In an unprecedented move, the Arab Monetary Fund (AMF) has rescheduled Sudan’s debt to the fund, which now stands at 70mn Arab Accounting Dinars – AAD (US$280mn).
Equally, the AMF may reschedule debts of some other big debtors such as Iraq and Somalia on a case-by-case basis by bringing in a measure of flexibility in its lending policies.
Sudan’s minister of finance and economy, Elzubier Ahmed Elhassan, signed the debt rescheduling documents with the AMF’s chairman and director-general, Jassim Al Mannai at the fund’s headquarters.
Sudan owed the AMF AAD84mn (US$336mn) but the rescheduling has brought the debt down to AAD70mn (US$280mn).
“This is the first time the AMF has made such a rescheduling of the debt of a member country. It is an exception when compared to other financial institutions such as the International Monetary Fund, which does not entertain rescheduling debts,” says Al Mannai.
“The board decided to make an exception by easing several conditions to make it easier for Sudan to repay its debt,” he adds.
Besides the debt reduction, Sudan will also gain from an extended repayment period and, more importantly, lower interest rates.
“The AMF has extended the repayment period for Sudan from the normal seven-nine years to 30 years. Also, the interest rate will be a floating 2.7% compared to the earlier 5% interest,” says Mannai.
Iraq and Somalia are two big debtors who owe the AMF huge sums but they will be dealt separately. “Every country presents a different situation and we need to be flexible, tailor-make and reschedule debts. We will be innovative and we have to come up with realistic solutions in rescheduling debts,” adds Mannai.
Iraq, he says, owes a total of US$400mn to the AMF, of which nearly half is the interest alone, while Somalia owes a lesser amount.
The Sudanese minister said the rescheduling will help his country benefit greatly. “We will be prompt in our payments by making a monthly payment of US$1mn. At least 25% from new loans will be used to repay debts,” says Elhassan.
“We are undertaking many reforms to boost economic growth and reduce our reliance on loans.”