Last year the government lifted most fuel subsidies, meeting another key demand from lenders, and the United States removed Sudan from its “state sponsors of terrorism” list as its leaders agreed to take steps towards normalising relations with Israel. The success of the transition is seen as crucial to stability in a volatile region, as Sudan emerges from decades of international isolation. Hamdok is serving under a joint military-civilian council that took power after the overthrow of veteran autocrat Omar al-Bashir in April 2019. It comes less than two weeks after Prime Minister Abdalla Hamdok appointed a new government to add rebel group leaders who signed a peace deal in October, including Ibrahim. Sunday’s move had been expected late last year under an IMF staff monitoring programme that could lead to relief on Sudan’s estimated $60bn in foreign debt, but was held up by political uncertainty.Īs well as paving the way for debt relief, the devaluation would help stabilise the currency, reduce smuggling and speculation, and attract remittances from Sudanese working overseas, the central bank said in a statement. Ibrahim said Sudan’s customs exchange rate was not included in the devaluation and its reform was still under study. Steps had been taken to streamline imports of strategic commodities and limit imports of non-essential goods before the devaluation, officials said. “The decision is not a float, but a policy of flexible management,” said central bank Governor Mohamed al-Fatih Zainelabidine. Authorities would not control the rate, the central bank governor told reporters, though Finance Minister Jibril Ibrahim said unspecified foreign funds were on their way to Sudan and the central bank could intervene if needed. The circular also set a profit margin between buying and selling prices of no more than 0.5 percent. Banks and exchange bureaus are required to trade within 5 percent above or below that rate. The central bank will set a daily indicative rate in a “flexible managed float”, a circular sent to banks said. Recently, the dollar traded at between 350 and 400 Sudanese pounds on the black market. The central bank set the indicative rate at 375 pounds to the US dollar, several commercial banking sources said, from a previous official rate of 55 pounds. The change on Sunday is a key reform demanded by foreign donors and the International Monetary Fund (IMF), but was delayed for months as shortages of basic goods and rapid inflation complicated a fragile political transition. Since January Sudan is witnessing sporadic anti-government protests again after a sharp rise in food prices.The Central Bank of Sudan has sharply devalued the currency, announcing a new regime to “unify” official and black-market exchange rates in an effort to overcome a crippling economic crisis and access debt relief. Previous efforts at economic reform have proven controversial.Īn attempt in September 2013 to cut fuel subsidies led to bloody confrontations between anti-austerity protesters and security forces that left dozens dead in Khartoum. Sudan’s average gross domestic product growth between 19 was above six percent, after which it steadily declined to around three percent in recent years. The World Bank had even said that removing exchange restrictions to unify official and black-market exchange rates of the Sudanese pound against the US dollar could help revive Sudan’s sluggish economy. In 2016, the World Bank had urged Sudan to adopt swift structural reforms to revive its ailing economy. Sudan’s economy is already suffering from the loss of three-quarters of its oil resources when South Sudan gained independence in 2011. The pound had been expected to strengthen against the greenback after the embargo was lifted, but it has only slipped since then.ĭespite the lifting of the restrictions, banks across the world remain wary of working with Khartoum, officials say.Īlthough Washington lifted the embargo it has still kept Sudan on its list of “state sponsors of terrorism,” a factor which officials say keeps investors away from the east African country. Trading on the foreign exchange market has been very volatile since October 12 when Washington lifted its 20-year-old trade embargo imposed on Khartoum.Īuthorities have even arrested dozens of black market traders in a bid to curb the speculation. The central bank called on commercial banks for better coordination in order to put the foreign currency in “good use to help import essential items”.
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