On Thursday, the Central Bank of Sudan issued a statement on the government’s vision to fix the structural imbalances of the Sudanese economy. Will it stop the collapse of the pound?
The Sudanese Central Bank stated that, as of today, it will intervene in the foreign exchange market to ensure the removal of imbalances and unwanted changes and the restoration of stability to it.
He added, according to the statement, that in this regard, a number of publications were issued that included changing the exchange rate management methodology, export operations, importing and exporting gold.
The Central Bank of Sudan announced the infusion of foreign exchange amounts in favor of commercial banks, to meet the needs of their customers of foreign exchange for the purpose of import, according to the official Sudanese news agency “SUNA”.
He continued, “An urgent plan has also been prepared to reduce monetary excess, aimed at reducing inflation and stabilizing the exchange rate.”
He explained that the flexibility that the Central Bank of Sudan has pursued in managing foreign exchange policy since February 2021, in addition to other sources, has enabled it to build estimated and diversified foreign reserves.
Fears are growing that Sudan will reach the stage of economic collapse with the continued depreciation of the national currency (the pound), the unprecedented rise in the prices of necessary commodities and the effects of the liberalization of fuel prices on the productive sectors.
As a result of the announcement by the Central Bank of Sudan, on March 8, that the exchange rate of the Sudanese pound once morest the dollar was liberalized, the competition between local banks and the parallel market intensified in the race to control the exchange market, with the high ratio of demand once morest supply and the existence of financial deals that buy foreign exchange with astronomical numbers.
The new central bank policies are reaping fruits
For his part, an informed Sudanese source, who preferred not to be named, explained, according to the official news agency “SUNA”, that the policies pursued by the Central Bank of Sudan during the last period began to bear fruit.
The source added: According to clear indicators, including that the foreign exchange resources of the banks amounted to 65 million dollars, on the 13th of this March, and within a week, they reached 102 million dollars.
He explained that the uses before the start of the new policies were $68 million, while it has now reached $96 million.
The source stressed that the bank will continue its reform policies that seek to reduce inflation, encourage exports and the safety and stability of the banking system.
Record high foreign exchange
Foreign exchange rates rose in Sudan today, Thursday, setting records in banks, and the price of the dollar today in Sudan in the parallel “black” market reached regarding 690 pounds.
Simultaneously, the prices of basic commodities recorded a record high, a few days before the approaching month of Ramadan, and there are fears that the deteriorating economic situation will increase the suffering of citizens.
For his part, Ayoub Abdel Hafeez, a Sudanese economic expert, said in an interview with Xinhua, “There are signs of an economic collapse looming on the horizon.”
He added, “The markets are witnessing an economic stagnation in light of the lack of purchasing power and the unprecedented rise in the prices of essential goods.”
He continued, “With the month of Ramadan approaching, there are real fears of an increase in prices, greed of traders, lack of liquidity and the collapse of the value of the national currency.”
With the rising prices, another problem arises, which is the lack of essential goods such as cooking gas.
Juba will soon pay $3.2 billion to Khartoum
For his part, said Dr. Chol Deng Tun Abel, Executive Director of the National Oil Corporation in South Sudan, said on Thursday that his country is on the verge of completing the payment of the amount owed to Khartoum, amounting to 3.2 billion dollars in financial support that was decided to be paid to support the economy of Sudan following his country’s secession from it, according to “SUNA”.
On the latest developments in the prospects for developing technical cooperation in the field of oil between Khartoum and Juba, Abel explained that since the secession of South Sudan from the mother Sudan in 2011, his country has been using oil facilities in Sudan to process its oil, transporting and exporting it through Sudanese ports in the Red Sea, with a length of pipeline of 1.8 A thousand kilometers.
According to Abel, South Sudan continued to pay $15 for every barrel of oil exported through Sudanese ports as part of the material support that was decided to be paid to support the economy of Sudan following his country’s separation from it within $3.2 billion, in addition to $9.1 for each barrel that constitutes transit fees, processing and transportation of southern crude Sudan.
Timeline Sudan’s economic reform plan
And the previous transitional government headed by Abdullah Hamdok, which was formed in 2019, began implementing an economic reform plan under the supervision of the World Bank to obtain the exemption of Sudan’s foreign debt, which amounts to regarding $60 billion.
But that plan was disrupted following the measures taken by the Sudanese army chief, Lieutenant-General Abdel Fattah al-Burhan, on October 25, to dissolve the government and impose a state of emergency.
The United States of America and international agencies suspended hundreds of millions of dollars in aid intended for Sudan, and stipulated the restoration of civilian rule.
Sudan’s debt forgiveness process was halted under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative of the International Monetary Fund.
Washington quickly froze $700 million in emergency aid, while the $500 million in direct budget support expected in late November from development agencies was halted.
Another $150 million from the International Monetary Fund’s so-called Special Drawing Rights, which are used to bolster official reserves, has not been obtained.
Since the secession of South Sudan in 2011, Sudan has faced a severe economic crisis following losing two-thirds of its oil production.
