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Sudan: Staff Report for the 2014 Article IV Consultation and Second Review under the Staff Monitored Program—Debt Sustainability Analysis

Author(s):
International Monetary Fund. Middle East and Central Asia Dept.
Published Date:
December 2014
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Background and Recent Developments

1. Sudan’s economy has yet to recover from the shock of South Sudan’s secession in 2011. Sudan lost three-quarters of oil production, two-thirds of exports, and half of fiscal revenues in the secession. A heavy debt burden, international sanctions, and volatile domestic and regional political environments continue to weigh on economic performance. Growth has been subdued and inflation was high since the secession.

2. Economic performance in the first half of 2014 was mixed. Under a new staff-monitored program (SMP) with the IMF for the year 2014, the authorities have tightened fiscal and monetary policy stances. Government borrowings from the central bank was reduced, reserve money growth slowed (albeit higher than the program target), and international reserves increased marginally. However, inflation remains stubbornly high, affected by past energy price hikes, exchange rate devaluation, and continued supply disruptions due to conflict. There is a large gap between the parallel market rate and the official exchange rate.

3. The “zero-option” and prospects for debt relief. Debt relief prospects are predicated on reaching out to creditors, normalizing relations with international financial institutions, and establishing a track record of cooperation with the IMF on policies and payments. As for the “zero-option”2, the Sudanese authorities have indicated that they have agreed with South Sudan to extend the deadline for another 2 years till October 2016 in order to avoid immediate apportionment of debt between the two countries. In the meantime, they will step up outreach efforts to creditors to garner support for debt relief.

Structure of Debt

4. Sudan’s external debt remained very high as of end-2013.3 In nominal terms, it amounted to about US$45 billion (79 percent of GDP), of which about 85 percent was in arrears (Error! Reference source not found.). The structure of external debt has not changed over the last decade. The bulk is public and publicly guaranteed (PPG) debt (US$43.4 billion, of which 88 percent in arrears), mainly owed to bilateral creditors and roughly equally divided between Paris Club and non-Paris Club creditors (Figure 2). Only a small fraction is private debt owed to suppliers (US$1.6 billion).

Figure 1.Stock of External Debt, 2001–13

Sources: Sudanese authorities, World Bank, and IMF staff estimates

Figure 2.Structure of 2013 PPG External Debt

Sources: Sudanese authorities, World Bank, and IMF staff estimates.

5. External public borrowing has been limited in recent years (Table 1). Sudan has been largely cut off from access to external financing due to its arrears with the creditors. It has been only able to contract new debt—below 1 percent of GDP per year in 2012-14—with a limited number of multilateral and non-Paris Club bilateral creditors. The newly contracted debt has been mainly used to finance projects in the agriculture, services and energy sectors. In the first half of 2014, some US$152 million of new debt (0.2 percent of GDP) was contracted, including US$99 million from a multilateral creditor and US$53 million from bilateral creditors. The new debt contracted is within the annual limit of US$600 million under the SMP. There has not been any new private external debt in decades.

Table 1.New External Debt Contracted (2012-14)
20122013H1 2014
Total new debt (in US$ million)431618152
In percent of GDP0.70.90.2
Of which:
Concessional134165
Nonconcessional296602147
By creditor (in percent)
Multilateral794865
Non-Paris Club bilateral215235
Average grant element (in percent)302827
By sector (in percent)100100100
Agriculture3238
Energy74733
Services6136
Industrial Development631
Other10
Sources: Sudanese authorities; and IMF staff calculations.
Sources: Sudanese authorities; and IMF staff calculations.

6. Sudan’s total public debt reached 91 percent of GDP by end-2013. The bulk of the public debt is external debt. Domestic debt has been on the rise due to increased domestic financing of the budget, albeit to a still relatively low level (13 percent of GDP).

