Western, Arab donors pledge $1.8 billion for Sudan’s transition

The pledges came from 40 countries and institutions during a video conference hosted by Berlin.
Thursday 25/06/2020
Sudanese Prime Minister Abdalla Hamdok (R) meets with German President Frank-Walter Steinmeier in Khartoum, last February. (AFP)
Sudanese Prime Minister Abdalla Hamdok (R) meets with German President Frank-Walter Steinmeier in Khartoum, last February. (AFP)

BERLIN— Western and Arab countries pledged a total $1.8 billion in aid to Sudan on Thursday in efforts to help the struggling African nation, one year after pro-democracy protesters forced the removal of the country’s longtime autocratic ruler, Omar al-Bashir.

The pledges from 40 countries and institutions came during a video conference hosted by Berlin, which marks the formal launch of the international community’s financial support for Sudan’s democratic transition after three decades of punitive sanctions and isolation under Bashir.

“We are extremely delighted and satisfied this this response,” said Sudanese Prime Minister Abdalla Hamdok, a former economist with the United Nations. “For 30 years, we have longed for this.”

Although the conference presented an unprecedented amount of international support, pledges fell far short of the $8 billion Hamdok had previously said Sudan will need to rescue its plunging economy.

Acting USAID administrator John Barsa said that the US alone would give $356.2 million towards development aid and democratic transition programs. The funds included a nearly tenfold increase in development assistance compared to 2019, he said.

Sudan’s interim government has been grappling with an economic crisis since it took office last year, also navigating a treacherous transition to civilian rule. On top of that, the coronavirus pandemic has exacerbated Sudan’s economic despair, throwing millions of casual laborers out of work. Many of Thursday’s pledges will be used to fund an ambitious $1.9 billion cash transfer program to Sudan’s neediest families, around 80% of the population, over the course of two years.

Two-thirds of the country’s more than 40 million people live in poverty, and the government has inherited a debt of 60 billion dollars and a rapid inflation rate, and badly needs an injection of funds from foreign donors. The nation’s currency, the Sudanese pound, is trading on the black market for double its official rate of 55 pounds to the dollar.

The European Union pledged 312 million euros ($350 million), while Germany said it would give 150 million euros ($168 million), of which 118 million euros will go toward development aid, food security, vocational training, support for refugees and poor families, including in the war-torn region of Darfur. A further 32 million euros will go toward humanitarian aid and stabilisation programs.

The European Union pledged 312 million euros ($350.13 million), the United States $356.2 million, Germany 150 million euros and France 100 million for various specific projects, among them planned cash transfers to poor families with the help of the World Bank, officials said at the online event.

The United Arab Emirates pledged $300 million and the United Kingdom 150 million pounds ($186.17 million).

France pledged a total of 100 million euros, or about $112 — a mixture of previously announced aid and newly bolstered assistance.

Sudan’s government faces steep challenges to transforming its economic system and meeting the demands of protesters who ousted Bashir last year, spurred by the soaring prices of staple goods and rising youth unemployment. The government is on the hook for billions of dollars in interest and principal repayments, which has crippled its economic activity and hindered its access to funds from international financial institutions.

David Malpass, President of The World Bank Group, said the global body has worked to find innovative ways to circumvent these financial restrictions, and will establish a multi-donor trust fund to channel Thursday’s pledges as it works with the government to clear its massive debt.

On Wednesday, the International Monetary Fund announced that they had reached a preliminary deal to reform the country’s economy, and while the government grapples with the economic fallout of the coronavirus.

But IMF assistance is presumably contingent on significant economic reforms, including painful measures that will slash subsidies for basic goods to create room for more spending on social programs.

On Thursday, Kristalina Georgieva, Managing Director of the International Monetary Fund, stressed the need for the government to remove fuel subsidies, which she said consumed 10.5% of Sudanese gross domestic product. She also appealed for $1.5-2 billion in aid to plug Sudan’s financial gap, saying that without donors’ help, “inflation cannot be put under control and these reforms cannot have legs.”

Another major economic stumbling block for Sudan is the fact that it remains listed as a state sponsor of terrorism by the US State Department because of the country’s former support for radical Islamic extremist groups.

Barsa said the U.S. would “work with” Sudan to get the designation lifted.

The collapse of Sudan’s economy poses an existential threat for its political transition. The uprising that toppled Bashir in April 2019 led to a power-sharing deal between civilian appointees and the military. Pro-democracy activists have said that the military leaders have stalled in handing over power to civilian leaders.

“This conference opened a new chapter in the cooperation between Sudan and the international community to rebuild the country,” Heiko Maas said at the video conference co-organised with Sudan, the European Union and the United Nations.