IMF urges Sudan to seek debt relief from donors

Reuters News

9/27/2012 2:41:47 PM - Reuters News

WASHINGTON (Reuters) - The International Monetary Fund on Thursday urged Sudan to meet with donors to discuss debt relief, as the north African country continues to reel from the secession of its southern region.

Some of the fund's board members also called for "exceptional efforts" from the IMF and the international community to help Sudan reduce its debt of about $40 billion. But the lobby for debt relief is unlikely to be successful while Sudan continues to face criticism over its human rights abuses.

"Directors encouraged the authorities to step up their dialogue with creditors and donors to garner support for debt relief," said a statement from the 24-member IMF board, which discussed Sudan as part of an annual economic review.

The IMF also commended Sudan's tough austerity package to help overcome the loss of oil revenues, but said the country should do more to tighten monetary policy and strengthen the independence of the Bank of Sudan.

South Sudan seceded in July 2011, taking three-quarters of Sudan's critical oil revenue with it. Leaders from the two sides finally reached a border security deal on Wednesday to restart badly needed oil exports.

However, they failed to settle the fate of at least five disputed oil-producing regions along the border, which have been the source of tensions and intermittent fighting.

Sudan sorely needs a financial lifeline from international donors, but it is unable to borrow from the IMF after failing to pay back previous loans and efforts to reschedule debts it owes other countries have faltered.

The United States and other powers criticize Sudan for human rights violations and a harsh crackdown on rebels. Western powers also shun Sudanese President Omar Hassan al-Bashir who was indicted by the International Criminal Court over war crimes in Darfur, the site of a nearly decade-old insurgency.

Washington still maintains its 1997 embargo on the country over Sudan's role in hosting prominent Islamist militants. The sanctions restrict U.S. trade and investment with Sudan and block the assets of the Sudanese government.

(Reporting by Anna Yukhananov; Editing by M.D. Golan)