent such commitments, debt would be apportioned with South Sudan. Parties extended the agreement multiple times; a new extension until October 2022 is expected to be signed. - Shocks and humanitarian conditions: - Sudan is largely agrarian, significantly impacted by climate change, with frequent shocks including floods and droughts. - As of February 20, 2021, there were 28,038 recorded cases of COVID-19, including 1,864 fatalities. - Approximately 1.9 million internally displaced people and over 1.0 million refugees and asylum-seekers, exacerbated by conflict in the neighboring Tigray region of Ethiopia. - Political transition and reform opportunity: - The 2019 revolution led to a technocratic transitional government with a mandate to carry out sweeping reforms. - The transitional government is due to govern for 39 months following the October 3, 2020, peace agreement, by which time Sudan is to conduct elections. - In February 2021, a new government cabinet was formed; representatives of peripheral regions are included in central governance for the first time in the country’s history. - The transitional government reached a peace agreement in October 2020 with almost all internal armed opposition groups to end 17 years of conflict. - The government committed to reversing economic distortions, including agreeing to an IMF SMP meeting UCT conditionality standard and reforms supported by the IDA Reengagement and Reform DPF, which included phasing out costly fuel subsidies and adjusting the exchange rate. - Delisting from U.S. SSTL: - The U.S. formally delisted Sudan from the SSTL on December 14, 2020, removing a significant barrier to reengagement. - Social contract, fragility, and conflict: - Economic challenges are intertwined with a fragile social contract, tensions between center and periphery, and exclusionary governance. - Localized violence remains a concern in parts of Darfur, South and West Kordofan. - Poverty and human development: - Latest household survey from 2014/15 does not reflect recent economic decline, high inflation, and COVID-19 impacts. - 2014/15 survey: incidence of extreme poverty (US$1.90 a day) was 13.5 percent. - Using US$3.20 a day (LMIC poverty line), incidence was 46.1 percent—slightly higher than the 2015 average poverty rate of 44.3 percent for Lower Middle-Income Countries (LMICs). - Poverty was higher in rural areas: extreme poverty 15.7 percent in rural vs. 9.5 percent in urban areas. - States with highest extreme poverty rates include: Central Darfur (35.1 percent), West Darfur (24.4 percent), North Darfur (22.4 percent), South Darfur (22.1 percent), South Kordofan (22.1 percent), and East Darfur (20.0 percent). Much lower rates in Northern (2.1 percent), River Nile (5.6 percent) and Kassala (6.5 percent). - COVID-19 socioeconomic impacts (survey findings): - June 2020 Sudan High Frequency Monitoring Survey: about 40 percent respondents reported either a reduction or total loss in income due to COVID-19; 67 percent respondents had to stop working because of lockdown measures. - Only 29 percent reported having received their full salary; 43 percent reported having received only part of their salary; 28 percent reported having received no payment. - More than 20 percent of households were unable to buy bread and cereals as well as milk and milk products; about 45 percent of respondents worried about having enough food to eat; many modified eating habits. - Only 10 percent of households with children who attended school before COVID-19 were engaged in learning activities during school closures. - By September 2020 one-third of respondents had stopped working and over 20 percent of households were unable to buy bread and cereals as well as milk and milk products. - A new household survey is urgently needed to obtain a more accurate estimate of poverty. - Human development and service access: - In the 2020 update of the World Bank’s Human Capital Index (HCI), Sudan ranked 160 out of 174 countries. - According to the 2020 Human Development Index (HDI), Sudan ranks 170 out of 189 countries. - Primary school enrollment rate was 65 percent in 2019. - Under-five mortality rate was 60 deaths per 1,000 births in 2018 (higher than 2015 MDG target of 41 per 1,000 births; LMIC average was 59 in 2014). - More than 40 percent of the population lacks access to safe drinking water; more than 60 percent lacks basic sanitation. - Gender and labor market: - Sudan’s Gender Development Index (GDI) is 0.837, placing it among countries furthest from achieving gender parity. - Factors: low women’s political participation (28 percent); unequal labor market participation (24.5 percent); unequal education attainment of adult women relative to adult men (15.3 percent); lack of inclusion in peace building. - Recent legislative changes criminalize female genital mutilation and increase women’s personal freedom, but more targeted measures are needed. - Labor force participation in 2014: 76 percent among men, 33 percent among women. - Overall unemployment rate in 2014: 11.0 percent; unemployment for women 19 percent, for men 8 percent. - Youth unemployment: 27 percent of young women unemployed, 20 percent of young men unemployed. - Households with an unemployed head are nine-percentage point more likely to be moderately poor than those with identical characteristics. - Key poverty and social indicators (Table 1 entries): - Extreme Poverty Rate ($1.9 in 2011 PPP) (%) 13.5 2014 - Lower Middle-Income Poverty Rate ($3.2 in 2011 PPP) (%) 46.1 2014 - School Enrollment, Primary (% gross) 65 2019 - School Enrollment, Primary, Female (% gross) 69 2019 - School Enrollment, Primary, Male (% gross) 63 2019 - Human Capital Index 160 2020 - Human Development Index, Global Ranking 170 2020 - Under-five mortality (per 1,000 births) 60 2018 - Life expectancy at birth (years) 65.1 2018 - Labor Force participation rate (%) 53.0 2014 - Unemployment rate (%) 11.0 2014 ### C. Macroeconomic and Structural Reform Track Record - (Section heading provided; substantive content to follow in source document.) *International Monetary Fund — Sudan chapter excerpt.* ### 22. The Government of Sudan (GoS) has launched a comprehensive package of structural ### 22. The Government of Sudan (GoS) has launched a comprehensive package of structural ### Overview - Objective: address major inherited economic imbalances, fight corruption, increase social support, and provide a foundation for sustainable growth. - Context: loss of most oil reserves with the secession of South Sudan in 2011 led to continued large commodity subsidies (mostly fuel) and overvalued official exchange rates, causing high inflation, pressure for currency depreciation, neglect of public investment in human and physical capital, reduced real incomes, and increased poverty. ### Key structural reforms implemented or underway - Fuel subsidy reduction and elimination - Fuel subsidies grew to account for almost 100 percent of Government revenues by 2019. - March 2019: Government introduced a dual pricing system for diesel and gasoline allocating a portion of fuel to the population at higher prices; “commercial prices” increased to market rates in October 2019. - MoFEP Decree No.66 and Decree No.94 in Q4 2020 effectively ended subsidies on retail diesel and gasoline. - January 2021: residential electricity rates on large consumers increased by around 500 percent as part of a four-year program to stabilize electricity subsidies. - Government spending on fuel subsidies decreased in 2020 to 3.8 percent of GDP from 10.5 percent in 2019. - The 2021 budget programs fuel subsidy spending at 0.3 percent of GDP. - Expected benefits: moderates consumption, promotes alternative clean energy, long-lasting climate and environmental benefits. - Exchange rate liberalization - Under the SMP, all but the customs exchange rate to be unified; banks and foreign exchange bureaus permitted