Sudan economic situation ‘remains poor’, 2023 budget ‘vague’

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Sudan’s macroeconomic situation remained poor in January, FEWS NET reported on Wednesday. Economists criticise the national budget for this year for its lack of clarity.

“The national budget for the year 2023 that was approved on February 1 does not reach the level of a budget,” economist Hasan Bashir says.  

“It is more a financial plan based on revenues and expenditures to run the wheel in the state,” he told Radio Dabanga. “In light of the governmental and political vacuum in the country, it is of course not possible to approve a comprehensive national budget.”

Bashir explained that the data related to education, health, and other sectors are very vague. “In addition, the approved budget does not contain any real indicators of resources in the country, which is worrying, especially in light of the economic recession that seriously affects the country.

“The revenues the budget relies on are the export of gold and livestock, in addition to the various taxes and levies that burden the Sudanese,” he stated.

The economist described the stage Sudan is going through now as unnatural, and said he expects that “the budget will be amended even if a new government is not formed”.

‘The approved budget does not contain any real indicators of resources in the country, which is worrying’ – economist Hasan Bashir

He said that the formation of a government will certainly contribute to improving the economic situation and the state’s general budget.

Sidgi Kaballo, economic expert and leading member of the Communist Party of Sudan, also denounced the lack of clarity in the 2023 budget.  

“Talking about a percentage of expenditures without specifying the details is misleading and does not allow us to get an idea about the real areas of expenditures,” he told Radio Dabanga.

“This budget, approved in a joint meeting of the Sovereignty Council that was hijacked by the October 25 coup and the Council of acting Ministers, can only be temporary. When the political situation in the country improves, many local, regional, and international conditions will change accordingly, which could lead to a breakthrough in aid,” he said. “The current instability poses a very serious risk to investment.”

He further noted that the current budget deficit is relatively high compared to previous years. 

‘Poor’

The Famine Early Warning Systems Network (FEWS NET*) reported on Wednesday that Sudan’s macroeconomic situation remains poor in January 2023, “due to persistent low foreign currency reserves, longstanding political instability, the weak exchange rate, and the high inflation rate”.

On January 27, the US Dollar exchange rate was trading at SDG 594 on the parallel market and SDG 585 in most commercial banks, compared to SDG 485 and SDG 440 in January 2022.

‘The high cost of living is continuing to reduce households’ purchasing power for their food and non-food needs’ – FEWS NET

From November to December, the Consumer Price Index (CPI) remained stable, although annual inflation declined to 87 percent, the report reads. “The CPI is being driven primarily by increases in the cost of education, and food and beverages, which are 89 and 65 percent higher than last year, respectively. The high cost of living is continuing to reduce households’ purchasing power for their food and non-food needs.”

The recently concluded harvests are improving household food access in most areas of Sudan. Yet people continue to suffer, in particular in conflict-affected areas in Darfur, Blue Nile, Kordofan, Kassala, and Red Sea state, where a number of people continue to face a food crisis as household access to food and income remains low due to the impact of insecurity and high food prices.

These areas will likely continue to face higher-than-normal humanitarian food assistance needs during the post-harvest period through to the beginning of the lean season in May, FEWS NET stated.

The overall national cereal production for the 2022/23 cropping season was higher than last year despite reductions in the area planted. Staple food prices have continued to decline seasonably across all markets since the start of the harvest in October 2022. Cereal prices are anticipated to remain more than three times above the five-year average, however, driven by the high cost of production, the weak exchange rate, and high international food prices, contributing to ongoing high inflation in the country.

* The Famine Early Warning Systems Network is a leading provider of early warning and analysis on food insecurity. Created by USAID in 1985 to help decision-makers plan for humanitarian crises, FEWS NET provides evidence-based analysis on approximately 30 countries.