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Sudanese economist: ‘An increase in the rate of the US dollar was expected’

The US dollar rate hit a new high at the end of the trading week on Thursday, hitting over 400 SDG. The continued increase in exchange rates in Sudan was expected, says economist Hasan Bashir. On Wednesday, the Ministry of Finance signed two agreements with the African Bank to support economic and financial reforms in Sudan.

Over the past two weeks, the official dollar price has risen by 12 pounds, an increase once seen only on the parallel foreign exchange market in Khartoum. The parallel market lost much of its importance on February 21, when the government devalued the Sudanese pound with immediate effect. The official price of the US dollar has changed from SDG55 to SDG375.

The price of the US dollar rose by one pound from Wednesday to Thursday to 400.21 SDG buy and 402.21 sell.

Hasan Bashir, professor of economics at El Nilein University in Khartoum, said in an interview with Radio Dabanga yesterday that the continued increase in exchange rates came as no surprise. “The decision to raise the dollar price to the parallel market level was wrong. The idea of ​​fighting the parallel foreign exchange market rates is the same methodology used by the old regime, and has shown that it does not work, ”he said. “As long as the banks run out of currencies, rates will continue to rise.”

He called the measures taken by the government to limit the rise in the exchange rate as “futile”. This will make the situation worse, he said. “An increase in the exchange rate leads to higher inflation, reduced purchasing power and increased poverty rates.”

According to Bashir, “The constantly increasing exchange rates are a symptom of a structural imbalance in the Sudanese economy, represented by a deficit in the balance of payments and a lack of competitiveness regarding exports. And this leads to a shortage of foreign currency in the Treasury ”.

The economist called on the government to “verify the sources of foreign currency in companies [affiliated with the former regime] which were investigated by the Withdrawal of Empowerment Committee * and the military companies were turned over to the government ”. The large amounts of foreign currency flowing in the illegal trade in gold and other commodities also need to be addressed.

Bashir added that the political changes, brought about by the Juba Peace Agreement, signed by the government and a number of rebel movements on October 3 last year, had so far had no positive impact on the Sudanese economy. “On the contrary, it caused an increase in exchange rates.”

Dr Hasan Bashir, professor of economics at El Nilein University in Khartoum (file photo)

On February 22, Professor Bashir praised the unification of official and parallel exchange rates, saying the measure would stabilize exchange rates and encourage grants, loans and emergency grants. At the same time, however, he warned of increasing inflation and poverty in the country.

High ceiling

On Wednesday, the Central Bank of Sudan (CBoS) raised the limit on the amount allowed for travel from $ 100 to $ 2,000 or its equivalent in other currencies.

In addition, foreigners residing in Sudan are now allowed to change money. The decisions are part of the injection of foreign currency by the bank in an attempt to control the escalation of the dollar rate in the parallel market.

According to a circular released Wednesday, the CBoS also allows banks to use foreign currency within 72 hours of purchase “for authorized purposes, including importing strategic and essential goods, travel abroad, as well. than studies ”.

On April 25, the Sudanese News Agency (SUNA) quoted the deputy director of CBoS, saying that the bank has “sufficient foreign exchange reserves to meet urgent strategic raw material needs, as part of the recently implemented exchange rate unification policy. “.

Deputy Director Mohamed Ahmed Bushra told Cabinet that the bank would start providing foreign currency to commercial banks.

African support

In early May, the Ministry of Finance signed two agreements with the African Bank, concerning a bridging loan in the amount of $ 425 million to pay the arrears of debt to the African Development Bank between the Ministry of Finance and the African Development Bank, and a grant of $ 207 million to support reforms economic and financial affairs in Sudan.

The agreements were signed by the Minister of Finance, Jibril Ibrahim, and the Regional Director of the African Development Bank for East Africa, Nnenna Nwabufo.

In a press release, Nwabufo said the deals will allow the bank to do more for the Sudanese economy, especially as the Sudanese government has started implementing economic reform measures with support from the Monetary Fund. international.

* The Empowerment Withdrawal Committee, formally known as the Empowerment End, Anti Corruption and Fund Recovery Committee, was established by the new government in 2019 to purge Sudan of the remnants of the regime. ‘Al Bashir. Accountability (tamkin) This is the term with which the ousted government of Omar Al Bashir has supported its affiliates in state affairs by granting them long-standing privileges, including government office and the establishment of various businesses.

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