The US has removed Sudan from the state sponsor of terrorism list, a move set to help the African country access debt relief, multilateral lending and western investment for its battered economy.

“Today, Sudan’s designation as a state sponsor of terrorism is officially rescinded. This represents a fundamental change in our bilateral relationship toward greater collaboration and support for Sudan’s historic democratic transition,” said US secretary of state Mike Pompeo on Monday.

“After 3 decades of global isolation on the State of Sponsor of Terrorism list, Sudan officially rejoins the international community,” Sudan’s Prime Minister Abdalla Hamdok wrote on Twitter, adding “this achievement comes with numerous opportunities for Sudan’s development”.

The US put Sudan on the list of state sponsors in 1993 when then president Omar al-Bashir’s regime was hosting Osama bin Laden in Khartoum. The northeastern African state, devastated by years of mismanagement, civil war and corruption, was cut off from the international finance system.

Sudan, which overthrew the 30-year dictatorship of Mr Bashir last year after protests triggered by a rise in food and fuel prices, had urged the US to remove it from the list. But Washington first wanted Khartoum to pay compensation to victims of alleged Sudan-sponsored terrorism.

In April, Sudan agreed to pay compensation to the families of US sailors killed on the USS Cole in a 2000 attack in Aden.

In October, US president Donald Trump signed an executive order to remove Sudan from the terror blacklist after Khartoum agreed to pay $335m to the families of the victims of the 1998 al-Qaeda bombings outside US embassies in Nairobi and Dar es Salaam. Congress had 45 days to object to the order. Those 45 days expired this week. The executive order was widely seen as a precursor to Sudan normalising ties with Israel.

Without US backing, Sudan has been unable to write off $60bn in past debts or access new multilateral lending or western investment for its economy, which is forecast to shrink 8.4 per cent this year.

With Monday’s announcement, US sanctions on Sudan should be lifted. Being removed from the list is the first step for Khartoum to attract investments and negotiate debt relief, say US senior officials, adding Washington will provide money to help Sudan clear arrears.

“The sanctions were stopping the country from getting debt relief. And the debt arrears with multilateral institutions and other creditors were stopping us from getting badly needed concessional financing from them — getting out of that terror list was crucial for Sudan,” said Abda el-Mahdi, a Khartoum-based economist.

Mr Hamdok — who leads a military-civilian interim government and inherited an economy on the ropes — previously said US sanctions stemming from Sudan’s terrorism status were “crippling our economy”.

Strapped of hard currency, on the back of a sharp devaluation, inflation rocketed to 254 per cent last month, one of the world’s fastest rates after Venezuela and Zimbabwe. Days-long queues outside petrol stations and breadlines have worsened.

Sudan, which as part of widespread reforms in the wake of last year’s revolution separated religion from state and signed a peace deal with most rebels, is also expected to regain sovereign immunity from prosecution.

The legislation that restores Sudanese immunity from terrorism lawsuits first needs to pass Congress. Democratic senators believe the Trump administration has overcommitted to Khartoum. Under the current deal, the families of September 11 victims would no longer be able to pursue claims against Sudan for alleged complicity, congressional insiders say.

“We strongly support a successful transition to democracy in Sudan; making this deal work for victims of terrorism should not be in conflict with that goal,” Democratic senators Bob Menéndez and Chuck Schumer said in a statement last week, after they proposed amendments to the deal.

Officials in Khartoum want full immunity from such claims. “This is unjust,” said a senior Sudanese official, but added: “Restoring our sovereign immunity is also important, but removing Sudan from the [terror] list is more important. It is a big thing.”

Additional reporting by Katrina Manson in Washington