IMF 'encouraged' by US plan to remove Sudan from state terror list

Move would pave the way for the heavily-indebted country to access debt relief measures

A sign outside the International Monetary Fund's headquarters in Washington. The fund expects a 5 per cent decline in economic output for the Middle East and North Africa in 2020. EPA

The International Monetary Fund on Friday said US government plans to remove Sudan from its list of state sponsors of terrorism would clear away one of the hurdles facing the heavily indebted African country as it seeks debt relief.

“We are encouraged by the US administration’s formal indication to Congress of its intention to remove Sudan from (the list)," Carol Baker, the IMF's Sudan mission chief, said in a statement to Reuters. "The removal of Sudan from the (list) eliminates one of the hurdles toward possible HIPC debt relief.”

The Heavily Indebted Poor Countries initiative was launched in 1996 by the IMF and the World Bank to ensure that no poor country faces a debt burden it cannot manage. But the process is long and will require significant reforms by Sudan.

US president Donald Trump this week announced his decision to remove Sudan from the US list of state sponsors of terrorism, paving the way for Friday's announcement that Israel and Sudan would take steps to normalise relations.

Sudan, saddled by $60 billion in external debt, urgently needs financial help to reorganise its economy. Inflation hit 167 per cent in August and the currency has tumbled as the government prints money to subsidise bread, fuel and electricity.

The IMF last month endorsed plans to monitor a 12-month programme of economic reforms being implemented by Sudan's new transitional government as it seeks to build international confidence and move toward eventual debt relief.

Sudan's high external debt and longstanding arrears continue to limit its access to external borrowing, including from the IMF, to which it owes $1.3bn.