South Sudan sets conditions for north debt help

Reuters News
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Posted: Mar 18, 2011 4:26 PM
South Sudan sets conditions for north debt help

By Aaron Maasho

ADDIS ABABA (Reuters) - South Sudan will help the north get relief on around $38 billion in debt, as long as the north "cooperates" on a border dispute and other issues in the countdown to the country's split, a southern official said.

Sudan's oil-producing south is due to separate from the north on July 9 after its people overwhelmingly voted to secede in a referendum in January -- a vote promised in a 2005 peace deal that ended decades of north-south civil war.

The sides remain at loggerheads over a list of issues ahead of the split, including ownership of the disputed Abyei border area, the scene of clashes in recent days, and the handling of the country's crippling debt.

South Sudan has already said it plans to introduce its own currency after the division and will need the cooperation of its old civil war foe to redeem the old Sudanese pounds circulating in its system.

"We are ready to join the north in joint efforts for debt relief," said Pagan Amum, secretary general of the south's ruling Sudan People's Liberation Movement (SPLM), at the end of a week-long meeting with northern leaders in Ethiopia.

"But our participation is conditional to the cooperation of the north in all the other areas including Abyei, as well as also assuming the redemption of the Sudanese currency as we change the currency," he told Reuters.

JOINT TEAM

Both sides had agreed to send a joint team to the spring meetings of the World Bank and the International Monetary Fund to campaign for debt relief, said former South African President Thabo Mbeki, who organized the meeting in the Ethiopian resort town of Debre Zeit.

"We are not dealing with an ordinary routine case of debt forgiveness," Mbeki told reporters in Addis Ababa.

"This will happen in the context of a very important and fundamental political change in Sudan which would be of interest not only to the Sudanese but also of immediate interest to the neighbors and the rest of the continent."

Sudan's north-south conflict -- Africa's longest civil war fought over oil, ideology and religion -- destabilized the whole region and killed an estimated 2 million people.

North Sudanese officials have in the past said they would not divide the debt with the south, as the new nation would not be able to service it. The SPLM says the north should keep the debt as it was built up by the Khartoum government.

The World bank has said Khartoum would need to introduce wide economic reforms to qualify for relief of multilateral debt.

Nearly 90 percent of Sudan's external debt is owed to bilateral and commercial creditors, with their own requirements, and would take at least three years to clear, according to a paper by the Center for Global Development.

Much of Sudan's debt dates back to the 1960s when borrowed on poor terms to finance large industrial projects, according to a note by the IMF.

Mbeki did not announce breakthroughs on other burning issues, including the position of contested parts of the north-south border, the ownership of Abyei or how the south would pay the north to transport oil through its territory.

(Writing by Andrew Heavens; Editing by Elizabeth Fullerton)