Debt statistics 2017

Overall international debt burden (% of GDP)136
Government payments on foreign debt (% of revenue)5.3
Government foreign debt (% of GDP)92
Private foreign debt (% of GDP)49
IMF and World Bank debt cancellation ($ billions)0
Country case studiesYes

Country case study

Most of Sudan’s debt to the West, whether financial institutions such as the IMF and World Bank, or rich country governments, originated in the 1970s and 1980s when Sudan was ruled by the dictator Gaarfar Nimeiry.

During the 1970s Sudan’s economy was strong, with good prices for its major export, cotton. With lots of cheap money in the world economy following the 1970s oil price spikes, private banks lent recklessly to Sudan in anticipation of future revenue from oil.[1] Western powers also supported loans to Sudan, for instance lending in order to buy western company exports.

However heavy flooding in 1978 and the rise in US interest rates in the early 1980s meant Sudan could not meet payments on its debts. Rather than banks taking some responsibility for their reckless lending, the IMF bailed them out by giving Sudan new loans in order to pay its old debts.[2] Despite Sudan’s difficulties paying its debts, more loans were given by banks and governments due to, as the IMF’s official history puts it, “respect for Sudan’s strategic role in the region”.[3] Just as in other African countries such as Zaire (now Democratic Republic of Congo), Western powers continued to loan money to an already highly indebted dictator, in order to keep him on side in the Cold War.

In 1983 major drought struck devastating exports and food security. As the country plunged into economic crisis, Nimeiry imposed Islamic law across the country, including the previously autonomous South. Despite the start of the civil war, the IMF lent more money but with the drought, civil war and falling prices of commodities, Sudan defaulted on its debts in 1984. Few repayments have been made on debt to the Western world since, and so further loans have not been given either. However, loans have been given from other creditors, such as Kuwait, Saudi Arabia and China.

Omar Al-Bashir came to power in Khartoum in 1989. His regime has been accused of very serious human rights abuses, and the International Criminal Court has issued an arrest warrant against Bashir for war crimes. He continued a policy of repression towards the South and West of Sudan.

In 2005 a peace agreement led southern Sudan once again having an autonomous government. In early 2011, Southern Sudanese voted for independence, and South Sudan became the world’s newest country in July 2011. Sudan (North) has offered to keep all the government debt, in return for being allowed into the Heavily Indebted Poor Countries process (HIPC). This means that for the moment South Sudan has started life debt free. However, in theory there could be a negotiation on dividing up Sudan’s debt in the future. So far, Sudan (North) has not been entered into the HIPC process.

The Sudanese government’s external debt is thought today to be close to $40 billion, over 70 per cent of GDP. Of this, close to half is owed to the IMF, World Bank and Western governments, and debt payments are not being made on it.

The debt owed to western government’s has had interest of 10-12 per cent added to it every year since 1984. For instance, the debt to UK Export Finance was £170 million in 1984 but is now £700 million. If and when this debt is cancelled, most government’s intend to count it as aid and as contributing to meeting aid targets. Despite the fact this is ‘made-up money’ which no payments have been made on since 1984, cancellation would allow government’s to cut aid spending by billions of dollars collectively, but still say aid has remained the same.

[1] Boughton, J. (2001). Silent revolution: The International Monetary Fund 1979-1989. 01/10/01.

[2] Boughton, J. (2001). Silent revolution: The International Monetary Fund 1979-1989. 01/10/01.

[3] Boughton, J. (2001). Silent revolution: The International Monetary Fund 1979-1989. 01/10/01.

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