Sudanese Pound hits record lows against world currencies - Committee to investigate El Fakhir

The rate of the Sudanese Pound (SDG) is trading at all-time lows on the streets of Khartoum. There is no end in sight for the ongoing economic malaise in the country – largely a legacy of the corruption and mismanagement by the deposed Al Bashir regime – that has led to unrelenting price hikes for consumer goods, and widespread shortages of bare essentials such as bread. Read more.

Sudanese Pound hits record lows against world currencies

Report from and by Radio Dabanga.org

Dated Thursday 27 February 2020

Photo: A man waits for his money at currency exchange brokerage in Khartoum (Photo: ASHRAF SHAZLY / AFP)

(KHARTOUM) - On Wednesday [Feb 26], traders in Khartoum were asking SDG 107 for one US Dollar (USD) the highest cost for the greenback to date. By comparison, today’s official daily middle US Dollar rate quoted by the Central Bank of Sudan (CBoS) is SDG 54.63.

According to dealers who spoke to Radio Dabanga, Pound Sterling (GBP) reached SDG 136.74 on the parallel market, while the price of the Euro reached SDG 114.48. Saudi Riyal (SAR) reached SDG 28.26 on, while the Emirati Dirham (AED) reached SDG 29.04, and the Qatari Riyal (QAR) trades for SDG 29.07.

The head of the Flour and Fuel Distribution Unit in South Darfur announced that the quantities of flour available in the state do not exceed 3,000 50 kg sacks, which is not enough for a day.

He attributed this to the departure of three of the five companies that supplied flour to the state.

In a meeting with the flour distribution mechanism on Tuesday, the acting governor of the state, Maj Gen Hashim Khaled, harshly criticised the mechanism for not notifying him earlier of the seriousness and exacerbation of the state’s bread flour crisis.

Rising commodity prices

Members of the Sudanese Professionals Association of the Ministry of Finance in Kassala accused the state government of causing the price of 50 kg bag of sugar to rise from SDG 1,850 ($33.86*) to SDG 3,100 ($56.74).

In a statement, she stated that the state’s Ministry of Finance has sold a large amount of subsidised sugar, estimated at 32,000 sacks to merchants, expecting increase in sugar prices due to this procedure and demanded the governor of the state to direct the return of the sugar sold to the merchants immediately so that it can go to the target citizen in the specified manner and the specified price, threatening to follow the legal means to return it.

They also demanded the formation of an investigation committee to find out those responsible administratively for this administrative corruption that occurred and hold them accountable immediately.

As reported by Radio Dabanga on February 13, Sudan’s Minister of Industry and Trade Madani Abbas, has apologised to the Sudanese people for the lack of a solution to the bread shortage. He affirmed the state’s commitment to continue subsidising bread until the end of the transitional period. The government currently subsidises a sack of flour by more than SDG 1,600 ($30).

Economists

In recent days, independent economic experts have cited the instability of the Dollar exchange rate and subsidies as major factors in Sudan’s economic crisis.

In an interview with Radio Dabanga, Professor Hamid Eltigani, economist and Head of the Department of Public Policy and Administration at the American University in Cairo.

He describes the economic situation as “dangerous”. He warns against “an explosion in the country” in case the economic crisis is not dealt with. He calls for a gradual lifting of subsidies on petrol and diesel, and normalisation of the exchange rate between the Sudanese Pound and the US Dollar.

In an interview with Radio Dabanga this week, former banker and civil society activist Hafiz Ismail, who is a leading member of the Sudanese panel of experts, says that “the current economic crisis is attributable to the lack of vision and the absence of an economic plan to manage the crisis”.

Ismail warns of economic collapse in the country due to the rapid deterioration in value of the Sudanese Pound “around the clock”. He expressed concern that the economic failure would “neutralise the public towards the government and increase the growing rejectionist trend“.

The analyst told Radio Dabanga that the Sudanese economy suffers from two distortions, namely commodity subsidy and multiple [Central Bank of Sudan, customs, and unofficial] exchange rates, and calls “for the development of policies to mitigate harm to the most affected groups through social security networks in preparation for the lifting of subsidies”.

In a separate interview with Radio Dabanga, Professor Hamid Eltigani, economist and Head of the Department of Public Policy and Administration at the American University in Cairo.

He describes the economic situation as “dangerous”. He warns against “an explosion in the country” in case the economic crisis is not dealt with. He calls for a gradual lifting of subsidies on petrol and diesel, and normalisation of the exchange rate between the Sudanese Pound and the US Dollar.

* USD 1 = SDG 54.63 at the time of publishing this article. As effective foreign exchange rates can vary in Sudan, Radio Dabanga bases all SDG currency conversions on the daily middle US Dollar rate quoted by the Central Bank of Sudan (CBoS).

View Original: https://www.dabangasudan.org/en/all-news/article/sudanese-pound-hits-record-lows-against-hard-currencies

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Sudanese Pound hits new low as US Dollar and gold prices soar

Sudan: Economist: Plunging Sudanese Pound leading to economic collapse

A leading economic analyst has called for a programme to stabilise commodity prices and the US Dollar exchange rate in Sudan, warning of economic collapse and loss of public confidence in the transitional government. Read more.

