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Prime Minister Hamdok wins critical backing for economic turnaround

An IMF programme and bridging loans could trigger debt reduction programme starting next month

The two days of economic brainstorming on African economies in Paris started well on the morning of 17 May when Sudan's Prime Minister Abdalla Hamdok set out his government's reform plans which could unblock a plan to restructure much of the country's $60 billion foreign debt (AC Vol 62 No 10, Transition under pressure).

France's Finance Minister Bruno Le Maire added the pledge of a $1.5bn bridging loan to settle Sudan's arrears to the International Monetary Fund. Britain, Ireland and Sweden have made similar loans to repay Khartoum's arrears to the African Development Bank, and the United States has provided a bridging loan to pay off arrears to the World Bank.

That means Sudan could start its debt-relief programme, under the IMF and Bank's Heavily Indebted Poor Country Initiative, late next month. It would allow the country to borrow another $2bn from the Bank to fund urgent development projects, and bring in the IMF to finance more economic restructuring.

Those initial economic changes – ending fuel subsidies, raising the power tariffs and liberalising forex policy – have all pushed up prices and are politically risky. The introduction of the government's Family Support Programme, designed to compensate most Sudanese, is helping.

But the next stage of economic reforms, which includes restructuring and reviewing the accounts of some 600 state companies, may be riskier still.

Many of these companies, which have corruptly benefited from public funds, are in the hands of Islamist acolytes of the former ruling party or the military and intelligence services.

Under new Finance Minister Jibril Ibrahim, many of these companies are meant to be under treasury surveillance but local anti-corruption activists say that political ideologues and security officials are pushing back hard. This year about 22% of the national budget is allocated to the military whose management is opaque.

But individual officers also get access to funds directly from the 'military-industrial' companies such as Giad, which comes under the ministry of defence, as part of a complex network of companies and subsidiaries.

A new report by Sudanese researcher Suliman Baldo, now of the US-based Sentry Group, highlights the role of Al Sabika Al Zahabia, a gold mining company which it says is still controlled by the General Intelligence Service.

It adds that Lieutenant-General Abdul Rahim Hamdan Dagalo, the second-in-command of the Rapid Support Forces (RSF), the rebadged Janjaweed militia operating in Darfur, and Deputy Chair of the ruling Sovereign Council Mohamed Hamdan Dagalo 'Hemeti' have incorporated several private companies in Sudan and the United Arab Emirates. These companies are reported to be carrying out contracts for the RSF under opaque arrangements (AC Vol 61 No 25, Washington seals the deal).

Depriving the Hamdok government of this revenue adds to the political risks it faces. Should it fail to convince young Sudanese that it is able to resuscitate the economy it could face the same sort of popular protests that led to the toppling of the Islamist National Congress Party regime in April 2019.

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