Sudanese External Debt: Sustainability Analysis and Prospects for Solutions
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Date
2024-05-06
Authors
Hag, Mohammed Gebrail
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This study aims to analyse Sudan’s debt sustainability and suggests practical solutions for its external debt crisis. To this end, the study applies descriptive statistics methods to secondary data. The empirical results of a debt sustainability analysis point out that Sudan remains in debt distress as all its external debt burden ratios remain well above their respective indicative thresholds. Consequently, this study introduces three scenarios for solving the Sudanese debt crisis. The first is full or partial debt relief through the Heavily Indebted Poor Countries (HIPC) Initiative. The second scenario is repaying all external debt through the establishment of a so-called “oil revenue fund” to serve Sudanese external debt in collaboration with South Sudan. The study also suggests debt division between Sudan and South Sudan as a last resort. The study shows that Sudan faces an external debt burden ranging from US$7.96 billion (financial capacity weighted) to US$31.6 billion (geographical method weighted). By comparison, South Sudan’s debt burden ranges between US$8.2 billion (geographical method weighted) and US$31.84 billion (financial capacity weighted). Additionally, the study suggests that each country bears an additional US$4.2 billion as their share of the interest accumulation of the debt stock upon the separation of South Sudan, which amounted to US$39.8 billion. Several policy implications emerge from the study that could help policy makers in the two countries, and key creditors, be more strategic in addressing the issue in a way that accommodates common interests.