to set exchange rates in line with market conditions. - Implemented on February 21, 2021 (Central Bank of Sudan Circular No. 1/2021). - Customs exchange rate expected to be unified with the market rate in mid-2021. - Social protection (Sudan Family Support Program, SFSP) - Social spending increased as a percentage of GDP in 2020 and is expected to increase significantly in 2021 with SFSP rollout. - SFSP envisioned to provide 12 months of consistent support to beneficiaries, with eventual transition of recertified eligible beneficiaries to longer-term permanent social safety net support. - SFSP will establish digital infrastructure for mobile payments and strengthen the national registry to encourage greater inclusion and empowerment of women. - SFSP will facilitate rapid identification of potential beneficiaries for expanded coverage and lay the groundwork for a shock-responsive national safety net. - Public financial management (PFM) and anti-corruption - Priority: create an effective and transparent PFM system to ensure efficient fiscal policy implementation and minimize fiscal risks. - 2020: authorities published the central government budget on the Ministry of Finance website. - Starting in 2021: central government budget to be published on the website within one month after approval by the Legislative Council, and quarterly budget execution reports within one month after the end of each quarter (Decree No.92). - 2020 Public Expenditure and Financial Accountability (PEFA) review forms the foundation for a comprehensive reform strategy. - Progress: significant progress in compiling a list of all SOEs, work ongoing to clarify ownership; government seeks World Bank and other development partner assistance to launch PFM reforms as part of poverty reduction strategy. - Tax reform - Tax revenues to the central budget were only 3 percent of GDP in 2020. - All ministerial-granted tax exemptions abolished as of 2020; no new special exemptions can be granted. - 2021 budget plans include: a progressive personal income tax starting in 2021; a higher VAT on telecommunications; liberalization of the exchange rate on oil revenue and grants; removal of income tax exemptions for all companies that currently benefit; and improvements in tax administration to widen the tax base and curb tax evasion. ### Other short- and medium-term reforms - Civil service reforms, fiscal federalism, removing administrative barriers to business and investment, and power sector restructuring. - Focus on creating favorable conditions for private sector-led growth: improving investment climate, fostering Public-Private Dialogue, strengthening legal and institutional framework for PPPs, and supporting MSME development (access to finance, business entry and taxation, innovation and entrepreneurship). - IFC and World Bank support: private sector development reform agenda, new investment and PPP laws, business and regulatory environment improvements, private sector analytics, SMEs development; largely supported by IDA PACGs and a multi-donor trust fund. ### Implementation progress and challenges under SMP and IDA DPF - Implementation started slowly due to fragile political environment but picked up. - Structural achievements: elimination of subsidies on retail sale of imported gasoline and diesel; price adjustment mechanism adopted; extension to domestically produced gasoline and diesel in December; Ministry of Finance published revised 2020 budget, January–November monthly budget execution, and partial SOE inventory in December. - Legislation progress: Anti-Corruption National Committee Law and revised Central Bank Act (October and December 2020 structural benchmarks) drafted with IMF input but not yet passed by the Joint Council. - Exchange rate unification: official and market exchange rates unified with move to a band on February 21, 2021; unification of customs exchange rate expected end-June (noted elsewhere as mid-2021). - IDA DPF supported fuel subsidy and exchange rate policy actions and rollout of SFSP and improved public sector transparency. - Quantitative performance under SMP has been more mixed. ### PEFA 2020 assessment highlights (PFM weaknesses) - Weaknesses in quality and timeliness of data, lack of organized checks and balances, insufficient publication of information and transparency of procedures. - MoFEP does not provide local governments with a ceiling or budget envelope through the Budget Call Circular; LGs are informed of allocations after budget approval and allocations are not disclosed publicly. - Lack of medium-term fiscal framework implementation; macro-fiscal unit needs strengthening. - Single Treasury Account (TSA) needs full implementation at central government level, including improving cash forecasting, extending cash ceilings from one to three months, and improving payment management. - Auditor General reports had no traction or publicity despite highlighting weaknesses and inefficiencies. - Large SOE system: highly inefficient, not transparent, preferential allocation of contracts, unmanaged fiscal risks; prime minister decree (June 2020) required inventorying all SOEs and subjecting them to MOFEP oversight. - Sudan’s complex and opaque tax system grants generous exemptions and ad hoc loopholes, resulting in current tax collection rate at about 6 percent of GDP in 2019, far below peers. ### Donor coordination and external support - World Bank and IMF coordinating support: IDA DPF actions, SMP benchmarks, and complementary technical assistance aligned. - World Bank support areas: social protection (SFSP and targeted assistance), PFM (diagnostics, tax administration, open procurement, wage policy), energy sector (fuel subsidy and power sector reform). - IMF TA: PFM, fiscal reporting and statistics (GDP, prices, monetary reporting), fiscal risks related to SOEs, legal framework desk reviews (Central Bank Act, Banking Business Act, Anti-Corruption Law), governance diagnostic exercise for governance roadmap. - Other partners: AfDB Group (about US$155 million in PBA grants expected over 2020–22 plus TSF resources), United Kingdom, European Union, United States (macro-fiscal reforms and institutional strengthening), France (PFM, tax administration, political economy analysis, citizen engagement), ALSF (commercial claims litigation support). - Friends of Sudan (FoS) and Sudan International Partners Forum (SIPF) coordinate donor commitments; Mutual Partnership Framework (MPF) adopted May 2020. - Pledges and contributions for SFSP and STARS: - Partners pledged over US$1.8 billion for humanitarian and development support at Berlin conference. - Close to US$393 million pledged for SFSP through STARS; additional US$42 million from the United States and Germany for SFSP through WFP. - UAE pledged US$50 million for community infrastructure; Saudi Arabia pledged $US10 million for COVID-19 health crisis. - As of February 2021, pledges to STARS amounted to US$569.5 million; actual contributions received by February 2021 amount to US$301 million, with US$284 million soft-earmarked for SFSP. - IDA providing additional pre-arrears clearance grants of up to US$410 million to mitigate reform impacts through SFSP; first approved in October 2020; second tranche submitted to Executive Board for approval in late February. - World Bank pledged additional resources for emergency COVID-19 response through HEPRF. ### Medium- to long-term strategy and macroeconomic outlook - Successful implementation of SMP policy measures expected to lay foundation for sustained, inclusive growth by eliminating market distortions (exchange rate unification, subsidy reform), improving business climate, and addressing governance and transparency issues. - Sudan’s removal from the U.S. SSTL supports reforms. - Removal of subsidies and customs exchange rate reform expected to provide fiscal space for greater social spending. - Reforms need