Sudan settles World Bank debt with $1.15bn US loan

Loan recognises reform progress that Khartoum has undertaken

The US Treasury announced the loan assistance, which will help Sudan pay off outstanding debts. AP

Sudan has settled its debts with the World Bank after nearly three decades, moving the heavily indebted African country closer to a much-needed international debt-relief package, the World Bank, US Treasury and IMF have said.

It comes after the Biden administration confirmed on Friday its approval of $1.15 billion in loan assistance to Sudan as it hailed reforms that the transitional government has taken in Khartoum in the last two years.

World Bank President David Malpass said the repayment using the US assistance meant Sudan could now access nearly $2 billion in grants from the Bank's International Development Association (IDA).

"We are thankful to the U.S. government for facilitating this clearance process, which also supports our drive towards more comprehensive debt relief," Sudan's Finance Minister Jibril Ibrahim said.

The Sudanese government said $215 million would be immediately available for much-needed budget support and $420 million for the Sudan Family Support Programme.

In a statement, the Treasury Department commended Sudan’s civilian-led transitional government “for moving forward with reforms that will help restore economic stability, advance the country’s efforts to secure debt relief, and ultimately improve the economic prospects of its citizens".

Sudan’s government “deserves credit for making challenging but necessary reforms to restore its social contract with the Sudanese people,” said US Treasury Secretary Janet Yellen.

The Treasury said they provided same-day bridge financing of approximately $1.15bn to help Sudan clear its arrears at the World Bank at no cost to US taxpayers.

Ms Yellen said this assistance “will move Sudan one step closer … reintegrate into the international financial community".

Among the reforms that the US Treasury hailed are moves by Sudanese authorities “to strengthen governance, bolster central bank independence, improve the business climate, accelerate social support to struggling households and put Sudan’s finances on a more sustainable footing".

US-Sudan relations are moving closer to full normalisation after they were marred by hostility and sanctions until Omar Al Bashir's removal from power in April 2019.

Sudan made a peace deal with Israel, was removed from the US state sponsors of terrorism list in 2020 and paid $335 million to US victims of Al Qaeda attacks that the Al Bashir regime supported.

This constituted a reversal of the last three decades. In 1993, the US added Sudan to the state sponsors of terrorism list, then imposed a trade embargo and crippling sanctions to punish Khartoum for its ties to extremist organisations and Iran, as well as for its role in the genocide in Darfur.

Following Mr Al Bashir's downfall, the Trump administration took major strides towards normalising relations, granting Khartoum partial immunity from further lawsuits after the payout.

The Biden administration has continued the gradual improvement in ties and support of the new transitional government in Khartoum.

In January, after Mr Biden took office, a senior military delegation from US Africa Command undertook a two-day visit to Sudan that discussed deepening naval, counterterrorism and defence co-operation between Washington and Khartoum.