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Economist: Abraham Accords, US Loan Will Help Revitalize Sudan's Economy

Sudanese Prime Minister Abdullah Hamdok, right, welcomes US Treasury Secretary Steven Mnuchin to the Cabinet Building, in Khartoum, Sudan, Jan. 6, 2021.

Sudan took another big step this week toward rejoining the international community and losing its label as a pariah state by officially signing an agreement to normalize relations with Israel.

Sudan, which once hosted al-Qaida leader Osama bin Laden, had already agreed to improve relations with Israel but made it official on Wednesday when visiting U.S. Treasury Secretary Steven Mnuchin and Sudan’s justice minister signed the Abraham Accords in Khartoum.

The agreement is aimed at boosting relations between Arab countries and Israel. As part of the deal, the U.S. removed Sudan from its list of states that sponsor terrorism. Mnuchin also signed a pledge to give Sudan a $1 billion bridge loan, which will help Sudan clear its debt with the World Bank and open doors for acquiring direct foreign investment.

Khartoum-based economic analyst Samah Salman said Sudan desperately needs the U.S. money to dig out of its economic crisis. Speaking to VOA’s South Sudan in Focus, she notes the country has $60 billion in foreign debt, about a quarter of which is in arrears.

“The government has a huge budget deficit. The 2021 national budget is only being approved this week and the country is in a situation of widespread shortages of essential goods including fuel, bread and medicine,” Salman said.

Salman said the U.S. loan will have a long-term positive impact on Sudan’s faltering economy.

“In the short term the Sudanese people are not seen to immediately benefit from the signing of this Memorandum of Understanding, as in the last few months annual inflation has continued to soar at greater than 200 percent,” she said. “Now, that’s not to say there isn’t medium- to long-term impact or benefit to Sudan, as the signing obviously will help to clear Sudan’s arrears to the World Bank and by doing so it will give Sudan access to over 1 billion in annual from the World Bank for the first time in 27 years.”

Mnuchin said as much at the signing ceremony on Wednesday.

“You will be able to use this drawdown, clear the arrears and that will create significant positive opportunities for Sudan,” he said.

Mnuchin is the second high-ranking U.S. official to visit Sudan in recent months, following Secretary of State Mike Pompeo in August. The country was taken off the U.S. state sponsors of terrorism list in December.

Sudanese Justice Minister Nesraldin Abdelbari said Sudan welcomes “the warming up of relations between Israel and countries in the region and also the start of diplomatic relations on our part.”

Once Sudan has access to foreign financing, Salman said, the country can redevelop its agricultural sector, electricity, and infrastructure, which have all deteriorated greatly since the 1990s.