Sudan's President Omar Hassan al Bashir, who risks losing the oil-producing south after an independence referendum, called on creditors to cancel Sudan's debts at an Arab economic summit on Wednesday.

"Sudan has just emerged from conflict and it is clear that it deserves preferential treatment from creditor states," Bashir told the summit at the Sharm el-Sheikh resort.

"We look forward to have this summit offer a clear initiative to cancel Sudan's debts ... for peace and rebuilding it," he said.

A 2005 peace deal ended decades of civl war between the north and oil-producing south and the country remains mired in a deep economic crisis.

The government has spent heavily on defence and been forced to increase imports to cover a fall in local production. It faces foreign exchange shortages, rising inflation and a weakening Sudanese pound.

It announced emergency measures this month to redress its budget deficit, including lower subsidies for petroleum products and hikes in the price of sugar.

Bashir's debt relief plea comes at a politically sensitive time as his government awaits the outcome of a recent self-determination referendum in the south due by the end of this month.

"(We are) fulfilling a promise we made. We are committed to the result," Bashir said of the referendum, which was promised as part of the 2005 peace agreement.

The government has also been locked in conflict with rebel groups in the western Darfur region where there has been a series of broken ceasefires and failed negotiations. The Justice and Equality Movement (JEM), one of two rebel groups, took up arms against the government in 2003.

Bashir said the Arab League had been working on a peace strategy in the Darfur area to "allow refugees to return voluntarily and enforcing security. We aim to bring back all the sons of Darfur who remain away."

Clashes this month drove more than 12,000 people from their homes. On Dec. 30, Sudan's government withdrew from peace talks with a rebel coalition negotiating in Doha.