complementing by growth-enhancing structural reforms across agriculture, private sector development, energy, and human capital. - Decade of slow growth, social upheaval, large imbalances, and high transaction costs resulted in three years of economic recession; stabilization and reforms offer potential to accelerate growth. ### Selected economic and financial indicators (from Table 2) - Output - Real GDP growth at market prices (%) : 2017 = 0.7; 2018 est = -2.3; 2019 = -2.5; 2020 est. = -3.6; 2021 proj. = 0.9 - Inflation - Period average (%) : 2017 = 32.4; 2018 est = 63.3; 2019 = 51.0; 2020 est. = 163.3; 2021 proj. = 191.4 - End of period (%) : 2017 = 25.2; 2018 est = 72.9; 2019 = 57.0; 2020 est. = 269.3; 2021 proj. = 111.4 - Central government finances - Revenue and grants (% of GDP) : 2017 = 6.9; 2018 est = 8.9; 2019 = 7.8; 2020 est. = 4.8; 2021 proj. = 11.7 - Expenditure (% of GDP) : 2017 = 13.1; 2018 est = 16.7; 2019 = 18.7; 2020 est. = 10.8; 2021 proj. = 14.4 - Fiscal balance (% of GDP) : 2017 = -6.2; 2018 est = -7.9; 2019 = -10.8; 2020 est. = -5.9; 2021 proj. = -2.7 - Public debt (% of GDP) : 2017 = 152.9; 2018 est = 185.6; 2019 = 200.3; 2020 est. = 249.1; 2021 proj. = 203.5 - Money and credit - Broad money (% change) : 2017 = 68.8; 2018 est = 111.8; 2019 = 60.1; 2020 est. = 88.0; 2021 proj. = 77.0 - Credit to the private sector (% change) : 2017 = 38.4; 2018 est = 69.3; 2019 = 45.8; 2020 est. = 78.8; 2021 proj. = 80.0 - Balance of payments - Current account (% of GDP) (cash basis) : 2017 = -6.9; 2018 est = -8.7; 2019 = -11.4; 2020 est. = -13.2; 2021 proj. = -6.0 - FDI (% of GDP) : 2017 = 1.7; 2018 est = 3.1; 2019 = 2.9; 2020 est. = 2.7; 2021 proj. = 2.5 - Reserves (in months of imports) : 2017 = 0.3; 2018 est = 0.2; 2019 = 0.2; 2020 est. = 0.3; 2021 proj. = 0.4 - Exchange rate - REER (% change) : 2017 = -13.2; 2018 est = -24.5; 2019 = -12.5; 2020 est. = ...... *Source: IMF staff report content (selected chapter text).* ### 29. The outlook, assuming HIPC Decision Point is attained, is positive, as macroeconomic ### 29–42: Outlook, Poverty Reduction Strategy, and Debt Relief Analysis (excerpt) ### Macroeconomic outlook and stabilization (paras. 29–34) - Outlook is positive assuming HIPC Decision Point is attained; macroeconomic stability is restored following adjustments to fuel prices, exchange rate unification, and SMP policy actions (para. 29). - 2021 expected to bring positive growth and progress in stabilization, but economic and social situation remains challenging and downside risks are high (para. 29). - Growth projections and trajectory (para. 30): - Following contraction in 2018–20, growth is expected to pick up slowly. - Sudan is projected to reach its 2017 level of GDP in 2024. - Medium-term growth projected in the 4–5 percent range. - Accelerated growth drivers: internal peace dividend, correction of distortions, improved investment climate, depreciated exchange rate, realization of low-hanging public investment projects. - Longer-term prospects depend on maintaining macroeconomic stability, favorable private business climate, and policies to reverse neglect in social spending and public infrastructure. - Inflation and fiscal consolidation (para. 31): - Rate of inflation exceeded 300 percent in early 2021. - End-year 2021 annual inflation projected at 111 percent. - 2022 inflation expected to be less than 30 percent, then steadily decline thereafter. - Budget savings from sharp reduction in fuel subsidy spending and inflows of foreign grants (expected to be 4 percent of GDP higher in 2021 than in 2020) underpin major fiscal consolidation to slow monetary expansion and inflation. - External and current account dynamics (para. 32): - Reduction in subsidies and customs rate unification provide fiscal space for social spending, supported by donor grants. - Deficit monetization expected to decline, bringing inflation to below 20 percent a year over time. - Exports return to pre-COVID levels while import demand remains strong; current account in sizable deficit financed by FDI and public/private investment flows. - Over time, improved competitiveness and higher investment will boost export growth and halve the (cash) current account deficit in the medium-term. - Foreign grants expected at an exceptionally high level of 4.2 percent of GDP in 2021, majority earmarked for the Sudan Family Support Program (para. 32). - Revenue mobilization and fiscal sustainability (para. 33): - Major increases in inflows of foreign grants in 2021 and higher tariff revenues from customs exchange rate adjustment will boost government receipts. - Tax policy and administration reforms aim to broaden the tax base by eliminating various exemptions under the VAT and personal income tax, and harmonizing the corporate income tax rate—these reforms will increase tax revenue by about 3 percentage points of GDP in the medium term. - Continued improvements in tax administration could add another 1–2 percentage points of tax revenue in the long run. - Redistribution of revenues toward social spending and infrastructure will reduce the fiscal deficit and support poverty reduction and inclusive growth. - The primary fiscal balance will turn positive in the medium- to long-run, markedly improving debt sustainability (para. 33). ### Risks to the outlook (para. 34) - Upside risks: - Removal of Sudan from the SSTL, improvements in macroeconomic management, governance and transparency, and strengthening of the business climate could attract a surge in foreign investment and donor flows. - Downside risks: - Failure to implement envisioned policy measures or reversion to old policies (subsidies, multiple currency practices, lack of transparency/governance) could hamper growth and jeopardize inclusivity. - Dangerously high inflation rate makes stabilization in 2021 difficult; money demand could be easily destabilized. - Continued fragility of the internal peace process; susceptibility to flooding and natural disasters. - Social unrest risk due to worsening economic conditions; slow governance and transparency reforms or political instability could trigger flight to quality and halt donor support and foreign investment. - Mitigants: - Government resolve to implement reforms; awareness that backtracking would lead to mounting crisis and instability. - Active engagement of the IMF, World Bank, and international community. ### Poverty Reduction Strategy (paras. 35–36) - PRSP process: - Government completing a Poverty Reduction Strategy Paper (PRSP) to provide a national roadmap to alleviate poverty and identify budgetary resources and priority sectors (para. 35). - PRSP will assess the macroeconomic framework and poverty profile, suitability of macroeconomic reforms to free budgetary resources, processes for identifying/prioritizing sectors and activities, cooperation and partnerships, and monitoring and evaluation framework (para. 35). - Timeline and pillars (para. 36): - PRSP document expected to be finalized by end-April 2021; draft prepared and to be sent to Bank and Fund in mid-March 2021. - Five preliminary pillars identified: - (i) macroeconomic stability; - (ii) inclusive economic growth; - (iii) human and social development; - (iv) peace; - (v) strengthening of governance and institutional capacity. - Pillars reflect consultations in March 2019 and February/March 2021. ### Debt reconciliation and structure of external debt (paras. 37–39) - Debt reconciliation (para. 37): - Preliminary Debt Reconciliation Analysis (DRA) prepared using external PPG debt disbursed and outstanding as of end-December 2019. - As of end-January 2021, multilateral debt largely reconciled; bilateral debt reconciliation advanced. - External PPG debt stock and composition (paras. 