- On March 26, 2021, the Republic of Sudan cleared its arrears to the International Development Association (IDA), enabling its full re-engagement with the World Bank Group (WBG) after nearly three decades.
- The payment of these arrears was facilitated by a $1.15 billion short term bridge loan from the United States government. The bridge loan has been repaid using financing from Reengagement and Reform Development Policy Operation approved by the World Bank.
- This paves the way for the country to access nearly $2 billion in IDA grants for poverty reduction and sustainable economic recovery over the next two years.
- In addition, Sudan will have access to the full range of potential support from the World Bank Group, including private sector debt and equity investments through the International Finance Corporation (IFC), and political risk insurance provided by the Multilateral Investment Guarantee Agency (MIGA) to facilitate foreign direct investments.
Significance of arrears clearance for Sudan
- Clearing arrears with IDA is a key step towards meeting the requirements needed for receiving comprehensive external debt relief under the Heavily Indebted Poor Country (HIPC) Initiative.
- Sudan’s arrears have prevented it from accessing financing from the WBG for nearly three decades, depriving the country of an important source of financing to drive economic growth and poverty reduction.
- The re-engagement with the WBG comes as the country is facing considerable economic hardships, including high inflation, declines in economic growth, and a poor 2020-2021 harvest — all exacerbated by the COVID-19 pandemic.
Sudan and the World Bank
- Sudan and the World Bank have a longstanding partnership which dates back to 1957 when the country joined IBRD. Sudan was also one of the founding members of IDA in 1960. IDA has continued to support Sudan's efforts in key sectors including agriculture, irrigation, infrastructure, and financial services.
- During the three decades in which the country was in arrears, the World Bank had a limited program of support financed by other donor funding. In recent years the Bank has had an active portfolio of about $100 million supporting basic education, the COVID19 response, community development, and natural resource management.
- IDA is currently supporting Sudan’s reform agenda through the Reengagement and Reform Development Policy Operation and other technical assistance. The reforms aim to support Sudan’s economic growth and poverty reduction program, to make the Sudanese economy more competitive, enhance transparency, increase investments, create jobs and strengthen social protection.
- To maximize support to Sudan, the World Bank has prepared a Country Engagement Note and has provided pre-arrears clearance grants totaling $410 million to the Sudan Family Support Program, which is designed to mitigate the impact of economic adjustment. This financing has been matched by $410 million of financing from other donors. The program aims to deliver cash transfers up to 80% of Sudanese families. The Program was launched on February 24, 2021.