The queues at petrol stations are growing longer across Sudan. So are the breadlines, as the transitional government has been running out of hard currency to pay for fuel and wheat imports.
What is getting shorter is patience with Sudanese Prime Minister Abdallah Hamdok over a serious economic crisis, bequeathed by three decades of the corrupt dictatorship of Omar Al-Bashir, and worsened by US sanctions, which were recently lifted.
“The situation is very bad, I have to do this twice a week,” says 20-year-old Mazin Abdallah, as he waits in a line for two days to refuel the motor cart he uses to deliver dates. “There’s no way to keep sustaining ourselves. I hate to say that economically the situation was better with Bashir.”
Bashir was ousted in 2019 in a military coup, after street protests triggered by a rise in food and fuel prices. When he took over as prime minister over a year ago, Mr Hamdok, a respected former official of the UN Economic Commission for Africa, vowed to make peace and rebuild the $30bn economy. A 2020 peace deal with Sudan’s rebel groups was a step towards a transition. But economic uncertainty could lead to trouble. Ahmad Yousef, a trader in Khartoum’s gold market, says that “if this continues, the government would collapse”.
Sudan sells oil, gold, sesame and gum arabic (an ingredient in paint, cosmetics and glue, among other applications). Yet the value of imports surpasses exports by 50 per cent, say officials. The economy has been starved of foreign exchange since South Sudan seceded in 2011, taking three-quarters of oil reserves.
Lacking in hard currency to pay for imports, the hardship has been exacerbated by a plunge in the value of the Sudanese pound on the black market to 300 to the US dollar, which in Sudan is the currency used for 90 per cent of imports and exports. The official exchange rate is 55 Sudanese pounds to the dollar. Black-market traders often loyal to the old regime are pushing the exchange rate to excess, officials, diplomats and economists say.
“The current government has inherited huge, humungous economic problems. There’s no doubt about that,” says Abda El-Mahdi, a Khartoum-based economist and consultant. “And from the beginning, I always said that the president, the new regime will have to manage expectations. So people will need to be patient. And things will not change overnight.”
There are hopes for change. In December, after almost three decades, the US removed Sudan from the state sponsor of terrorism list. The move is helping the country access debt relief, multilateral lending and western investment for its battered economy.
The US put Sudan on the list in 1993 when Bashir’s regime was hosting Osama bin Laden in Khartoum. The country was cut off from the international finance system.
Without full US backing, Sudan was unable to write off $60bn in debts, access multilateral lending or western investment. Now, Sudan is in talks with the IMF and World Bank and the US has given it a $1bn grant to help pay arrears.
“We are cautiously optimistic,” says Adam Elhiraika, the prime minister’s economic adviser. “The removal of Sudan from the sponsor of terror list together with the peace dividend is expected to boost the economy a lot in 2021.”
He forecasts growth of 1 per cent and that inflation will decelerate to 95 per cent in 2021, compared with 148 per cent in 2020, one of the world’s fastest rates after Venezuela and Zimbabwe.
“There are a lot of structural problems,” says Taha El-Tayeb, chairman of Sudan’s Banking Association. “The government has started working on the huge subsidies . . . that the government cannot really handle, and the exchange rate differential adds to that.”
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In December, Sudan effectively removed subsidies on imported gasoline and diesel. It will continue to subsidise wheat, medicine, cooking gas and electricity.
But it is considering phasing out some subsidies from a group that totalled some 36 per cent of government expenditure in 2020. To offset the impact, the government is due to roll out a $1bn family support programme — funded by international donors including states and financial institutions — to provide a monthly cash transfer to up to 80 per cent of Sudan’s 43m population.
Hiba Mohamed Ali Ahmed, finance minister, says donors have pledged $1.8bn to support the country pushing through economic reforms.
Thanks to the lifting of sanctions, “Sudanese financial institutions can re-establish banking relations with international banks,” she says.
Sudan wants to merge the official and black market exchange rates if it can secure $2.5bn in financing. Doing this “without a buffer could cause a huge currency depreciation, which can lead to further price spirals and make life harder for ordinary Sudanese,” says Mr Elhiraika.
Queueing for three hours to buy bread, Suad Samel, a 40 year-old school secretary in Bahri, northern Khartoum, complains the price doubled in two months. “This is untenable, yes, but I [would] rather suffer through this, through anything, than going back to Bashir,” she says. “I'd rather have inflation at 1,000 per cent than having those people back. We need to look ahead”.
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