38–39): - Sudan’s external PPG debt estimated at US$49.8 billion in nominal terms at end-December 2019. - Given large arrears, NPV similar to nominal level. - Creditor composition (nominal terms): - Multilateral creditors: about 11 percent of total debt stock; major multilateral creditors include IDA, the IMF, AFESD (together account for close to three-quarters of Sudan’s multilateral debt) (para. 38). - Official bilateral debt: about 77 percent of total debt stock (equally divided between Paris Club and non-Paris Club creditors, each about 38 percent); major Paris Club creditors include Austria, France and the United States; top non-Paris Club creditors (China, Kuwait, Saudi Arabia) account for more than 86 percent of that category (para. 38). - Commercial creditors: about 12 percent of nominal debt stock; about two-thirds of commercial claims correspond to the London Club (para. 38). - Arrears: - About 86 percent of external PPG debt was in arrears at end-December 2019. - Arrears on external PPG debt at end-December 2019 estimated at US$42.6 billion (para. 39). - Arrears include IDA US$1.0 billion, IMF US$1.3 billion, AfDB Group US$0.4 billion (para. 39). - Arrears represent about 52 percent of debt owed to multilateral creditors (excluding IFAD), about 90 percent of official bilateral debt, and 100 percent of commercial creditor debt (para. 39). ### Possible assistance under the HIPC Initiative and preliminary estimates (paras. 40–41, Table 4) - Eligibility and baseline ratios (para. 40): - Sudan would qualify for HIPC Initiative “export window.” - After full application of traditional debt relief mechanisms, Sudan’s NPV of external PPG debt at end-2019 is estimated at US$26.4 billion. - This NPV represents 495 percent of the country’s exports of goods and services (three-year average 2017–2019), exceeding the 150 percent HIPC threshold (para. 40). - Required HIPC debt relief to reach threshold (para. 41 and Table 4): - Reducing NPV debt-to-exports ratio from 495 percent to 150 percent requires US$18.4 billion of HIPC Initiative debt relief in end-December 2019 NPV terms. - Implied common reduction factor: 70 percent (Table 4 shows 69.7 percent in memorandum). - Proportional burden-sharing estimates (US$ billions): - Multilateral: US$3.9 billion. - Bilateral: US$13.0 billion. - Commercial: US$1.4 billion. - After traditional debt relief NPV: US$26.4 billion; after HIPC debt relief NPV: 8.0 (Table 4) — (see table entries). - Exports (three-year average 2017–2019) used in calculations: 5.3 (memorandum, Table 4). ### Assumptions on timing and modalities for HIPC delivery (para. 42) - Timing assumptions (working assumptions for simulations): - Decision Point by June 2021 and Completion Point by June 2024 (para. 42). - Modalities and creditor-specific estimates (para. 42): - IDA: - IDA assistance under HIPC Initiative and MDRI estimated at about US$1.2 billion in end-2019 NPV terms. - Equivalent to close to an 85 percent reduction in the NPV of Sudan’s debt to IDA as of cutoff. - Estimated that 93 percent of IDA’s debt relief would be delivered through an arrears clearance operation to be concluded in March 2021 entirely financed with grants. - HIPC debt relief from IDA would be delivered in full through the arrears clearance operation; IDA would not provide additional HIPC debt relief through reduction in debt service after Decision Point. At Completion Point Sudan would benefit from IDA’s MDRI debt relief (para. 42, bullet 1). - IMF: - IMF assistance under the HIPC Initiative estimated at US$929 million in end-2019 NPV terms, of which US$5.9 million represents concessional element associated with PRGT interest subsidization during the interim period. - After Decision Point approval, IMF expected to provide HIPC interim assistance on eligible debt service falling due prior to Completion Point, subject to Sudan maintaining satisfactory progress under the new Fund arrangement (para. 42, bullet 2). - AfDB Group: - AfDB Group’s HIPC Initiative debt relief estimated at US$341 million in end-2019 NPV terms and would be entirely delivered through an arrears clearance operation in concessional terms expected in April 2021 (para. 42, bullet 3). *Source: Excerpt from IMF staff report text (paras. 29–42) on Sudan.* ### Box 4, Section V.B. ### Box 4, Section V.B. ### Composition and delivery of HIPC debt relief - Combined debt relief from IDA in the context of the HIPC Initiative and MDRI depends on the actual Completion Point date; the estimated reduction in the text assumes Completion Point in June 2024. - Other multilateral creditors’ debt relief under the HIPC Initiative is estimated at about US$1.7 billion in end-2019 NPV terms; assumed delivered through concessional debt restructuring (forgiveness, rescheduling or refinancing), including accumulated arrears, at Completion Point unless interim relief is required. - Paris Club creditors’ expected debt relief under the HIPC Initiative is estimated at about US$5.7 billion in end-2019 NPV terms. Interim HIPC relief from Paris Club creditors is assumed to be provided through a Cologne flow operation shortly after Sudan’s Decision Point; the remaining HIPC debt relief would be delivered through a stock of debt operation shortly after Completion Point. - Non-Paris Club bilateral and commercial creditors’ expected debt relief under the HIPC Initiative is estimated at US$8.7 billion in end-2019 NPV terms; assumed comparable to Paris Club terms. - A successful HIPC implementation requires full participation of all creditors in an equitable manner; Bank and Fund staff will encourage and facilitate creditor participation. ### External arrears clearance strategy and modalities - Most of Sudan’s external debt was in arrears at end-December 2019, including to IDA, the IMF and the AfDB Group; most arrears are expected to be cleared on concessional terms. - Grant element embedded in arrears clearance operations will be counted toward a creditor’s contribution to HIPC debt reduction. - Paris Club working assumptions for simulations: - As part of Decision Point treatment, arrears on pre-cutoff non-ODA debt assumed to receive Naples terms (i.e., 67 NPV percent reduction). - Cologne flow operation applied to remaining Paris Club non-ODA debt (i.e., 90 percent NPV reduction). - Pre-cutoff ODA debt (including arrears) assumed rescheduled at the lower of the original interest rate or the relevant CIRR. - Post-cutoff debt assumed rescheduled over 16 years with a 3-year grace period (instead of 8 years with 3-year grace period). - Payments falling due during the interim period and associated moratorium interest are deferred until after Completion Point given Sudan’s exceptional circumstances. ### Arrears clearance timing and funding specifics - Arrears to IDA will be cleared in March 2021 through a bridge loan provided by a bilateral donor. Sudan will use up to US$1,160 million of the proceeds of the Reengagement and Reform DPF to repay the bridge loan. The portion of the DPF used to repay the bridge loan will be financed with a combination of an exceptional allocation from the IDA19 arrears clearance set aside and the country’s regular IDA allocation. - Arrears to the IMF are expected to be cleared in 2021 through a bridge loan from bilateral donors, which remains to be secured; this could enable the IMF to approve a new three-year Fund-supported arrangement for Sudan. The new Fund arrangement will be front-loaded; authorities plan to use the proceeds to repay the bridge loan. - Clearance of arrears to the AfDB Group is expected in April 2021, facilitated by a bridge loan from a bilateral donor, proceeding under the AfDB’s Transition Support Facility (TSF) with burden sharing: beneficiary country or donors acting on its behalf must meet up to a maximum of one-third of arrears clearance obligations and the AfDB Group a minimum of two-thirds; precise proportions determined case-by-case. - Discussions on clearance of arrears to other multilateral creditors are ongoing; the DRA assumes arrears to these creditors are cleared on terms