Popular backlash feared after Sudan floats currency
KHARTOUM--Sudan took the unprecedented step of floating its currency Sunday, meeting a major demand by international financial institutions to help transitional authorities overhaul the battered economy.
The flotation is the boldest economic measure taken by the transitional government that has ruled the Arab-African country after a popular uprising led to the military’s overthrow of autocrat Omar al-Bashir in April 2019.
The central bank issued instructions to banks to unify the country’s official and parallel exchange rates starting on Sunday, a move expected to significantly devalue the Sudanese pound.
The bank did not say at what rate the exchange rate should be unified, but analysts say unifying effectively means moving to the parallel market rate since almost all transactions are calculated at that rate.
The US dollar had been trading at over 350 pounds to the dollar on the black market, while its official rate was at 55 pounds to the dollar.
Sudan’s currency will now fluctuate according to supply and demand, according to a statement by the Central Bank. It said the flotation is part of measures the transitional government has embarked on to help stabilise the country’s economy.
The Central Bank said the flotation would help “normalisation of ties with international and regional financial institutions and friendly countries to ensure the flow of grants and loans” into Sudan’s economy.
Sudan has for years struggled with an array of economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples. The country is $70 billion in debt and its annual inflation soared past 300% last month.
The move would likely provoke a popular backlash as the price of goods and services rise in response to the fall in the pound’s value and the possible hike in prices of fuel and other essential goods.
The country was plunged into an economic crisis when the oil-rich south seceded in 2011 after decades of war, taking with it more than half of public revenues and 95% of exports.