Sudan sharply devalues currency as economic crisis bites

An employee checks banknotes at a foreign currency brokerage office in Khartoum on October 7, 2018. (AFP)
Updated 07 October 2018
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Sudan sharply devalues currency as economic crisis bites

  • The central bank pegged the Sudanese pound at 47.5 against the dollar
  • The official rate was 28 to the dollar, while the currency had fallen to 45.50 on the black market last week

KHARTOUM: Sudan slashed the official value of its currency against the US dollar by more than half on Sunday, the third devaluation this year in the face of a mounting economic crisis.
The move came just weeks after President Omar Al-Bashir replaced the government over its failure to curb economic woes including soaring food prices.
The central bank pegged the Sudanese pound at 47.5 against the dollar. Previously, the official rate was 28 to the dollar, while the currency had fallen to 45.50 on the black market last week.
The central bank had said a committee would look into the acute shortage of foreign currency that has been weighing on the pound.
“The committee decided that today’s rate is 47.5 Sudanese pound to a dollar,” Abbas Abdallah, a committee member and head of the bankers’ union, told AFP.
“The committee will now announce the market rate daily.”
At the end of last year, the official rate stood at 6.7 pounds to the dollar.
It was unclear whether the latest devaluation was part of efforts to float the pound as recommended by the International Monetary Fund (IMF) to curb the wide gap between the official and unofficial exchange rates that had severely impacted Sudan’s economy.
“For a proper functioning of the currency market, the central bank needs to have good reserves of dollars as well as Sudanese pounds,” said a senior executive of a leading business group in Sudan.
“As for dollar reserves, everybody knows the situation faced by the bank.”
Sudan has struggled to boost its foreign currency reserves since the south split from the north in 2011, taking with it the bulk of the country’s oil revenues.
Traders expressed surprise at Sunday’s sharp devaluation but said the disparity between the official and unofficial markets would continue.
“This devaluation won’t have much of an impact as international banking transactions remain cumbersome,” said a black market trader on condition of anonymity.
But the IMF has pushed for unifying the exchange rates.
“A unified and market-determined exchange rate is key to further reducing external imbalances and boosting competitiveness, investment, growth and fiscal revenues,” the IMF said in December 2017.
Despite the IMF’s recommendation, Sudan has been wary of allowing the currency to float freely on the foreign exchange market, fearing that it might trigger unrest.
Protests erupted in January after the authorities cut wheat subsidies, but they were quickly curbed by security forces.
Food prices have since more than doubled on the back of surging inflation that stands at nearly 70 percent.
A much-awaited economic revival also failed to materialize after Washington lifted its decades-old sanctions in October 2017.
Washington has kept Sudan on its list of “state sponsors of terrorism,” which officials say makes international banks wary of doing business with Sudan — a key reason for the foreign currency crisis.
Sudan’s annual economic growth averaged over six percent during the decade to 2008, but it has since declined, with the crisis only growing since the secession of the south.
The economy grew 3.2 percent in 2017, according to the IMF.


Urgency needed to boost Palestinian economy: IMF chief

Updated 26 June 2019
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Urgency needed to boost Palestinian economy: IMF chief

  • The MF has been warning of severe deterioration in the Palestinian economy
  • ‘If there is an economic plan, if there is urgency, it’s a question of making sure that the momentum is sustained’

MANAMA: IMF chief Christine Lagarde said Wednesday that major economic growth was possible in the Palestinian territories if all sides showed urgency, as she took part in a US-led conference boycotted by the Palestinian leadership.
The International Monetary Fund has been warning of severe deterioration in the Palestinian economy, with tax revenue blocked in a dispute with Israel which has also imposed a crippling blockade on the Gaza Strip for more than a decade.
“If there is an economic plan, if there is urgency, it’s a question of making sure that the momentum is sustained,” said Lagarde.
The IMF chief is attending a conference in Bahrain to discuss the economic aspects of a United States plan for Israeli-Palestinian peace, which has already been rejected by the Palestinians as it fails to address key political issues.
Lagarde said for the US plan to work “it will require all the goodwill in the world on the part of all parties — private sector, public sector, international organizations and the parties on the ground and their neighbors.”
Citing examples of post-conflict countries, Lagarde said that private investors needed progress in several sectors including strengthening the central bank, better managing public finance and mobilizing domestic revenue.
“If anti-corruption is really one of the imperatives of the authorities — as it was in Rwanda, for instance — then things can really take off,” she said.
The plan presented by White House adviser Jared Kushner calls for $50 billion of investment in the Palestinian territories and its neighbors within a decade.
The proposals for infrastructure, tourism, education and more aim to create one million Palestinian jobs.
Gross domestic product in the Gaza Strip declined by eight percent last year, while there was only minor growth in the West Bank.
Kushner, opening the conference on Tuesday, called the plan the “Opportunity of the Century” — and said the Palestinians needed to accept it before a deal can be reached on political solutions.
The Palestinian Authority has rejected the conference, saying that the US and Israel are trying to dangle money to impose their ideas on a political settlement.
Washington says it will unveil the political aspects of its peace deal at a later date, most likely after Israel’s September election.