Western donors hope to Sudan cash scheme with $500 million - diplomats

By John Irish and Sabine Siebold

PARIS/BERLIN (Reuters) - Western countries hope donors will provide at least $500 million at a Sudan conference to support a cash programme for poor families launched by the struggling transitional government, European diplomats said.

Germany and the United Nations will host the virtual conference in Berlin on Thursday to gather potential donors to help the civilian government struggling with an economic crisis after the ousting of Omar al-Bashir last year.

"The aim in Berlin is to get $500 million in donations for the World Bank's Family Support Fund," one European diplomat said, confirming what other diplomats said.

Donations of $500 million would be well below the $8 billion in foreign aid which Prime Minister Abdalla Hamdok said last August was needed to turn around an economy in crisis since South Sudan took away most oil output with its secession in 2011 -- before the coronavirus pandemic ravaged the global economy.

It was not clear whether donations for other programmes would be also pledged. The German foreign ministry, hosting the event, did not immediately respond to a request for comment.

The conference describes participants as “partners” rather than donors, to recognise that Sudan has its own resources and needs political and economic support rather than handouts, the Sudanese government coordinator for the conference has said.

Hamdok, in power in a shaky coalition with the military which deposed Bashir last April after mass protests, plans to launch cash transfers for poor worth $1.9 billion with the help of the World Bank.

The family cash scheme is key to soften the blow of a removal of fuel and other subsidies demanded by Western donors which cost an estimated $3 billion annually.

Inflation topped an annual 100% last month as the government printed money to fund bread and fuel subsidies. Sudan's currency has fallen to 141 to the dollar on the black market compared to 55 at the official rate, due to hard currency shortages.

The conference will also tackle ways to start badly needed debt relief for Sudan, diplomats said.

New financing has been held up by the need to settle decades of arrears to the International Monetary Fund and by Sudan's listing, while under Bashir's rule, by the United States as a state sponsor of terrorism disqualifying it from new IMF borrowing.

(Additional reporting by Nafisa Eltahir; Writing by Ulf Laessing; Editing by Alison Williams)

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