consistent with Sudan’s limited repayment capacity. - Clearance of arrears to the Paris Club is expected through an exceptional treatment (based on precedents of Liberia and Somalia) beyond standard Naples and post-cutoff terms; Sudan will seek comparable treatment from non-Paris Club official bilateral and commercial creditors. ### Debt service implications following Decision Point and interim period - About 37 percent of HIPC debt relief from multilateral creditors would be delivered through concessional arrears clearance operations ahead of Decision Point; remaining delivered through concessional restructuring starting from Decision Point. - Repayment of the IMF arrangement to be approved at Decision Point would induce a sharp increase in principal payments over 2026–2031; most of this increase would be netted out by beyond-HIPC relief from the IMF at Completion Point. - During the interim period, the direct effect of debt relief on the GoS budget will lead to an increase in actual debt service payments as Sudan must resume servicing external debt after arrears clearance. - DRA estimates that, in a scenario of enhanced HIPC assistance and multilateral arrears clearance, debt service payments will average close to US$128 million annually during calendar years 2021–24. - Sudan’s outstanding obligations to multilateral creditors excluding arrears are estimated at US$2.7 billion at end-December 2019. - Under the before-HIPC debt relief scenario, associated debt service payments are estimated to average about US$240 million during the calendar years covered by the interim period, equivalent to 7 percent of projected fiscal revenues. - The IDA Reengagement and Reform DPF will include US$215 million of budget support, which would ensure positive net-flows to Sudan during the interim period. - IDA is expected to maintain strongly positive net flows to Sudan, including through DPF operations; other creditors, including the AfDB, are also expected to provide additional grant financing. ### MDRI, IMF beyond-HIPC assistance, and bilateral/Paris Club beyond-HIPC relief - On reaching Completion Point, Sudan would qualify for MDRI relief from IDA and the AfDF via cancellation of all outstanding debt disbursed prior to end-December 2003 (IDA) and end-December 2004 (AfDF) that remains at Completion Point. - If Completion Point is reached by the assumed date (June 2024), preliminary estimates indicate MDRI debt relief could amount to US$316 million in end-2023 NPV terms: - Of this, US$230 million would be provided by IDA and US$86 million by the AfDF. - Sudan has no debt eligible for MDRI relief from the IMF. - At Completion Point, the IMF – through the PRG-HIPC Trust Fund – would provide beyond-HIPC assistance to reduce the portion of pre-Decision Point financing not already covered by HIPC relief; this includes any Fund financing disbursed immediately after Sudan clears its arrears and before Decision Point (the initial disbursement under the new IMF arrangement). - Most Paris Club official creditors are expected to provide further relief and cancel 100 percent of their claims against Sudan after Completion Point, pending successful HIPC implementation; this additional assistance is estimated at US$2.7 billion in end-2023 NPV terms. ### Expected impact of debt relief and sensitivity analysis (scenarios) - Simulations under a baseline and two alternative scenarios (lower exports — climate shock, and lower growth — limited progress in strengthening the business climate) test external debt sustainability after debt relief. All three scenarios reflect conditional HIPC, MDRI, and IMF and bilateral beyond-HIPC debt relief. - Baseline scenario: - Pace of reform consistent with reaching Decision Point and Completion Point by June 2021 and June 2024, respectively. - NPV of debt-to-exports ratio projected to decline from 894 percent at end-2019 to 61 at end-2024, driven mostly by debt relief; stabilizes around 33 percent in the outer years. - Debt service-to-exports ratio would peak at 4.7 percent in 2027 and decline thereafter, stabilizing around 2.0 percent in the outer years. - First alternative — climate shock (two consecutive years of climate-related shocks reducing output and exports): - NPV of debt-to-exports ratio deteriorates, sharply increasing by 38 and 82 percentage points during the two years of the shock; debt service-to-exports ratio also deteriorates. - Difference with baseline then narrows and real GDP returns to baseline level in 2025. - Second alternative — limited progress in strengthening business climate (permanently lower growth): - By end of projection period, dollar GDP is only 65 percent of its baseline level. - NPV of debt-to-exports is, on average, about 32 percentage points higher over 2022–2030 than baseline, and about 16 percentage points higher over the long term. - Debt service-to-exports deteriorates significantly, reaching a peak in 2027 at about 7 percent. ### Key numerical highlights (preserved exactly as presented) - Assumed HIPC Completion Point: June 2024. - Other multilateral creditors’ expected HIPC relief: US$1.7 billion (end-2019 NPV terms). - Paris Club expected HIPC relief: US$5.7 billion (end-2019 NPV terms). - Non-Paris Club bilateral and commercial creditors expected HIPC relief: US$8.7 billion (end-2019 NPV terms). - IDA bridge-repayment from DPF proceeds: up to US$1,160 million. - DPF budget support component: US$215 million. - Average annual debt service during 2021–24 under enhanced HIPC assistance: close to US$128 million. - Outstanding multilateral obligations excluding arrears at end-2019: US$2.7 billion. - Associated debt service under before-HIPC scenario: about US$240 million (equivalent to 7 percent of projected fiscal revenues). - MDRI preliminary estimate if Completion Point in June 2024: US$316 million in end-2023 NPV terms (US$230 million IDA; US$86 million AfDF). - Expected Paris Club beyond-HIPC assistance at Completion Point: US$2.7 billion in end-2023 NPV terms. - Baseline NPV debt-to-exports: 894 percent at end-2019 to 61 at end-2024; stabilizes around 33 percent in outer years. - Baseline debt service-to-exports peak: 4.7 percent in 2027; stabilizes around 2.0 percent in outer years. - Climate shock scenario: NPV debt-to-exports increases by 38 and 82 percentage points during the two shock years. - Limited-progress scenario: dollar GDP at end of projection period is 65 percent of baseline; NPV debt-to-exports on average about 32 percentage points higher over 2022–2030; debt service-to-exports peak about 7 percent in 2027. *Source: Box 4, Section V.B., 1sdnea2021001.* ### 4.5 percent range over the long-term. ### 1sdnea2021001 - 4.5 percent range over the long-term. ### Macroeconomic outlook: inflation and growth anchors - CPI inflation: - Renewed access to IFI financing, fiscal consolidation and the strengthening of central bank independence bring down inflation from triple-digits to below 20 percent in 2023. - Inflation is projected to settle in a 5–6 percent range over the medium- to long-term. - External sector: - Current account expected to remain in significant deficit in the near term reflecting Sudan’s low domestic production capacity and need for imports, including for investment. - As investment in the agricultural sector increases, exports are expected to rise, reducing the current account deficit to between 4.5 and 5 percent over the medium- to long-term. ### Fiscal policy and revenues - Fiscal policy measures: - Elimination of fuel subsidies and unification of the customs exchange rate, together with tax policy measures and the return of grant budget financing, provide fiscal space for social spending. - Domestic revenue projections: - Domestic revenue is expected to increase from 7 percent to 10 percent following the Decision Point. - Further strengthening of tax policy measures and revenue administration reforms contribute to a