IMF, Sanctions and its effect on coutnries like Sudan

 People love to say Africa is “rich in resources.” Sure — but per person? It’s a different story. And when you add debt traps, IMF conditions, and foreign companies taking the best bits, you get a model that’s basically structurally doomed.

Sudan is the perfect case study for how this works.

How the IMF Plays the Game

The IMF’s governance structure gives the biggest voting power to countries with the most money — the U.S. has 16.5% of the votes, Japan 6.1%, China 6%. That means the rich countries set the rules.

In Sudan’s case, those rules have been brutal:

  • 1987: Currency devalued by 44% — inflation explodes, purchasing power collapses.

  • 2021: Another massive devaluation — prices for basics go through the roof.

  • Fuel subsidies cut — hitting the poorest households the hardest.

The IMF sells this as “reform” to attract foreign investment. But the reality? Sudan’s pound loses over 90% of its value every decade, and the country gets poorer.

Why Sudan Was an Easy Target

  • Sanctions: U.S.-led sanctions since 1993 cut Sudan off from global finance.

  • Terrorism listing: scared off Western companies.

  • Desperation: forced Sudan to take IMF loans with strict conditions.

Meanwhile, Pakistan — not sanctioned, nuclear-armed, and politically important — gets a way softer deal:

  • Regular bailouts even when it misses IMF targets.

  • Delayed subsidy cuts instead of immediate austerity.

  • Keeps control of key industries.

Sudan? No leverage. IMF pushes shock therapy, foreign companies swoop in.

Enter CNPC and the Oil Grab

When Western companies like ExxonMobil were blocked by sanctions, China’s CNPC, Malaysia’s Petronas, and India’s ONGC moved in.
They now control:

  • Major oil blocks (1, 2, 4)

  • The pipeline to Port Sudan

Sudan gets a tiny revenue share. CNPC and friends walk off with the profits.

And oil isn’t even the miracle some think:

  • Sudan has 5 billion barrels — just 1% of Saudi Arabia’s reserves.

  • Almost double the population of Saudi.

  • Even perfect management wouldn’t make Sudan rich — now add war, sanctions, and IMF conditions? It’s a losing formula.

The Gold Problem

Sudan has around 1,500 tonnes of gold (49.8M troy ounces). At today’s $3,300/oz, that’s a serious chunk of wealth. But 60–70% of it is smuggled out illegally.

A lot of that goes through the UAE, which has been accused of funding Sudan’s Rapid Support Forces (RSF) in exchange for gold mining rights — especially in Jebel Amir, Darfur.

Why Insurance or Safety Nets Won’t Save Them

People sometimes say “Why not insure these countries against shocks?” Here’s the problem:

  • Premiums would be sky-high — these governments are default-prone (Ethiopia, Zambia, etc.).

  • It’s not free money — insurers aren’t charities.

Ethiopia is the example:

  • Issued a $1B Eurobond in 2014 at 6.625% interest (way higher than rich countries pay).

  • Defaulted on a $33M coupon in Dec 2023.

  • Now in restructuring talks, can’t borrow again until that’s settled.

Debt as a Weapon

Rich countries borrow at 1–2% interest and then lend to poor countries at much higher rates. Many end up paying more in interest than they ever got in “aid.”

After 2008, Western governments realized they could make money lending to poor countries instead of just giving aid. The IMF and World Bank often go along because the loans are “development finance.”

But the reality? It’s just debt slavery with a better PR label.

China’s Version of the Game

China does it differently — fewer lectures, more concrete:

  • Build a port, a railway, or a power plant.

  • In return, you hand over mining rights or agree to use Chinese companies for construction.

The DRC’s Sicomines deal is a perfect example:

  • $6B worth of infrastructure in exchange for cobalt and copper rights.

  • China controls most of the cobalt mines now.

  • DRC earns just $20M/year from a $3B project.

Same with Zambia, Angola, and Kenya — the risk is always losing control of key assets if you can’t pay.

Why “Resource-Rich” is a Trap

Chile exports $90B worth of goods with 20M people.
The DRC? Way fewer exports and 5x the population.
It’s not just about what you have — it’s how much per person and how it’s managed.

Sudan is “resource-rich” on paper — but between smuggling, foreign control, and bad governance, the wealth never hits the average citizen’s pocket.

The Harsh Truth

This isn’t a temporary crisis — it’s a system that keeps repeating:

  1. Poor country has resources.

  2. Debt or sanctions weaken it.

  3. Foreign players (private or state-owned) step in and take the best assets.

  4. IMF conditions make it easier for them to operate.

  5. The local population stays poor, hungry, and dependent.

Until the people controlling the resources actually invest in infrastructure, food systems, and real local development, nothing changes — no matter how many “aid” packages or loans get signed.

Comments

Post a Comment

Popular posts from this blog

Why is there so much commotion about the national debt today

Image
The Shifting Sands of U.S. Debt: Why Higher Yields Are Here to Stay For decades, the United States has enjoyed an unparalleled advantage in global finance: the ability to issue debt in its own currency, backed by Treasuries widely regarded as the safest asset on Earth. This “exorbitant privilege” has allowed the U.S. to borrow at remarkably low rates, even as deficits ballooned. But in 2025, the landscape is shifting. Record deficits, central banks hoarding gold, and stubbornly high long-term yields and even Russias removal from the swift, USD depreciation has contirnuted significantly to the yields today. A Flood of Debt: Two Decades of Deficits The U.S. hasn’t balanced its budget since 2001. Over the past two decades, annual deficits have grown from modest to massive: 2022–2024 : Deficits remained enormous, with fiscal year 2024 hitting $1.8 trillion—the third-largest ever. The result? A huge flood of Treasury issuance. Every year, markets must absorb more debt, pushing yields higher...
Read more
Image
  Tricolor, First Brands, and the Shadow Credit Problem: Why Two Collapses Signal Deeper Trouble A Canary in the Debt Mine? When Texas-based Tricolor Holdings , a subprime auto lender ie(lends money for automobiles for hgiher risk individuals),  filed for bankruptcy earlier this month, the Wall Street Journal wondered if it was a “canary in a subprime debt mine.” Now, just weeks later, First Brands , a debt-loaded auto parts supplier, is also on the edge, leaving Jefferies, UBS , and other creditors exposed by billions. Two blow-ups in two weeks isn’t could be a warning sign. How Tricolor Collapsed: The Double Pledging Trap Tricolor specialized in lending to higher risk lenders and  immigrants  and thin-credit borrowers at very high interest rates, then packaging those loans into auto Asset backed securities(ABS) . On paper, these securities looked safe: rating agencies even stamped  “AAA.” But the real problem was how Tricolor allegedly funded itself. H...
Read more

Silicon Valley Bank the collapse

Image
The largest bank to have failed since 2008 and the 2nd largest bank to have failed in US history.    Silicon Valley Bank (SVB) was a bank that specialized in serving technology and innovation companies . It closed its doors in March 2023.       Silicon Valley Bank served: Technology companies: This includes companies of all sizes, from startups to established giants, across various tech subfields like software, hardware, internet, and telecommunications. Life Sciences: Pharmaceutical and biotechnology companies, medical device manufacturers, and healthcare organizations were also major clients. Venture Capital & Private Equity: SVB provided specialized services to investors financing these types of companies. Premium Wine:  This niche industry also benefited from SVB's unique understanding of their needs Their clients even included AirBnb , Fitbit and Pintrest Let's examine the factors that led to the d...
Read more