Debt Sustainability Analysis

A. Underlying Assumptions

7. The macroeconomic assumptions underlying this DSA have been updated based on developments in 2013 and the first half of 2014 (Box 1). The differences compared to the macroeconomic framework in 2013 DSA are driven by: (i) lower growth and higher inflation outturns in 2013 relative to previous projections; (ii) the impact of the policy measures carried out in September 2013, including a step devaluation in the official SDG/USD exchange rate and increases in domestic fuel prices; and (iii) outturns in the first half of 2014. Both the fiscal and current account deficits are projected to be lower than in the previous DSA over the medium term, reflecting improved fiscal performance as well as higher oil-related revenues from South Sudan. As in previous DSAs, this DSA update does not base its baseline or any alternative scenario projections on speculations about the timing and magnitude of arrears clearance, possible external debt relief or debt apportionment between Sudan and South Sudan.

Box 1.Sudan: Macroeconomic Assumptions 2014-34

Natural resources. The outlook is informed by discussions with the Ministries of Oil and Mining. Oil production is projected at 127 thousand barrels/day in 2014, a moderate increase from 119 thousand barrels/day in 2013. Enhanced recovery in existing fields and further exploration will likely help production to further increase over the medium term, reaching a peak of 210 thousand barrels/day in 2020 before it start to gradually decline. Meanwhile, annual production of gold is projected to increase by 3 percent per year until 2020 stable afterwards. Price projections are guided by the IMF’s latest World Economic Outlook (WEO). Price for Sudan’s crude oil is projected to average at US$91/barrel, and remains stable at US$87/barrel in the longer term.

Real sector. The real GDP growth rate is expected to gradually increase to 4.7 percent until 2019 and then to average 4.2 percent over 2020–34. Medium term real GDP growth mainly reflects a strengthening non-oil sector led by the agriculture and mining sectors under macroeconomic stabilization and structural reforms in the areas of business environment, education and health, and reducing unemployment1. Inflation, as measured by GDP deflator, is projected to be high in the near term, but will stabilize over the medium term; it averages at 15 percent in 2014-19 and 5½ percent in 2020-34.

Fiscal sector. The fiscal deficit is projected to improve over the medium term, reflecting a combination of improvements in tax revenue collection, increase in oil revenues, and containment of current spending, including a gradual phasing out of fuel subsidies. Over the long run, the fiscal deficit is expected to average some 1 percent of GDP, reflecting (i) a gradual increase in tax revenues, against the backdrop of decreasing oil revenues and (ii) increase in capital spending. Domestic debt to GDP ratio is projected to be stable under the growth and fiscal performance assumptions.

External sector. The current account deficit is expected to improve slightly over the medium term, reaching 5 percent of GDP by end-2019, reflecting further fiscal consolidation as well as growth in oil and non-oil exports. In the long run it is expected to be stable at 5-6 percent of GDP as oil exports decline while non-oil exports continue to increase. The current account deficit will be financed by foreign direct investment and continued accumulation of external debt arrears.

External debt. Reflecting continued limited access to international finance and a deteriorating debt service capacity, disbursements of new loans are expected to be limited, at about 0.4 percent of GDP during 2013–33. In line with the recent portfolio of new contracted debt, the share of new concessional loans is kept at around one third. It is assumed that Sudan will continue to fail to service obligations arising from the stock of arrears.

1/ For more information on sources of growth in Sudan, see IMF (2014), Staff Report for the 2014 Article IV Consultation and Second Review Under the Staff Monitored Program, Annex II.

B. External Debt Sustainability

8. Sudan’s external debt stock remains unsustainable under the baseline scenario (Figure A1 and Table A1). All PPG external debt level ratios continue to breach their indicative thresholds throughout the 20-year projection period. The present value (PV) of PPG external debt is at 125 percent of GDP at end-2013—more than four times of the 30 percent threshold for weak policy performers—and is projected to stay above 60 percent of GDP through the projection period. Similarly, both the PV of debt-to-exports and the PV of debt-to-revenue ratios are above 1300 percent in 2014, well above their respective thresholds. Although these ratios are projected to improve based on the assumptions of robust growth and limited external borrowing over the medium to long run, such improvements are insufficient to bring debt to sustainable levels.

