Sharing Sudan's Burden : Options for Post-Secession Debt Apportionment

Sudan faces an exceedingly high debt burden for an economy of its size. Standing at 80% of Gross Domestic Product (GDP), Sudan's external debt was US$43.6 billion in 2014, of which 87% was arrears. As part of the secession agreement, Sudan would take over all of the pre-secession debt provided Sudan would enter the HIPC process by October 2016, with support from South Sudan. If this fails, negotiations to apportion the debt would ensue. This paper explores potential options for dividing Sudan‘s external debt at the date of South Sudan secession that take into account different metrics of post-secession debt apportionments around the world. Based on debt division metrics — such as beneficiary rule, population size, GDP, and land size — Sudan's external debt obligations could range between 94 percent of external debt (US$37 billion) and 67 percent of external debt (US$27 billion). South Sudan's debt obligations could range from 6 percent of external debt (US$3 billion) to 33 percent of external debt (US$13 billion). The debt division estimates based on the beneficiary rule are derived utilizing World Bank Group loans as a proxy for evaluating options available for apportioning Sudan's debt burden as it is exceedingly difficult to trace every single loan distributed to Sudan