September 28, 2010 / 6:55 AM / 10 years ago

Sudan at UN urges debt forgiveness to aid peace

UNITED NATIONS (Reuters) - Sudan’s vice president on Monday urged U.N. member states to forgive the debts of Africa’s largest country to strengthen prospects for peace ahead of a referendum on independence for south Sudan.

U.S. President Barack Obama (C) greets semi-autonomous South Sudan's President Salva Kiir (L) and Sudan's Vice President Ali Osman Taha (R), before a high level meeting on Sudan, at United Nations headquarters, in New York, September 24, 2010. REUTERS/Chip East

The International Monetary Fund has said Sudan holds nearly $38 billion of external debt.

The oil-rich nation has long been in arrears to the IMF and the World Bank, which has prevented it from qualifying for debt relief or other financial assistance from the global lenders as it tries to rebuild from the continent’s longest civil war.

Sudan signed a peace deal in 2005 that ended the conflict between the country’s north and south.

“From this rostrum we call for the forgiving of the debts of Sudan according to the same standards applied to the least developed countries,” Vice President Ali Osman Taha of Sudan’s national government in Khartoum told the U.N. General Assembly.

“This will help fight the trend that leads to confrontations and destabilization,” he said.

Taha and the president of the semi-autonomous south, Salva Kiir, vowed last week to work for peace as U.S. President Barack Obama and other world leaders pressured them to hold a planned referendum on southern independence, scheduled for January 9, peacefully and on time..

Worry is mounting as preparations for the vote, along with another plebiscite on the fate of the disputed oil-rich region of Abyei, fall far behind schedule.

Taha said a declaration of the intention to forgive Sudan’s debts would dispel doubts inside Sudan about the southern referendum and help negotiations between the north and south on post-referendum arrangements.


A successful southern referendum could bring a conclusion to a bitter conflict that has rumbled on since around the time of Sudan’s independence in the 1950s. The south is expected to choose secession over remaining under Khartoum’s control.

The IMF said on its website that Sudan’s debt problems can be traced back to the 1960s when it embarked on a strategy of large-scale industrialization financed by higher-interest loans.

Sudan’s foreign debt stands at about $37.8 billion — most of which is in arrears — and is not sustainable in the absence of debt relief, the IMF said on its website. According to the World Bank, only a small percentage is low-interest loans.

“While recognizing Sudan’s reconstruction and development needs, (IMF) Directors urged the authorities to minimize non-concessional (high-interest) borrowing in view of Sudan’s unsustainable external debt burden,” the IMF said in a July 29 statement summing up its latest review of Sudan.

“This would also give a strong signal of Sudan’s cooperative effort and avoid complications in the event of any future debt-relief operation,” it said.

The World Bank has warned that southern Sudan would be unlikely to attract major multilateral or private investment in its first years as an independent state because of a likely bad debt hangover from Khartoum.

Even though the oil-producing south’s scruffy capital, Juba, has grown dramatically since the 2005 peace deal ended 24 years of north-south war, much of the investment is from small-scale Kenyan, Ugandan or local entrepreneurs.

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