## Frequently Asked Questions on Sudan

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**Canonical URL:** [Frequently Asked Questions on Sudan](https://www.imf.org/en/countries/sdn/frequently-asked-questions-on-sudan)

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### HIPC eligibility and debt relief decision
- The IMF and World Bank approved Sudan’s eligibility for debt relief under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative on June 29, 2021.
- A Debt Relief Analysis (DRA) based on estimated end-2020 data targets a reduction in Sudan’s public- and publicly-guaranteed external debt to the “150 percent of exports” threshold under HIPC.
- Under the DRA scenario, assuming full application of debt relief and participation by all creditors, debt would be reduced from $56 billion to $6 billion at Completion Point in present value terms.
- At Decision Point, assuming full application and creditor participation, Sudan’s debt is expected to decline from about $56 billion to $28 billion in present value terms; at Completion Point, debt is estimated to decline further to around $6 billion.

### Decision Point, Completion Point, and program conditions
- Decision Point requirements:
  - establish a minimum six-month track record of satisfactory performance under an IMF Upper-Credit-Tranche quality program (in Sudan’s case, the UCT-quality Staff-Monitored Program (SMP));
  - clear arrears to the World Bank, AfDB, and IMF, and agree to a strategy to clear arrears to other multilateral creditors;
  - agree to a set of appropriate completion point triggers with IMF and IDA staff;
  - adopt at least an interim Poverty Reduction Strategy.
- Completion Point conditions:
  - implement the floating Completion Point triggers, including satisfactory implementation of the full Poverty Reduction Strategy for at least one year;
  - maintain a track record of satisfactory macroeconomic performance under the country’s Extended Credit Facility (ECF).

### Debt composition and sustainability
- Sudan’s debt profile:
  - debt standing at over 150 percent of GDP and over ten (10) times of exports.
  - debt is mostly comprised of long-standing arrears.
  - creditor composition: multilateral creditors 11 percent; Paris Club bilateral creditors 42 percent; non-Paris Club bilateral creditors 36 percent; commercial creditors 11 percent.
- Under the HIPC framework, the target is to lower debt to 150 percent of exports to align debt with repayment capacity.
- Comparability of treatment: all creditors are expected to apply the “common reduction factor” equally to their outstanding debt stock in providing relief; Sudan should not accept less favorable terms from any one creditor than others.

### Program design and reform priorities under the Extended Credit Facility (ECF)
- The new ECF will anchor policies and reforms between HIPC Decision Point and Completion Point.
- Reform priorities in the ECF arrangement:
  - fiscal stability through increased domestic revenue mobilization and reduced energy subsidies, and measures to strengthen the social safety net;
  - supporting exchange rate flexibility and the adoption of a reserve money targeting regime;
  - strengthening the financial sector by implementing a dual banking system and reforming the bank resolution regime;
  - strengthening governance and transparency, especially in the SOE sector.
- The ECF reforms have been closely coordinated with other donors and complement the proposed HIPC floating Completion Point (CP) triggers.

### Macroeconomic context and near-term outlook
- Growth and inflation:
  - 2020 growth: contraction of -3.6 percent (third consecutive year of contraction).
  - inflation rose to 379 percent y/y in May 2021 due to large monetization of the fiscal deficit and shortages of food and fuel.
  - Growth is expected to pick up in 2021 with inflation falling as the fiscal deficit is reduced and higher grant financing lowers the need for monetization.
- External shocks and COVID-19:
  - the COVID-19 pandemic compounded challenges for the transitional government.
  - official confirmed COVID cases: 34,889 with 2,600 deaths as of May 24.
  - on May 18 the government suspended studies in all universities and schools for one month and banned certain mass gatherings due to an accelerating infection rate.
  - 2020 also saw record flooding; despite this, the Sudanese economy held up better than the Middle East and North Africa region as a whole.

### International support, arrears clearance, and reintegration
- International community support:
  - the IMF and World Bank support Sudan’s reintegration with the international financial community through the HIPC process, including a joint debt reconciliation exercise.
  - the IMF supports the authorities’ policy agenda to achieve a satisfactory track record through the Staff-Monitored Program.
  - the World Bank and African Development Bank (AfDB) supported development of a Poverty Reduction Strategy.
- Arrears cleared:
  - Sudan cleared its arrears to the World Bank on March 26;
  - Sudan cleared its arrears to the African Development Bank on May 12;
  - Sudan cleared its arrears to the IMF on June 29.
- Several bilateral partners are also providing support.

### Impact on debt service, financing, and economic prospects
- Debt relief objective:
  - debt relief aims to bring the level and repayment schedule of the debt to a sustainable level, with debt service payments consistent with Sudan’s limited payment capacity.
- Debt service and financing implications:
  - At Decision Point, Sudan’s stock of debt will decline but debt service payments will likely increase as Sudan resumes debt service payments.
  - Reintegration with the international financing community and becoming current on debt service obligations will unlock concessional financing and grants from multilateral as well as bilateral donors.
  - Sustained strong macroeconomic policies and improvements in the business climate can help attract foreign investment.

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## References

- [Report](https://www.imf.org/en/publications/cr/issues/2021/03/26/sudan-enhanced-heavily-indebted-poor-countries-initiative-preliminary-document-50310)
- [Press Release](https://www.imf.org/en/news/articles/2021/06/29/pr21200-sudan-joint-statement-david-malpass-kristalina-georgieva-on-behalf-of-world-bank-group-imf)

_Source: https://www.imf.org/en/countries/sdn/frequently-asked-questions-on-sudan_