Sudan delays China debt, exports $400 mln of gold

Reuters, Sunday 19 Feb 2012

Debt postponement agreed in light of Sudan's economic crisis following succession of oil-rich South Sudan

Sudan has secured a five-year delay on its debts to China, the finance minister said on Saturday, part of efforts to make up for the loss of revenues from the oil-producing south.

Ali Mahmoud also told reporters the United States had offered Sudan more debt forgiveness if it meets conditions including bringing peace to its southern border regions.

Sudan had also exported some $400 million worth of gold so far this year, he said.

Sudan has been facing a severe economic crisis since South Sudan declared independence in July, taking with it about three quarters of the country's oil output, the lifeblood of both economies. 

The loss of southern oil fields hit foreign currency inflows, fuelling inflation. Officials have said the country can make up for the loss of crude by boosting exports of agricultural commodities and minerals.

Mahmoud said China  a major investor in oil, construction and other sectors of the Sudanese economy  had agreed to postpone Sudan's debt in light of the loss of revenues.

"We've succeeded in convincing China to delay its debts for a period of five years," he said, without saying how much debt that included. "We told them we were previously paying from oil revenues and now we don't have oil revenues."

Sudan's external debt amounts to about $38 billion.

It exported 7.2 tonnes of gold at a value of $55 million per tonne between 1 January and 15 February of this year, Mahmoud said.

Gold output can be hard to verify in Sudan because much of it comes from individual prospectors rather than from regular mines, industry executives say.

US officials had proposed $2.4 billion of debt forgiveness for Sudan under the 2013 budget and had offered to work with international bodies to forgive more if Sudan met conditions including securing peace in southern border states and in Darfur, Mahmoud said.

Rebels and government forces have been fighting in the South Kordofan and Blue Nile states, along the border with South Sudan, since last year. A separate insurgency has raged in the western Darfur region since 2003.

The United States has maintained trade sanctions on Sudan since 1997, deterring investment by many Western firms.

The US special envoy to Sudan is due to visit Khartoum this week.

The central bank said last week it had sold 6.5 tonnes of gold for more than $300 million since January, and was increasing dollar supplies to local banks to stop a slide of the Sudanese pound.

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