Sudan’s Unsustainable Debt: The Way Out

The aim of this paper is to identify the main factors behind Sudan's huge external debt, as well as to identify its impact on the country's major economic indicators (especially Foreign Direct Investment (FDI), Per capita income, and poverty). Moreover, the paper will examine the strategies adopted by the government in order to reduce its unsustainable debt including benefiting from the available international initiatives such as Heavily Indebted Poor Countries (HIPCs); besides proposing a way out for the relief of the country unsustainable external debt. The methodology adopted in this paper is descriptive and analytical in nature depending mainly on secondary sources of data. The study indicated that Sudan’s debt is unsustainable and the country is highly indebted. Subsequently, statistics by International Monetary Fund (IMF) showed that the present value of Sudan’s total external debt, as of December 2012, stood at $ 79 billion, which was equivalent to 150% of GDP, 1,697% of exports and 1,646% of revenues. These ratios are far beyond the threshold of debt sustainability for Less Developing Countries. Although, the country is qualified technically to benefit from the HIPCs initiatives, but the Sudan has been banned from entering into the initiative, partly because the country needs to settle its arrears to the major creditors, i.e., IMF, World Bank (WB), and African Development Bank (AFDB), Paris and Non-Paris Club Creditors, and partly due to political demands imposed by the international community (in general and US in particular) to solve the Darfur problem.