further uptick to around 12 percent in the long run. - Grants: - Grants are expected to rise significantly in the near term, with funding for the Sudan Family Support Program, but decline gradually over time to around ½ percent of GDP over the long-term. - Primary deficit and debt sustainability: - Over time, the non-oil primary deficit shrinks to the 1–2 percent of GDP range, supporting debt sustainability. ### Domestic and external borrowing assumptions - Domestic borrowing: - Implementation of a dual banking system (i.e., the return of conventional banking) is expected to provide some space for domestic financing and support liquidity management by the CBOS. - Borrowing is expected to remain low, with the stock of domestic debt rising to about 20 percent of GDP over the medium-term. - External borrowing: - Framework assumes limited concessional borrowing in terms comparable to standard IDA terms, with a small amount of non-concessional borrowing in later years. - Annual external borrowing rising to about 1 percent of GDP over the medium-term. ### HIPC timing: Decision Point and Completion Point - Decision Point timing: - Sudan could reach the HIPC Initiative Decision Point by June 2021, contingent on satisfactory performance under the SMP and a minimum 6-month satisfactory implementation track record upon completion of the second review based on an end-March 2021 test date. - Sudan must clear arrears to IDA, the IMF, and the AfDB; arrears to IDA and the AfDB are expected to be cleared in March and April 2021, respectively. The IMF has yet to secure the financing package for arrears clearance. - Indicative timing assumes satisfactory financing assurances for the IMF’s portion of debt relief, submission of the PRSP, and agreed Completion Point triggers. - Completion Point timing assumption: - For the purpose of the DRA in this document, the technical assumption used by Bank and Fund staffs is that Sudan reaches its Completion Point in June 2024. - Risks around this indicative timing (notably weak capacity) are significant and would be mitigated by strong reform commitment, World Bank engagement, and technical assistance from IMF, World Bank, and other development partners. ### Possible floating Completion Point triggers (areas and key trigger actions) - Poverty reduction strategy implementation: - Satisfactory implementation for at least one year of Sudan’s poverty reduction strategy (PRS), evidenced by endorsement by the Boards of IDA and the IMF of an Annual Progress Report submitted by the government on PRS implementation. - Macroeconomic stability: - Maintain macroeconomic stability as evidenced by satisfactory implementation of the Fund-supported arrangement. - Public financial and expenditure management and transparency: - Strengthen budget regulatory and procedural framework, enhance reporting and transparency, and improve alignment of budget allocation with national development objectives, including between the federal and state levels, and increase comprehensiveness of the budget. - Publish the General Government consolidated financial statement based on the GFS definition, for 2021 and annually thereafter within three months of end of the reporting period, and audited accounts in accordance with international good practices. - Strengthen the legal and regulatory framework for SOE governance, including financial reporting, external audit, disclosure requirements, and financial oversight. - Domestic resource mobilization: - Strengthen the Large Taxpayer Office by leveraging digital/electronic means to strengthen Tax Administration Core System (TACS) database and on-demand reporting, to ensure that at least 60 percent of total domestic revenues are managed through taxpayers assigned to the LTO. - Public procurement: - Strengthen the Public Procurement legal framework and enhance transparency through the publication of procurement opportunities and contracts awarded by at least the top 10 most spending procurement and contracting units. - Debt management: - Enhance transparency by producing and timely disclosing at least one annual and four consecutive quarterly comprehensive reports on total (external and domestic) public and publicly guaranteed debt. - Establish a Debt Management Office/Unit managing external and domestic debt, adopt regulations and operational procedures for approval, issuance and monitoring of loan guarantees, and enhance coordination with fiscal policy. - Social protection and financial inclusion: - Establish a national social registry as the primary directory of poor and vulnerable households eligible for social protection support and reach a large share of cash transfer beneficiaries via digital means. - Growth and governance: - Strengthen the banking sector by: (i) adopting a resolution framework based on international best practice; and (ii) develop and initiate implementation of a resolution strategy and plan for banks based on the Act and results from the Asset Quality Review of banks. - Strengthen compliance with international standards on AML/CFT by completing and disseminating the results of the ML/FT national risk assessment (NRA) and adopting a national AML/CFT risk-based strategy. - Strengthen the regulation and viability of the electricity sector through measures for an effective regulatory framework, roadmaps for achieving cost recovery, expanding renewable energy sources, and clarification of potential role of the private sector. - Strengthen institutional, legal and regulatory frameworks to unlock private investments and allow greater private sector participation in Sudan’s economic recovery. - Statistics: - Produce and publish revised and rebased annual GDP time series based on updated supply and use tables (SUT) resulting from the 2020/21 comprehensive industrial survey (CIS). ### Public financial management (PFM) and monitoring public spending - Monitoring public spending: - Securing effective use of public spending for poverty reduction and inclusive growth is a key objective of the HIPC Initiative; technical assistance from IDA, IMF, AfDB and other partners will be needed to strengthen PFM capacity. - Budget linkages and forecasting weaknesses: - The national plan with strategic programs and key projects exists, but links with budget formulation remain weak. - Budget process remains incremental and is not linked to strategic sectoral plans; absence of macroeconomic and fiscal forecasting and of a MTEF impacts resource direction. - Reporting on plan implementation is limited to technical statistics without links to financial reporting, reducing monitoring of budget results and accountability. - IFMIS, reporting, and accounting: - An incomplete Integrated Financial Management Information System (IFMIS) impacts MoFEP capacity to produce adequate expenditure reporting. - Expenditure recorded through the Government Resource Planning (GRP) System is not linked to financial systems at local level; some donor-funded expenditures are off budget. - Electronic Payment System (E15) is operated by the Chamber of Accounts; General Directorate of Revenue is not part of the system. - GRP is capable of supporting budget preparation and execution but is underutilized, leading to inconsistencies between budget allocation and reporting and no budget execution data by ministry, program-head or function. - Accounting standards and audits: - Accounting policies and standards need alignment with international good practice. - Chamber of Accounts prepares final accounts; NAC applies INTOSAI standards and submits audit reports within three months after receipt of annual financial statements, but executive implementation of audit recommendations has been an issue. - PFM reform strategy: - GoS intends to develop a PFM reform strategy informed by diagnostics (PEFA and Tax assessments) and in consultation with development partners; HIPC Completion Point triggers on PFM are integral to the roadmap the government intends to develop and implement. *Source: 1sdnea2021001 - 4.5 percent range over the long-term.