9. In addition, Sudan’s debt outlook is vulnerable to a range of shocks (Figure A1 and Table A2). The PV of debt-to-GDP, debt-to-revenue and debt service-to-revenue ratios are most vulnerable to a onetime depreciation shock, whereas the PV of debt-to-exports and debt service-to-exports ratios are most vulnerable to an exports shock. A standard one-time 30 percent depreciation shock in 2015 would increase the PV-of-debt to more than 160 percent of GDP in that year, and result in a permanently upward shift in the debt path.

C. Public Debt Sustainability

10. Public DSA results mirrors those of the external DSA (Figure A2 and Tables A3). The debt ratios, albeit declining, converge to relatively high levels in the long term. The PV of public debt-to-GDP ratio is projected to stay well above the indicative benchmark throughout the projection period. Similar to the external DSA, the public DSA bound tests show that public debt path is most vulnerable to a one-time 30 percent real depreciation (Table A4).

Conclusions

11. Sudan remains in debt distress. The results of this DSA are broadly unchanged from those in previous DSAs. External debt remains unsustainable. Over the long term, all public and public-guaranteed external debt burden ratios remain well above their respective indicative thresholds (except for the debt service ratios at the end of the projection horizon). Public debt is also unsustainable, driven mostly by external debt dynamics.

12. Further efforts are needed for Sudan to obtain much-needed debt relief and regain access to external financing. Sudan needs to: (i) step up outreach efforts to its creditors to garner broad support for debt relief; (ii) continue to cooperate with the IMF on economic policies and payments with a view to establish a track record of sound macro policies; and (iii) limit new borrowing on non-concessional terms as much as possible, since it further increases the future debt burden, and secure foreign support on highly concessional terms to finance necessary development and infrastructure expenditures.

13. The authorities generally agree with the results and assessments of the DSA. They agree that Sudan’s external debt is at unsustainable levels, debt service burdens are beyond Sudan debt servicing capacity, and as a result Sudan continues to accumulate external debt arrears. They agree that non-concessional borrowing is costly and therefore should be minimized. They reiterated that debt relief is urgently needed for Sudan’s economic development, and remain hopeful that international community will support Sudan to secure a debt relief in the near future. In this regard, the authorities will step up their efforts in reaching out to creditors.

Figure A1.Sudan: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2014-34 1/

Sources: Country authorities; and staff estimates and projections.

1/ The most extreme stress test is the test that yields the highest ratio on or before 2024. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Exports shock and in figure f. to a One-time depreciation shock

Figure A2.Sudan: Indicators of Public Debt Under Alternative Scenarios, 2014-34 1/

Sources: Country authorities; and staff estimates and projections.

1/ The most extreme stress test is the test that yields the highest ratio on or before 2024.

2/ Revenues are defined inclusive of grants.

