Sudan Finance Minister: ‘Reforms, not new currency’

The Sudanese government plans a raft of reforms to stimulate and boost Sudan’s ailing economy, rather than printing new currency, Minister of Finance and Economic Planning, Heba Mohamed says. These will include technical reforms, programmes to fight smuggling, combat inflation, and create investment opportunities.

Minister Mohamed was responding to questions from Radio Dabanga regarding the future financial plans of Sudan following its removal from the US State Sponsors of Terrorism List, as well as the expected visit by the US Secretary of the Treasury and Export-Import Bank of the USA (EXIM).

She explained that after carefully conducted studies and discussions, it has been decided to prioritise reforms, instead of printing a new currency as was suggested as an option in earlier reports, as this would cost an estimated $600 million.

The current Sudanese Pound (SDG) notes, available up to a denomination of SDG500, were printed in the final months of the deposed Al Bashir regime, in an attempt to solve a chronic cash shortage, however this further contributed to inflation.

Mohamed expects that says that following its removal from the US State Sponsors of Terrorism List, the expected visit of the US Secretary of the Treasury and Export-Import Bank of the United States (EXIM) “will open great opportunities for Sudan”, in addition to the signing of the $2 billion bridge loan to help Sudan with debts amounting to $60 million owed to the World Bank. “If Sudan is exempted from its debts, the international financial institutions will open their doors to us.”

Regarding the exchange rate of the Sudanese Pound and the debasement of the national currency, Minister Mahomed asserts that “70 per cent of the currency’s decline is due to speculation in the dollar by a certain group, which is being monitored by security and intelligence services,” and lamented that the Sudanese economy is suffering from these speculations.

She explained that the greatest percentage of the 2021 budget approved by the Council of Ministers earlier this month will be allocated to old-age pensions. “We aim to protect the public, improve the economy, complete training, infrastructure, and reform laws.”

Mohammed says that planned new investment legislation obliges investors to develop a clear plan to train young people. “If the investment laws are passed, it will stimulate an encouraging environment in Sudan. She also stressed the need to pay attention to vocational training and technical schools.

2021 Budget criticised

The Economic Committee of the Forces for Freedom and Change (FFC) has warned that the 2021 National Budget approved by the Council of Ministers this month will lead to economic collapse in the country.

In an interview with Radio Dabanga, Prof Mohamed Sheikhoun, member of the FFC Economic Committee, accused acting Finance Minister Mohamed of presenting incorrect information about the 2021 education budget.

“The education budget is much smaller than the budget reserved for defence,” professor Sheikhoun he said. “The 2021 defence budget amounts to SDG 89.82 billion, which is an increase of 173 per cent compared to last year [not taking into account inflation], while education will have a budget of 16.2 billion, an increase of only nine per cent.”

According to the FCC Economic Committee, the defence and security budget should be reduced by at least 40 per cent. The budget reserved for education must be increased by at least 50 per cent. The infrastructure sector should at least have a budget of SDG 6 million.

The revenues of gold mining and the taxes on companies owned by the military and the security apparatus are not included in the budget, he stated.

The economist called on Prime Minister Abdallah Hamdok to work with the previous budget for a limited period of time until the observations of the FFC Economic Committee have been taken into account.

Currencies

Sudan was removed from the US sanctions list in December last year, offered the possibility to liquidate its debt arrears at the World Bank, and signed an agreement on a $1 billion loan two weeks ago, the economic situation is still deteriorating – which is also reflected in the forex rates.

The hard currency rates on the Khartoum parallel market continue to rise. Forex dealers reported this morning that the selling price of the US Dollar is a record SDG 300, while the Euro sells for SDG 340.

* USD 1 = SDG 55 at the time of posting, according to the daily middle US Dollar rate quoted by the CBoS. Effective foreign exchange rates however can vary widely on Sudan’s parallel market.

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