* ### 67. This paper presents a preliminary assessment of Sudan’s eligibility for assistance under ### 1sdnea2021001 - 67. This paper presents a preliminary assessment of Sudan’s eligibility for assistance under ### Eligibility - Question for Executive Directors: Do Executive Directors agree that Sudan is eligible for assistance under the enhanced HIPC Initiative? ### Timing of Decision Point - Staff recommendation: Sudan could reach its Decision Point by June 2021, together with the approval of a new Fund arrangement by the IMF Board, provided that: - (i) Sudan has a current six-month track record of satisfactory performance under a program of upper-credit tranche policy conditionality with the IMF; - (ii) Sudan clears its arrears to IDA, the IMF, the AfDB and clears or has a plan for the clearance of arrears to other external creditors; and - (iii) Sudan agrees on appropriate completion point triggers? ### Floating Completion Point - Question for Executive Directors: What are the Executive Directors’ views on possible key policy measures (“triggers” against which satisfactory performance would have to be measured) linked to the floating Completion Point? *SUDAN — INTERNATIONAL MONETARY FUND 41* ### Annex Figures and Tables ### Annex Figures and Tables ### Composition of external debt and potential HIPC costs - End-2019 nominal stock: US$49.8 billion. - Figure A1: Composition of stock of external debt by creditor group (end-2019) — reported shares: - IDA 3% - IMF 3% - AfDB 1% - Other Mult. 5% - Paris Club 38% - Non-Paris Club 38% - Commercial 12% - Alternative composition (reported elsewhere in figures): - IDA 2% - IMF 2% - AfDB 1% - Other Mult. 4% - Paris Club 40% - Non-Paris Club 38% - Commercial 13% - Figure A2: Potential costs of the HIPC Initiative by creditor group (NPV terms as of end-2019): US$41.8 billion. - Note: Includes the cost of traditional debt relief by external official bilateral and commercial creditors and the cost of HIPC Initiative debt relief by all external creditors. ### Debt stock by creditor (Table A1) — end-2019 (US$ million and percent) - Total nominal debt stock: 49,795.1 (100.0 percent). - Arrears stock: 42,632.0 (100.0 percent). - NPV of debt before traditional debt relief: 49,744.0 (100.0 percent). - NPV of debt after traditional debt relief: 26,364.2 (100.0 percent). - Multilateral (nominal): 5,648.0 (11.3 percent); NPV before relief: 5,665.7 (11.4 percent). - IDA: 1,431.7 (2.9 percent) nominal; NPV before relief: 1,397.2 (2.8 percent); NPV after traditional relief: 1,397.2 (5.3 percent). - IMF: 1,333.2 (2.7 percent) nominal; NPV before relief: 1,333.2 (3.1 percent); NPV after traditional relief: 1,333.2 (5.1 percent). - AfDB Group: 486.1 (1.0 percent) nominal; NPV before relief: 488.7 (1.0 percent); NPV after traditional relief: 488.7 (1.9 percent). - Bilateral (nominal): 38,191.1 (76.7 percent); NPV before relief: 38,122.3 (76.6 percent); NPV after traditional relief: 18,624.7 (70.6 percent). - Paris Club (nominal): 19,074.9 (38.3 percent); NPV before relief: 19,076.7 (38.3 percent); NPV after traditional relief: 8,177.2 (31.0 percent). - Non-Paris Club (nominal): 19,116.2 (38.4 percent); NPV before relief: 19,045.6 (38.3 percent); NPV after traditional relief: 10,447.5 (39.6 percent). - Commercial (nominal): 5,956.0 (12.0 percent); NPV before relief: 5,956.0 (14.0 percent); NPV after traditional relief: 2,073.8 (7.9 percent). - Post-cutoff date and ODA/non-ODA breakdowns provided in table (preserved in source). ### Discount and exchange rates underpinning the debt relief analysis (Table A2) - Exchange rates (currency per U.S. dollar, end-December 2019) and discount rates (average Commercial Interest Reference Rates published by the OECD over the 6-month period prior to December 2019) are reported for: - U.S. dollar, Algerian dinar, Canadian dollar, Chinese yuan, Danish krone, Euro, Indian rupee, Japanese yen, Korean won, Kuwaiti dinar, Saudi Arabia riyal, Soviet Union ruble, Swiss franc, Swedish krona, Norwegian krone, United Arab Emirates dhirams, U.K. pound, Special Drawing Rights. - Example reported exchange/disc. values in source: - Exchange Rate: 1.00 (U.S. dollar), Discount Rate: 2.8 (in percent). - Exchange Rate: 71.34, Discount Rate: 2.0. - Exchange Rate: 1,160.90, Discount Rate: 2.4. - Exchange Rate: 109.12, Discount Rate: 0.7. - Exchange Rate: 119.60, Discount Rate: 2.0. - Exchange Rate: 0.97, Discount Rate: 0.2. - (Full table of exchange and discount rates as of end-December 2019 provided in source.) ### External debt sustainability indicators and scenarios (Figures A3, A4; Tables A3–A6) - Figure A3: External Debt Sustainability Indicators, 2019–39 - NPV of debt-to-exports ratio (percent) and Debt service-to-exports ratio (percent) are plotted across scenarios: - Before traditional debt relief - Unconditional delivery of HIPC - Conditional delivery of HIPC, MDRI and beyond HIPC assistance - Figure A4 and Table A6: Sensitivity analysis, 2020–39 (after conditional enhanced HIPC assistance, MDRI, and beyond HIPC assistance) — scenarios include: - Baseline scenario - Lower export level - Permanently lower growth - Table A3: External Debt Service, 2020–39 (US$ million unless otherwise indicated) — key aggregated figures (selected): - I. Before traditional debt relief and multilateral arrears clearance: Total debt service 2020–2029 and 2030–2039 shown; sample annual totals include 2020: 638.5; 2021: 691.0; 2022: 544.0; 2023: 408.1; 2024: 475.1 (full annual time series provided in table). - Debt service to exports ratio (I): 12.6 (2020), 11.3 (2021), 7.6 (2022), 5.0 (2023), 5.3 (2024), etc. - II. After traditional debt relief: Total debt service figures (annual series) and debt service to exports ratio: 15.7 (2020), 14.3 (2021), 11.7 (2022), 20.0 (2023), 18.8 (2024), etc. - III. After enhanced HIPC assistance and multilateral arrears clearance: Total and existing debt series with debt service to exports ratio: 2.4 (2020), 2.4 (2021), 1.0 (2022), 0.9 (2023), 2.5 (2024), etc. - IV. Debt service after HIPC and MDRI assistance: totals and ratios provided. - V. After enhanced HIPC assistance, multilateral arrears clearance, MDRI, and bilateral beyond HIPC assistance: aggregate series provided. - Memorandum items: Exports of goods and nonfactor services (examples): 2020: 5,085.6; 2021: 6,125.7; 2022: 7,192.3; government revenues (central government revenues, excluding grants): 2020: 1,604.5; 2021: 2,563.2; 2022: 3,719.7 (full series in table). - Reduction in debt service as a result of traditional debt relief: series of annual reductions (e.g., -183.4, -299.3, -1,226.9, -1,204.4, etc. — full series provided). - HIPC initiative assistance and multilateral arrears clearance effects, MDRI and additional bilateral beyond HIPC assistance effects are tabulated (annual series in source). - Table A4: Net Present Value of External Debt, 2019–39 (US$ billion) - NPV of total debt (multiple scenarios/time paths). Example values: - NPV of total debt (2019): 49,744.0 (US$ billion in table header context). - NPV of total debt and NPV of outstanding debt series for 2019–2039 provided under scenarios I–VI (Before traditional debt relief; After traditional debt relief; After conditional delivery of enhanced HIPC assistance and multilateral arrears clearance; After unconditional delivery of enhanced HIPC assistance and multilateral arrears clearance; After conditional delivery of enhanced HIPC assistance and multilateral arrears clearance, and MDRI assistance; After conditional enhanced HIPC assistance and multilateral arrears clearance, MDRI, and bilateral beyond HIPC assistance). - Detailed component series for Multilateral, Bilateral, Paris Club, Other official Bilateral, Commercial, and NPV of new borrowing are provided across 2019–2039 (full tables in source). - Table A5: External Debt Indicators, 2019–39 (ratios and thresholds) - Key indicators reported across scenarios (I–VI) and average periods: - NPV of debt-to-GDP ratio (examples): 148.2 (2019, before traditional relief), series declining/increasing across years under scenarios (full table). - NPV of debt-to-exports ratio (examples): 933.5 (2019, before traditional relief), with series across years and scenarios. - NPV of debt-to-revenue ratio (examples): 2,008.2 (2019, before traditional relief). - Debt service-to-exports and debt service-to-revenue ratios under multiple scenarios (series provided). - Notes: Exports defined per IMF BPM6; revenues defined as central government revenue excluding grants. ### External debt indicators and sensitivity analysis (Table A6) - Baseline scenario (2020–2029 and averages): - NPV of debt-to-GDP ratio (examples): 138.7 (2020), 67.2 (2021), 66.1 (2022), 65.1 (2023). - NPV of debt-to-exports ratio: 941.3 (2020), 444.5 (2021), 396.4 (2022), 346.7 (2023). - Debt service-to-exports ratio: 2.4 (2020), 2.4 (2021), 1.0 (2022), 0.9 (2023). - Sensitivity analysis: - Lower export level scenario and Permanently lower growth scenario series provided (exact annual ratios reported in table). ### Possible delivery of IDA and IMF assistance under enhanced HIPC (Tables A7–A8) - Table A7: Possible delivery of IDA’s assistance under the enhanced HIPC Initiative, 2020–2053 (US$ million) - Debt service before HIPC assistance (IDA): annual series examples 2020: 42.6; 2021: 42.3; 2022: 41.8; 2023: 40.3; 2024: 38.6; cumulative and long-run series provided. - Debt service after HIPC assistance: series with in-year amounts (e.g., 2020: 0.0; 2021: 27.5; 2022: 41.8; 2023: 40.3; etc.). - Savings on debt service to IDA: series and cumulative (examples: 242.6, 14.8, 0.0, ...). - Projected stock of IDA credits outstanding at implementation date: 246.7 (US$ million). - Remaining IDA credits after MDRI: 0.0; Debt stock reduction on eligible credits: 246.7 (all due to MDRI). - Memorandum: Debt service to IDA covered by HIPC assistance (in percent) — example entries: 100.0 (2020), 34.9 (2021). - Table A8: Possible delivery of IMF assistance under enhanced HIPC Initiative (US$ million) - Total IMF assistance under the HIPC Initiative estimated at US$929.0 million in NPV terms (basis: end-December 2019 data). Of this, US$5.9 million represents the concessional element associated with subsidization of PRGT interest during interim period; remaining US$923.1 million provided as a grant toward debt relief. - Projected debt service due on IMF obligations before debt relief: annual series (examples: 2021: 3.0; 2022: 2.8; 2023: 3.1; 2024: 1.7; 2025: 1.7; 2026: 25.0; 2027: 163.2; 2028: 291.1; later years shown). - IMF assistance under HIPC Initiative — deposits into Sudan's Umbrella Account: - Interim assistance: series (4.4; 3.0; 3.3; ...). - Completion point assistance: 912.5 (US$ million). - Completion point interest: 4.0 (US$ million). - Total Umbrella Account balance at the completion point: 916.5 (US$ million). - Debt relief provided at Completion Point (on stock basis in cash terms): 1,424.6 (US$ million). - HIPC assistance: 916.5. - Beyond-HIPC: 508.0. - Debt service due to the IMF after HIPC and beyond-HIPC debt relief: annual series (examples: 2026 onward include 11.6; 27.2; 42.7; 46.6; 46.6; 34.9; 19.4; 3.9). - Memorandum items include percent of exports and percent of total debt service shares; projected assumptions on ECF/EFF disbursements and charges provided in notes. ### Paris Club and bilateral creditor delivery (Table A9, Table A10) - Table A9: Paris Club Official Bilateral Creditor’s Delivery of Debt Relief Under Bilateral Initiatives Beyond HIPC - Country-by-country summary on coverage of ODA and Non-ODA pre- and post-cutoff date debt, and modalities (flow/stock/case-by-case) — examples include: - Australia: HIPCs 100 100 100 100 (cancellation). - Austria: HIPCs 100 - 100 - (case-by-case, flow/stock). - Belgium: HIPCs 100 100 3/100 - 100 - (cancellation at completion point of eligible ODA loans before Dec 31, 2000). - France, Germany, Japan, Netherlands, United Kingdom, United States and others have specified modalities (flow and/or stock) and percentages; detailed table entries provided in source. - Notes describe creditor-specific modalities, cutoff dates, and special cases (e.g., SAC classification, Cologne/decision point treatments). - Table A10: Status of Countries Considered Under the HIPC Initiative (December 2020) - Completion/Decision Point status and NPV assistance amounts for 36 countries reaching completion point under enhanced framework and others; examples: - Afghanistan: Decision Point Jul. 07; Completion Point Jan. 10; NPV of debt reduction and assistance figures (full table in source). - Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Rep., Chad, Comoros, Congo Rep., Congo DR, Cote d'Ivoire, Ethiopia, etc., with NPV assistance, percentage reduction, and composition across bilateral, multilateral, IMF, World Bank listed. - Notes: NPV amount of assistance is calculated as the reduction of the NPV of debt after traditional debt relief required to reach threshold levels (NPV of debt-to-exports 150 percent or NPV of debt-to-revenue 250 percent). ### Statement by Sudanese authorities (March 26, 2021) - Key points from statement by Ms. Mannathoko, Executive Director for Sudan and Mr. Ismail, Senior Advisor to Executive Director: - Since August 2019, transition government actions: internal peace, justice, addressing economic imbalances, phasing out fuel subsidies, unifying exchange rate per SMP conditionality. - Social measures: Sudan Family Support Program (SFSP); increased social spending to mitigate pandemic and reform impacts. - Removal from SSTL List ended almost three decades of international isolation. - Persistent challenges: COVID-19 pandemic, historic floods, refugee inflows, high poverty (about 46.1 percent of the population living below US$3.20 a day (2014/15 survey)), high inflation. - Authorities seek Executive Board support for arrears clearance and debt relief to access financing for stabilization, poverty reduction, development; appreciate technical assistance from Fund and partners. - Eligibility and progress toward enhanced HIPC Initiative: - Sudan qualifies under the HIPC Initiative’s export window (preliminary debt relief analysis). - Key multilateral creditors (World Bank, AfDB) set to clear shares of arrears by end-March 2021 and end-April 2021, respectively. - Paris Club expected to provide shares of debt relief in HIPC context; Non-Paris Club bilateral and commercial creditors expected to provide comparable terms. - Authorities request Board support to reach Decision Point by June 2021 and approval for a new Fund arrangement once Decision Point requirements are met. - Decision Point preparatory actions: - PRSP: expected finalization by end-April 2021; draft submitted March 15, 2021. - Track record: SMP endorsed as meeting UCT conditionality standard; assessment of 6-month track record underway, first review assessed as satisfactory. - Arrears clearance: IDA arrears to be cleared in March 2021; timing/modalities for IMF and AfDB arrears under advanced consideration. - Agreement on Completion Point triggers: authorities seek endorsement of proposed floating completion point triggers and commit to meeting them. - Conclusion: Authorities appeal for financing assurances from IMF member countries at Decision Point for interim and subsequent HIPC assistance; reaffirm commitment to SMP reforms and triggers to reach HIPC Completion Point; request continued IMF Executive Board and international community support. *Italic: Source — Annex Figures and Tables (1sdnea2021001) — Sudan: Annex Figures and Tables (tables and figures as provided in the source PDF).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1sdnea2021001.pdf_