Egypt has announced its participation in the international initiative to help Sudan grow economically by leveraging Cairo's quota with the International Monetary Fund (IMF) in an effort to allow Sudan pay off some of its outstanding debt.
In a May 17 speech to the Paris Conference to Support the Transition in Sudan, Egyptian President Abdel Fattah al-Sisi said, "Egypt will participate in the debt relief initiative to help Sudan secure relief through the use of Egypt’s share in the International Monetary Fund."
He also said, “The conference comes at a pivotal stage in the modern history of Sudan to consolidate the gains of the December  revolution, which marked the beginning of a new era, and opened horizons of hope for the future for the brotherly Sudanese people.”
Alaa Zahran, head of the Institute of National Planning — the research arm of the Egyptian Ministry of Planning and National Development — told Al-Monitor via phone that Egypt's announcement that it will use its IMF quota to help Sudan will not affect Egypt's future borrowing opportunities. Egypt's quota is estimated at $6 billion.
This step stems from the conviction of the Egyptian leadership that the security and stability of Sudan is an integral part of the security and stability of Egypt and the region, he said. It also reflects Egypt's commitment and steadfast political will to support the sustainability of peace, development and stability in Sudan and preserve its territorial integrity, he continued.
Sudan is aiming to clear its foreign debts owed to international financial institutions, official bilateral creditors and commercial creditors, amounting to about $50 billion. Sudan has obtained loans from Western states to help pay some of its debt arrears, according to a Reuters report.
In December, the United States announced a $1 billion bridge loan to Sudan to clear Sudan’s World Bank arrears.
In April, Washington and the IMF called on more than 20 countries to provide full support to Sudan's debt relief process, stressing that the country has made progress in implementing reforms at the macroeconomic level.
Zahran said Egypt’s economic support to neighboring countries, mainly Sudan and Libya, will contribute to restoring the region's political, economic and security stability and achieving development goals and mutual interests.
Salah Fahmy, an economist at Al-Azhar University, said using Egypt's quota at the IMF for the benefit of Sudan would guarantee Sudan new borrowing opportunities from international financing institutions.
Mahmoud Mohieldin, one of the IMF's 24 executive directors, said all countries within the organization have an emergency account that can be used in the event a country defaults on its loans, as happened in Sudan. He said another country can make deposits into this side account to help the defaulting country pay off its debt.
Fahmy said Egypt's support for Sudan’s debt relief process improves Cairo’s reputation among international financial institutions and supports its creditworthiness due to its economic stability and foreign exchange earnings.
It also reflects the weight of the Egyptian economy in the global economy, he said, adding that Egypt's assistance to Sudan gives the Egyptian state marketing power in international forums and administrative councils. He said the Egyptian economy has been able to withstand the coronavirus pandemic and it came in sixth among the 18 global economies with the highest increasing growth, according to an IMF report submitted during the spring meetings held in April.
Fahmy said Egypt's growth renews confidence of local and foreign investors in the ability of the Egyptian economy to manage crises. He said that the risks the Egyptian economy has been facing are still within a safe margin and that Egypt, through its implementation of an economic reform program during the past three years, became stronger in the face of domestic and foreign shocks.
On May 16, Sisi met with Lt. Gen. Abdel Fattah al-Burhan, the chairman of the Sudanese Sovereignty Council, in Paris. Sisi stressed during the meeting Egypt’s commitment to support the steps taken by the Sudanese government to achieve economic stability, get rid of its accumulated debts and reduce its financial burdens.
Sisi praised the steps that Sudan is taking in the direction of structural reform of the economy, which reflects a real political will to make the transition a success.
Sisi affirmed Egypt's readiness to communicate the Egyptian experience in economic reform and to train Sudanese officials and workers.
Zahran said the world needs to come together to create a global fund to support countries affected by disasters and emergency crises such as the coronavirus pandemic. The fund would be similar to the Climate Change Fund so that each country participates with a share commensurate with the strength of its economy to support the affected countries and peoples, he said, adding that the low-interest loan funds that would be involved would have specific terms for the expenditure of funding.