Table A1.External Debt Sustainability Framework, Baseline Scenario, 2011-2034 1/(In percent of GDP, unless otherwise indicated)
ActualHistorical Average6/Standard Deviation6/Projections
2011201220132014201520162017201820192014-2019 Average202420342020-2034 Average
External debt (nominal) 1/61.884.080.382.380.578.475.973.170.465.453.6
of which: public and publicly guaranteed (PPG)59.481.477.879.977.975.873.370.768.163.251.7
Change in external debt−2.822.2−3.72.0−1.8−2.1−2.6−2.7−2.7−1.0−1.2
Identified net debt-creating flows−5.09.40.11.20.60.0−0.6−1.2−1.1−0.2−0.6
Non-interest current account deficit−2.16.66.12.73.64.13.73.53.02.82.83.94.74.2
Deficit in balance of goods and services−2.06.86.54.74.64.54.24.24.04.75.0
Exports17.69.99.510.012.012.713.113.012.912.111.4
Imports15.516.716.114.716.517.117.317.216.816.816.5
Net current transfers (negative = inflow)−1.7−1.4−2.1−2.92.0−2.1−2.4−2.6−2.7−2.8−2.6−2.2−1.4−1.9
of which: official−1.0−0.7−0.7−0.6−0.7−0.7−0.7−0.7−0.6−0.5−0.3
Other current account flows (negative = net inflow)1.51.11.61.41.61.61.51.51.41.31.1
Net FDI (negative = inflow)−4.0−3.9−4.6−5.92.1−3.3−3.3−3.1−3.1−3.1−2.8−3.3−4.2−3.5
Endogenous debt dynamics 2/1.16.8−1.40.50.2−0.3−0.6−0.9−1.0−0.8−1.1
Contribution from nominal interest rate2.72.73.12.93.22.82.52.32.21.81.2
Contribution from real GDP growth0.21.4−2.6−2.4−3.1−3.1−3.1−3.3−3.2−2.6−2.3
Contribution from price and exchange rate changes−1.82.7−1.9
Residual (3-4) 3/2.212.8−3.80.8−2.4−2.1−1.9−1.6−1.6−0.8−0.6
of which: exceptional financing−2.7−2.8−2.8−2.6−2.7−2.6−2.5−2.3−2.1−1.8−1.1
PV of external debt 4/127.5128.9124.1119.2113.7108.2102.889.966.7
In percent of exports1335.31286.91035.2941.2868.0831.0799.8743.4583.3
PV of PPG external debt125.0126.6121.5116.6111.2105.8100.587.764.8
In percent of exports1309.71263.31013.4920.6848.7812.4781.8725.6566.7
In percent of government revenues1357.61165.11072.51000.6942.4880.4843.0749.7559.7
Debt service-to-exports ratio (in percent)18.333.532.529.726.223.621.920.819.616.712.7
PPG debt service-to-exports ratio (in percent)18.133.132.129.325.823.221.520.519.216.312.1
PPG debt service-to-revenue ratio (in percent)18.035.233.327.127.325.223.922.220.716.811.9
Total gross financing need (Billions of U.S. dollars)−1.93.83.02.62.32.22.01.81.92.62.9
Non-interest current account deficit that stabilizes debt ratio0.7−15.69.82.05.55.55.65.65.54.95.9
Key macroeconomic assumptions
Real GDP growth (in percent)−0.3−2.23.33.53.03.13.43.94.24.64.74.04.14.44.2
GDP deflator in US dollar terms (change in percent)2.9−4.12.310.911.21.8−11.0−2.01.11.62.3−1.00.30.20.1
Effective interest rate (percent) 5/4.44.13.94.90.53.73.63.53.43.33.23.42.82.32.6
Growth of exports of G&S (US dollar terms, in percent)−8.7−46.91.415.435.710.110.27.58.95.65.78.02.94.73.5
Growth of imports of G&S (US dollar terms, in percent)−7.50.91.615.625.5−4.13.75.46.65.44.73.64.14.44.2
Grant element of new public sector borrowing (in percent)35.135.135.135.135.135.035.134.433.534.1
Government revenues (excluding grants, in percent of GDP)17.79.49.210.911.311.711.812.011.911.711.611.7
Aid flows (in Billions of US dollars) 7/0.40.40.40.40.60.60.60.60.60.50.4
of which: Grants0.20.30.40.30.50.50.50.50.50.40.3
of which: Concessional loans0.20.10.00.10.10.10.10.10.10.10.1
Grant-equivalent financing (in percent of GDP) 8/0.60.90.90.90.80.80.60.30.5
Grant-equivalent financing (in percent of external financing) 8/72.173.673.873.472.171.167.560.865.3
Memorandum items:
Nominal GDP (Billions of US dollars)67.363.266.770.064.565.769.273.578.795.9149.0
Nominal dollar GDP growth2.6−6.25.74.9−7.91.95.36.37.12.94.44.64.3
PV of PPG external debt (in Billions of US dollars)69.770.972.273.674.976.277.684.496.8
(PVt-PVt-1)/GDPt-1 (in percent)1.81.92.12.01.91.81.91.50.81.3
Gross workers’ remittances (Billions of US dollars)1.41.11.41.41.61.71.92.12.12.12.1
PV of PPG external debt (in percent of GDP + remittances)122.5124.0118.6113.6108.2102.897.985.863.9
PV of PPG external debt (in percent of exports + remittances)1077.11047.6840.6760.7700.1665.3645.5612.7503.6
Debt service of PPG external debt (in percent of exports + remittances)26.424.321.419.217.716.815.813.810.8
Sources: Country authorities; and staff estimates and projections.

Includes both public and private sector external debt.

Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.

Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.

