Sudanese Authorities Seek Debt Relief Before South Becomes Independent
Sudanese authorities want creditors to write off much of the country’s $38 billion foreign debt before Southern Sudan becomes independent in July, a minister in the southern government said.
Without debt relief, the northern and southern regions are likely to split the debt load, Gabriel Changson Chang, a member of the committee negotiating financial arrangements with the north, said today in an interview in Juba, the southern capital. At most, 75 percent of the debt will be written off, he said.
Sudan hasn’t been able to borrow from the World Bank since 1993 because of its failure to make payments on its debt. That may leave the south, one of Africa’s poorest regions, ineligible to borrow from the bank. Sudan has debt arrears of about $30 billion, according to the Washington-based Center for Global Development.
“We want both the north and south to be economically viable,” said Chang, who also is the southern minister of culture.
Almost 99 percent of Southern Sudanese voters chose independence in a referendum last month. The plebiscite was the centerpiece of a 2005 peace deal that ended decades of civil war between northern and southern Sudan.
At independence the south will assume control of almost three quarters of Sudan’s current oil production of 490,000 barrels a day, pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp. Sudan’s output is the third-biggest in sub-Saharan Africa.
Poverty
A region about the size of Texas with just 30 miles (48 kilometers) of paved roads, Southern Sudan has no steady power supply, large-scale farms or factories. Half of its 8 million people live on less than $1 a day and need food aid, according to the United Nations. The regional government depends on oil earnings for 98 percent of its budget.
Responsibility for the debt is one of the key issues the northern and southern regions must negotiate before the south becomes independent. The sides should also agree on citizenship, sharing oil revenue, border demarcation and the future of the disputed region of Abyei.
Pressure on Creditors
“I would be surprised if Sudan’s creditors force the country to repay the entirety of its large debt,” Simon Freemantle, an economist at Johannesburg-based Standard Bank Group Ltd., said yesterday in a phone interview.
“We are likely to see substantial pressure exerted on countries such as the U.K. in the wake of South Sudan’s secession to significantly reduce the debt owed by Sudan in order to facilitate post-independence growth momentum,” he said.
The majority of Sudan’s debt was held by governments, according to a June report from the International Monetary Fund.
Sudanese President Umar al-Bashir called for debt relief at a meeting of the Arab League last month.
“Sudan has just emerged from conflict and it is clear that it deserves preferential treatment from creditor states,” Bashir said.
Sudan’s government in Khartoum, the capital, last month imposed import restrictions and austerity measures, including the partial lifting of fuel subsidies, to help government finances cope with the likely secession of the south.
Oil provided 49 percent of government revenue in 2009, Auditor General al-Taher Abdel Qayoum Ibrahim told parliament in October.
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.
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