A 2011 referendum in Southern Sudan will determine the sub-nation’s independence – and it’s just one month away. Ahead of the South’s possible secession, Sudanese leaders are scrambling to find solutions to a host of questions, a critical one being: What should be done with Sudan’s crushing $35 billion external debt burden? I’m joined on this Wonkcast by Ben Leo, a research fellow here at the Center for Global Development, who has just published a CGD working paper which outlines potential scenarios for post-referendum debt division between the Khartoum government in the north and an independent Southern Sudan. On the Wonkcast, Ben explains how debt complicates the landscape for splitting Sudan and outlines a range of possible approaches to a viable solution.
Sudan’s colossal debt burden weighs heavily on an already-impoverished population and an economy that is heavily dependent on revenues from oil, the vast majority of which is located in the South. In the second half of our discussion, Ben points out that political constraints on the World Bank and the IMF create a vacuum of analysis – a void which his paper aims to fill. He also highlights a major policy challenge in the post-referendum environment—the likely need for debt relief for BOTH halves of present-day Sudan.
“Even when you have the South assume a very large percentage of (Sudan’s) debt obligations,” says Ben. “the North is still highly unsustainable.” Not only is the North likely to inherit at least some of the massive debt, it also stands to lose a huge chunk of its revenue, because most of the oil is located in the south, he says.
Listen to the Wonkcast to hear the interview and read the new working paper for full details. Have something to add? Ideas for future interviews? Post a comment below, or send me an email. If you use iTunes, you can subscribe to get new episodes delivered straight to your computer every week.
My thanks to Wren Elhai for his production assistance on the Wonkcast recording and to Ross Thuotte for a draft of this blog post.