Assumes that PV of private sector debt is equivalent to its face value.

Current-year interest payments divided by previous period debt stock.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Defined as grants, concessional loans, and debt relief.

Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).

Sources: Country authorities; and staff estimates and projections.

Includes both public and private sector external debt.

Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.

Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.

Assumes that PV of private sector debt is equivalent to its face value.

Current-year interest payments divided by previous period debt stock.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Defined as grants, concessional loans, and debt relief.

Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).

Table A2.Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2014(In Percent)
Projections
20142015201620172018201920242034
PV of debt-to-GDP+remittances ratio
Baseline124119114108103988664
A. Alternative Scenarios
A1. Key variables at their historical averages in 2014-2034 1/124917462534413−13
A2. New public sector loans on less favorable terms in 2014-2034 2124109109105101968765
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2015-20161241121151111061019168
B2. Export value growth at historical average minus one standard deviation in 2015-2016 3/1241111141111061019165
B3. US dollar GDP deflator at historical average minus one standard deviation in 2015-201612497969288847556
B4. Net non-debt creating flows at historical average minus one standard deviation in 2015-2016 4/124111112106101968764
B5. Combination of B1-B4 using one-half standard deviation shocks12494898582786952
B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/12416216215614914212796
PV of debt-to-exports+remittances ratio
Baseline1048841761700665645613504
A. Alternative Scenarios
A1. Key variables at their historical averages in 2014-2034 1/1048664519426363313101−112
A2. New public sector loans on less favorable terms in 2014-2034 21048773730682653634619515
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2015-20161048772727678648628610503
B2. Export value growth at historical average minus one standard deviation in 2015-2016 3/1048102112431159110510781068875
B3. US dollar GDP deflator at historical average minus one standard deviation in 2015-20161048772727678648628610503
B4. Net non-debt creating flows at historical average minus one standard deviation in 2015-2016 4/1048864825686656636618506
B5. Combination of B1-B4 using one-half standard deviation shocks1048881910837800775752624
B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/1048772727678648628610503
PV of debt-to-revenue ratio
Baseline116510731001942880843750560
A. Alternative Scenarios
A1. Key variables at their historical averages in 2014-2034 1/1165818649538445378111−112
A2. New public sector loans on less favorable terms in 2014-2034 21165987961918864828758573
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2015-2016116510131018971913874794595
B2. Export value growth at historical average minus one standard deviation in 2015-2016 3/116510041009964907869796572
B3. US dollar GDP deflator at historical average minus one standard deviation in 2015-20161165879839801753720655491
B4. Net non-debt creating flows at historical average minus one standard deviation in 2015-2016 4/1165990967923868831756562
B5. Combination of B1-B4 using one-half standard deviation shocks1165840772737692663602454
B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/1165148514421376129312381125844
Debt service-to-exports+remittances ratio
Baseline2421191817161411
A. Alternative Scenarios
A1. Key variables at their historical averages in 2014-2034 1/241814111083−7
A2. New public sector loans on less favorable terms in 2014-2034 22421191817161412
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2015-20162421191817161410
B2. Export value growth at historical average minus one standard deviation in 2015-2016 3/2428323028272424
B3. US dollar GDP deflator at historical average minus one standard deviation in 2015-20162421191817161410
B4. Net non-debt creating flows at historical average minus one standard deviation in 2015-2016 4/2424221817161411
B5. Combination of B1-B4 using one-half standard deviation shocks2425242221191712
B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/2421191817161410
Debt service-to-revenue ratio
Baseline2727252422211712
A. Alternative Scenarios
A1. Key variables at their historical averages in 2014-2034 1/2722171412103−7
A2. New public sector loans on less favorable terms in 2014-2034 22727252422211713
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2015-20162728272523221812
B2. Export value growth at historical average minus one standard deviation in 2015-2016 3/2727262523221816
B3. US dollar GDP deflator at historical average minus one standard deviation in 2015-20162724222119181510
B4. Net non-debt creating flows at historical average minus one standard deviation in 2015-2016 4/2727252422211712
B5. Combination of B1-B4 using one-half standard deviation shocks272320191817139
B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/2741383633312517
Memorandum item:
Grant element assumed on residual financing (i.e., financing required above baseline) 6/3434343434343434
Sources: Country authorities; and staff estimates and projections.

Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non

Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods

Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to it an offsetting adjustment in import levels).

Includes official and private transfers and FDI.

Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.

Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2

Sources: Country authorities; and staff estimates and projections.

Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non

Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods

Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to it an offsetting adjustment in import levels).

Includes official and private transfers and FDI.

Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.

Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2

Table A3.Public Sector Debt Sustainability Framework, Baseline Scenario, 2011-2034(In percent of GDP, unless otherwise indicated)
ActualAverage5/Standard Deviation5/Projections
2011201220132014201520162017201820192014-19 Average202420342020-34 Average
Public sector debt 1/70.594.390.390.887.685.081.778.375.170.560.4
of which: foreign-currency denominated59.481.477.879.977.975.873.370.768.163.251.7
Change in public sector debt−2.623.9−4.00.4−3.1−2.7−3.2−3.4−3.1−0.9−1.0
Identified debt-creating flows−7.720.4−8.0−2.2−5.3−4.9−5.3−5.6−4.9−2.4−2.3
Primary deficit−3.9−0.3−1.5−2.62.2−2.2−2.5−2.7−2.9−3.1−2.4−2.6−1.3−0.9−1.1
Revenue and grants18.09.89.911.412.012.412.512.712.512.111.8
of which: grants0.30.40.70.50.70.70.70.60.60.40.2
Primary (noninterest) expenditure14.29.58.49.19.69.79.69.510.110.810.9
Automatic debt dynamics−3.721.1−6.40.0−2.9−2.2−2.4−2.5−2.5−1.2−1.4
Contribution from interest rate/growth differential1.21.9−3.1−3.1−2.3−1.9−2.1−2.2−2.3−2.8−2.8
of which: contribution from average real interest rate0.90.4−0.1−0.50.71.41.31.31.20.0−0.2
of which: contribution from real GDP growth0.21.6−3.0−2.7−3.0−3.3−3.4−3.6−3.5−2.8−2.6
Contribution from real exchange rate depreciation−4.919.1−3.23.2−0.6−0.2−0.3−0.2−0.2
Other identified debt-creating flows−0.2−0.4−0.2−0.10.00.00.00.00.00.00.0
Privatization receipts (negative)−0.2−0.4−0.2−0.10.00.00.00.00.00.00.0
Recognition of implicit or contingent liabilities0.00.00.00.00.00.00.00.00.00.00.0
Debt relief (HIPC and other)0.00.00.00.00.00.00.00.00.00.00.0
Other (specify, e.g. bank recapitalization)0.00.00.00.00.00.00.00.00.00.00.0
Residual, including asset changes5.13.54.02.72.22.22.02.21.81.51.3
Other Sustainability Indicators
PV of public sector debt137.5137.4131.3125.7119.6113.3107.595.073.5
of which: foreign-currency denominated125.0126.6121.5116.6111.2105.8100.587.764.8
of which: external125.0126.6121.5116.6111.2105.8100.587.764.8
PV of contingent liabilities (not included in public sector debt)
Gross financing need 2/1.67.65.34.84.24.54.13.43.74.77.3
PV of public sector debt-to-revenue and grants ratio (in percent)1394.71210.11090.61016.7956.9895.6859.6784.1622.2
PV of public sector debt-to-revenue ratio (in percent)1493.61265.11158.71079.11013.5943.3901.9812.2634.4
of which: external 3/1357.61165.11072.51000.6942.4880.4843.0749.7559.7
Debt service-to-revenue and grants ratio (in percent) 4/25.371.859.453.648.251.749.045.743.344.063.0
Debt service-to-revenue ratio (in percent) 4/25.875.163.656.051.254.851.948.145.545.664.3
Primary deficit that stabilizes the debt-to-GDP ratio−1.2−24.22.5−2.70.70.00.40.30.7−0.40.0
Key macroeconomic and fiscal assumptions
Real GDP growth (in percent)−0.3−2.23.33.53.03.13.43.94.24.64.74.04.14.44.2
Average nominal interest rate on forex debt (in percent)4.54.24.05.00.63.83.73.63.43.33.23.52.82.22.6
Average real interest rate on domestic debt (in percent)−5.6−9.8−16.6−1.18.6−17.7−7.01.63.65.25.3−1.51.62.11.7
Real exchange rate depreciation (in percent, + indicates depreciation)−7.630.8−4.0−5.014.0
Inflation rate (GDP deflator, in percent)19.028.536.217.69.333.021.711.08.16.56.514.55.34.95.2
Growth of real primary spending (deflated by GDP deflator, in percent)−8.6−34.4−8.4−5.011.012.18.44.74.13.111.07.24.84.74.8
Grant element of new external borrowing (in percent)35.135.135.135.135.135.035.134.433.5
Sources: Country authorities; and staff estimates and projections.

