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Khartoum, (sudanow) Introduction

The Sudan foreign debts is posing a major threat to the development, particularly after secession of the south which has now become a fact. A protracted debate is now going on about how the two new northern and southern states will tackle those debts which have become an onerous burden on the Sudan since the 1970s and have impaired the country's process of development as close to 37% of the domestic grand product has been allocated to repayment of those debts and their interests which have accumulated to exceed the original debts. Oddly enough, the Sudan has not greatly benefited from those debts due to failure of numerous projects financed by the debts; some of those projects have never materialized and others have faced obstacles during the process of implementation. Thus the foreign debts have become among the country's gravest problems during the 1980s and among the main reasons that led to the fall of President Jaafer Nimeiri's regime.

Throughout the successive regimes in the Sudan, the foreign debts constituted a dreadful obsession as the interests have increasingly accumulated year after year, obstructing the development process.

Taking over in 1989, the Salvation Government of President Omar al-Beshir found itself shackled with the foreign debts left over by the predecessor governments and began repayments in accordance with the available resources up to the conclusion of the Comprehensive Peace Agreement (CPA) of 2005 which, inter alia, provided for a self-determination referendum for the southerners top decide whether to remain within a united Sudan or secede and establish an independent state. It case of unity, the foreign debts would remain as they were and the united Sudan would continue with the repayments and bear their impact on the development.

However, with secession coming at a close range, The foreign debts have become one of the most outstanding issues that must be agreed upon during the rest of the transition period (July 9).

Carter and the clandestine agenda

Former US President Jimmy Carter during the last few weeks made a press statement alleging that President Omar al-Bashir had pledged that North Sudan would shoulder the foreign debts and that the south would be exempted after its secession. However, the Foreign Ministry immediately denied this statement, adding that President Bashir had underlined to Carter that the international community should write off the foreign debts, arguing that both northern and southern state do not have adequate resources for the repayment of those debts, considering, in particular, that the north would run short in oil revenues and the south would be confronting challenges that would arise from the secession. The Foreign Ministry reiterated the Sudan's call upon the international community to act with respect to the Sudan's external rights after the government has honored all of its commitments towards implementation of the CPA.

Some observers believe that, with that statement, Carter aimed at granting the southern government the hope that the foreign debts would be borne by the north as he is aware that the southern economy is incapable of repaying such debts. According to those observers, Carter wanted the south to part without bothering about debts while the north would continue suffering from the debts and unable to carry on with its development projects.

Now that the Sudanese Government has denied that statement, the foreign debts will remain one of the pending issues that should be agreed upon and ironed out by the two CPA partners.

It is a common knowledge that the Sudan was denied its financial and economic rights with the international financial institutions not for economic reasons but sheer political reasons. Some countries, like China, have written off part of their debts on Sudan. The other states are expected to follow suit.

Pre-Naivasha Foreign Debts

The foreign debts persisted from 1971 to 2004 to reach about 27 billion dollars, that is, before the CPA conclusion, and since then went on rising to reach 31.5 billion dollars in 2005 and went up to reach 39 billion dollars by the end of 2010.

Unkept promises

The Sudan has been served numerous promises to have its foreign debts written off if the government has achieved peace in the country and the government has eventually signed the peace deal but its debts have not been forgiven and they have remained a source of obsession and an obstacle to the development process; especially as the major part of those debts are interests which grow each year since the original debts did not exceed 14 billion dollars.

It is noted that in the debts grew during the past years to reach 31.5 billion in 2005, including an original 14 billion and the rest was interests and punishments for delays and failure to honor commitment to repayments.

The debts are divided into 32% for Paris Club, 37% for countries not members in Paris Club, 16% for international financial institutions and 12% for international commercial banks and foreign importers. The Government of Sudan has commenced during fiscal 2007-8 repayment of 50 million dollars to the International Monetary Fund (IMF) and notified it of cutting the installments down to 10 million dollars.

Improvement of relations

The observers recommend that, in order to get rid of its debts, the Sudan has to improve its relations with the big powers, topped by the United States, as refusal to write off the Sudan debts is for political, rather than economic reasons.

The observers envisage that in order to resolve the debts issue the Sudan has to work for improving its ties with the foreign countries and speed up reaching agreement with the IMF, the World Bank, the Paris Club member states and other states which fall under the IMF influence. This will at least help address the debts, if not written off. The main obstacle to forgiving the debts is that the Sudan was not capable of repaying 16% of the IMF and World Bank debts, something which hindered the development since 1971. The Sudan has not been able to adequately benefit from those debts in development projects in the 1980s and 1990s and has not equally benefited from the Credit Fund which addresses the debts of the least-developed countries.

President Omar Al-Bashir has said, now that the Sudan has become two states after secession of the south, the foreign debts would be divided between the two states and that the north would not bear them alone and the south be exempted.

According to the observers note that many countries which have separated from each other have ironed out a settlement to their foreign debts which they say is a mater of sovereignty. They believe that neither the north nor the south is in a position to repay the debts, arguing that the north cannot meet its own development demands, let alone repay the foreign debts while the south is too concerned with building its new state and meeting the living demands of its people to be worried about those debts.

Vice President Ali Osman Taha has recently reiterated his government's appeal for writing off the foreign debts which he said, after the secession, have become a problem to north and south Sudan.

Speaking to Sudan Media Centre (SMC), Economist Adel Abdul Aziz al-Fakki said, under Heavily Indebted Poor Countries (HIPC) for addressing the debts of the least-developed countries, the Sudan is entitled to having its foreign debts forgiven but for political reasons, this exemption has not been observed. Dr. Fakki said there are international theories for dividing the foreign debts- one of those theories provide for dividing the debts according to the numbers of the populations and another provides that the debts be divided according to the geographic areas where the projects which have been financed by the debts existed.

However, the economist said the debts issue would be subjected to negotiations between Khartoum and Juba government during the interim period and it is still early for one to say who is going to repay the foreign debts, though the two states would not be capable enough to repay them.

The two states deserve to be forgiven, Dr. Fakki said, suggesting that the two parties unify their efforts in demanding the international community to write off all the debts which he described as unbearable to the economy of either party.

In case the positions of the creditor countries varied, there are some precedents of countries which have experienced separation, such as Yugoslavia and Czechoslovakia where each new state shouldered the foreign debts in accordance with its capabilities, the economist said.

In the case of Pakistan and Bangladesh, Pakistan has borne the debts by itself and so has Russia after the Soviet split, though Ukraine later on demanded that it bears its own foreign debts all by itself, said Dr. Fakki.

It is clear, from what Economist Fakki has stated, that if no exemption is made the debts have to be borne by the two countries after separation and it is also clear that the debts issue is not a difficult problem as it can be dealt with in light of the international theories which have previously been applied in cases of secession.

(The article was published by the Sudan media centre (SMC) on 2011/02/10)

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