US sanctions, dwindling foreign reserves and a crippling debt burden, of around $38 billion, have hampered Sudan's ability to secure external financing for new projects.

The loan, provided by the Kuwait-based Arab Fund for Economic and Social Development, will support projects that benefit Sudan socially and economically, Sudan's Finance Minister Ali Mahmud said at the signing ceremony.

It will contribute $175 million to the new international airport in Khartoum, which a state-owned Chinese firm won the contract to build last month at an expected cost of around $2 billion.

The airport, which will replace Khartoum's existing one, located in the centre of the capital, is due for completion in 2014.

Another $175 million will go towards building the Atbara and Seteet dams in Kassala state, on branches of the Blue Nile, that will irrigate farm and

have a combined power generation capacity of 200 megawatts.

The remaining $10 million dollars will fund water projects in Kassala, Al-Qadaref and Red Sea state, all in eastern Sudan.

Donors and investors for the development of the three states in resource-rich but neglected eastern Sudan pledged $3.55 billion dollars in support, at a meeting in Kuwait in December, of which the Arab Fund said it would provide $210 million.