General government gross debt.

Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.

Revenues excluding grants.

Debt service is defined as the sum of interest and amortization of medium and long-term debt.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Sources: Country authorities; and staff estimates and projections.

General government gross debt.

Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.

Revenues excluding grants.

Debt service is defined as the sum of interest and amortization of medium and long-term debt.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Table A4.Sensitivity Analysis for Key Indicators of Public Debt 2014-2034
Projections
201420152016201720182019202420332034
PV of Debt-to-GDP Ratio
Baseline137131126120113108957573
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages137131126121116112987269
A2. Primary balance is unchanged from 2014137131126121115109946663
A3. Permanently lower GDP growth 1/1371321281221171121049695
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviation1371351351291231171068988
B2. Primary balance is at historical average minus one standard deviations137133129123116110987876
B3. Combination of B1-B2 using one half standard deviation shocks1371341321261191141028482
B4. One-time 30 percent real depreciation in 2015137200191182172164144116114
B5. 10 percent of GDP increase in other debt-creating flows in 20151371391331271201141018179
PV of Debt-to-Revenue Ratio 2/
Baseline121010911017957896860784638622
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages121010891020967918890810606584
A2. Primary balance is unchanged from 2014121010921021966910874778557533
A3. Permanently lower GDP growth 1/121010981030977922893859807803
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviation1210112310851026966932874756742
B2. Primary balance is at historical average minus one standard deviations121011051045983920883807658642
B3. Combination of B1-B2 using one half standard deviation shocks1210111210631003941906840707692
B4. One-time 30 percent real depreciation in 20151210165915451455136213081191985961
B5. 10 percent of GDP increase in other debt-creating flows in 20151210115810781014949911836683665
Debt Service-to-Revenue Ratio 2/
Baseline544852494643446063
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages544852494745445659
A2. Primary balance is unchanged from 2014544852504746435255
A3. Permanently lower GDP growth 1/544852504745507681
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviation545055535149517276
B2. Primary balance is at historical average minus one standard deviations544853545247456366
B3. Combination of B1-B2 using one half standard deviation shocks544954535147486771
B4. One-time 30 percent real depreciation in 2015545665646260597882
B5. 10 percent of GDP increase in other debt-creating flows in 2015544858695351466871
Sources: Country authorities; and staff estimates and projections.

Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection.

Revenues are defined inclusive of grants.

Sources: Country authorities; and staff estimates and projections.

Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection.

Revenues are defined inclusive of grants.

[This DSA update was prepared jointly by IMF and World Bank staff under the joint Fund-Bank Low-Income Country (LIC) Debt Sustainability Framework (DSF).] Sudan’s Country Policy and Institutional Assessment (CPIA) Rating averaged 2.34 for 2011-13 and falls under the weak performer category. Sudan’s fiscal year runs from January 1 to December 31.

Sudan retained all the external debt under the “zero-option” following the secession of South Sudan, provided that (i) South Sudan joined Sudan in outreach efforts for debt relief, and (ii) the international community gave firm commitments to the delivery of debt relief. The deadline for these conditions to be met was set at September 2014. If the conditions are not met, Sudan’s external debt would be apportioned between the two countries, based on a formula to be determined within six months from the deadline.

Debt data were provided by the Sudanese authorities, complemented by information obtained during the 2011 external debt reconciliation exercise as well as Fund and World Bank staffs’ estimates.

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