Economist: Sudan State of Economic Emergency ‘arbitrary’ measure

Experts and economists have reacted to the government's declaration of a State of Economic Emergency, announcement of emergency courts and prosecutors, and deployment of joint forces to protect the Sudanese economy.

Economist and director of the Red Sea University, Prof Hasan Bashir, described to Radio Dabanga the measures announced by the government as “important and necessary” yesterday. He said “they are long overdue” and their success is dependent on the ability of the regular forces to fight smuggling.

He expects that next week will be decisive for the Sudanese pound. Either the exchange rate will begin to rise, or it will collapse.

In an interview with Radio Dabanga, Bashir called for economic measures to be taken accompanied by deterrent sanctions. He also called for reform in the banking system and administration of many commercial banks, and also for monitoring of capital in the bank.

“Sabotaging the monetary system is one of the biggest problems facing the transitional period,” he said.

The economist stressed that trading gold and export earnings must be ironed out. He also called for the absorption of resources available to Sudanese citizens living abroad.

The budget must be reviewed for the final quarter of the year in order to correct aspects of it which have “triggered a rise in exchange rates” and preparation of the budget for 2021.

Bashir called on the Minister of Finance to change ministry staff “because they have failed to manage the economy”.

Prof Hamid Eltigani, Economist and Head of the Department of Public Policy and Administration at the American University of Cairo, has also called for the dismissal of staff at the Ministry of Finance and the Economic Emergency Committee. He also called for a reassessment of the prime minister's performance.

He described the measures announced by the government as arbitrary, warning that they would lead to a shortage of foreign exchange, which would lead to a further deterioration of the  Sudanese Pound.

Eltigani told Radio Dabanga yesterday that the government should distance itself from security solutions and instead focus on economic solutions. He explained that “smugglers always find ways to continue their actions, and recent measures will have a bad effect on the economy.”

He attributed the increasing rise in the price of the Dollar to a lack of realism. He told Radio Dabanga that the state’s limited foreign exchange revenues and the 2020 budget rely on unreal revenues and financial support from the international community.

According to Eltigani, one of the government's biggest mistakes was increasing wages depending on unreal resources: “The state prints the equivalent of $200 million every month and buys Dollars from the parallel market to import fuel and food.” The budget deficit has reached $1.6 billion.

He said that the main cause of the present economic crisis is the lack of domestic production and lack of an economic vision, calling on the government to switch their priority the economy.

Regarding expected scenarios, the economist warned that an economic collapse would lead to an increase in violence, looting, and a devolvement of peace processes, pointing to an abundance of armed militias.

He called for an immediate halt to the printing of more banknotes. The government should focus on production and investment, attempt to halt inflation, reduce military spending for the RSF militia and the army, and stop any non-essential spending.

He stressed the need to focus on agricultural projects, export, and for the government to export gold and gum Arabic.

Economic emergency

On Thursday, the acting Finance Minister, Dr Hiba Ahmed, announced the State of Economic Emergency and the formation of a joint mechanism to protect the Sudanese economy.

She said that the measures include deterrent laws to protect the economy, including emergency courts and prosecutors.

A number of legal amendments were announced by Minister of Justice, Nasreldin Abdelbari, to address the economic crisis along with establishment of emergency courts. The Foreign Exchange Bill, which still has to be passed, stipulates ten years imprisonment for illegal traders of gold, precious metals, and stones. Also, the penalty for smuggling commodities was raised from one month to ten years.

The measures came after the exchange rate of the dollar in the parallel market jumped to 260 pounds on Thursday, amid complete paralysis in the market, halting the selling movement and partial closure of the gold market in Khartoum due to the instability of the exchange rate.

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