Economist: Plunging Sudanese Pound leading to economic collapse

Report from Radio Dabanga.org

Dated Tuesday 25 February 2020

Former banker and civil society activist Hafiz Ismail, who is a leading member of the Sudanese panel of experts, says in a new interview with Radio Dabanga, that “the current economic crisis is attributable to the lack of vision and the absence of an economic plan to manage the crisis”.

Ismail warns of economic collapse in the country due to the rapid deterioration in value of the Sudanese Pound “around the clock”. He expressed concern that the economic failure would “neutralise the public towards the government and increase the growing rejectionist trend”.

The analyst told Radio Dabanga that the Sudanese economy suffers from two distortions, namely commodity subsidy and multiple [Central Bank of Sudan, customs, and unofficial] exchange rates, and calls “for the development of policies to mitigate harm to the most affected groups through social security networks in preparation for the lifting of subsidies”.

Ismail expressed concern that social security in Sudan is being obstructed by what he described “a corruption machine”, and stressed the need to start fighting corruption, while identifying clear mechanisms to implement the programme.

He calls for a unified currency exchange rate to curb the accelerating deterioration of the Pound. He called on the government to accelerate the changes of bank managements and the departments of Ministry of Finance at all levels, in addition to comprehensive tax reform to prevent tax evasion.

The former banker also stressed the need “to focus on investment in agriculture as a sustainable resource”, and “the need for the state to dominate the gold sector as a public resource, legalise prospecting, and allocate 50 per cent of production to the state with an appropriate proportion to be allocated to exploration areas”.

As reported by Radio Dabanga on February 9, Sudan’s Anti-Corruption Committee has dissolved the administrative board of the Central Bank of Sudan (CBoS) and 11 other banks and dismissed nine bank managers with alleged links to the deposed Al Bashir regime. The decision also dissolves nine administrative boards of directors of corporations, and removal of a number of directors of other institutions.

Sudan’s Anti-Corruption Committee (The Empowerment Elimination, Anti-Corruption, and Funds Recovery Committee) has issued a decision to form sub-committees in all states to be chaired by the governor of each state.

View Original: https://www.dabangasudan.org/en/all-news/article/economist-plunging-sudanese-pound-leading-to-economic-collapse

Sudan: Bread subsidy to continue during the transition - 1 person killed by security forces in Kosti

BBC News report by Mary Harper,

Africa editor, BBC World Service

Dated Wednesday 12 February 2020

Sudan: Bread subsidy to continue

Sudan says it will continue to subsidise the price of bread during the transition period.

Trade Minister Madani Abbas Madani said the country had sufficient wheat reserves to last until May.

On Tuesday, there were large protests in the capital, Khartoum, and other towns against shortages of bread and fuel.

There are reports that one person was killed by the security forces in the town of Kosti.

Demonstrations in 2018 about the rising cost of bread and other essentials escalated into the mass political protests that led to the downfall of President Omar al-Bashir last April.

View Original: https://www.bbc.co.uk/news/topics/cq23pdgvgm8t/sudan

Incoming Sudan govt will inherit $8.7-9.2bn trade deficit & business environment beset by corruption

NOTE from Sudan Watch Editor: Here is an interesting thread of tweets by Sudanese economist Yousif Elmahdi posted on his Twitter page 02 August 2019 @Usiful_ME. 

Note, in the final tweet Yousif reveals the source of his data is as follows: Macro data is from IMF;  agriculture productivity estimates come from a private sector study commissioned by government;  export data is from a mix of sources. 

Yellow highlighting is mine for future reference. I have used green to highlight Yousif's sense of humour.

Yousif Elmahdi

The incoming #Sudan government will be inheriting an economy highlighted (as of 2018) by:

— $8.7-9.2bn trade deficit 

— Fuel subsidy of 8% GDP (over $3bn)

— Wheat subsidy of around $500m, on top of $800m import bill 

— 60% power coverage deficit (4,000 megawatts)

• Yousif Elmahdi
  Alongside this:
• — International reserves were as low as $1bn gross by end-2018. 
• — In reality, there are no reserves because the budget deficit meant Central Bank was financing a parallel budget. On-budget expenditure was covering roughly:
• Yousif Elmahdi
  - All of Chapter 1 (wages and salaries), of which 20-25% security sector wages.
• - 30% of Chapter 2 (capital expenditure)
• Yousif Elmahdi
  — Tax to GDP ratio was 6%. For reference, sub-Saharan Africa average is around 18%.
• Yousif Elmahdi
  — Oil production declined from 160,000 to 70,000 barrels, all of it consumed locally (w/ deficit imported) covering around: 
• - 30-40% diesel needs. For reference, total diesel consumption composition is est: 50% transport sector; 10% industry; 10% agriculture; 5% general)
• Yousif Elmahdi
  - 40-50% gasoline needs. For reference some of locally produced gasoline is exported to Ethiopia in exchange for 100-200 megawatts power. 
• - 70-80% LPG needs.
• Yousif Elmahdi
  — Gold production estimated at 100 tonnes ($4bn), but only 20/30 tonnes ($1.5bn) accounted. 80% artisan produced.
• Yousif Elmahdi
  — Agriculture sector v. low productivity and high cost of 45 million cultivated acres: 44m rain-fed; 1m irrigated (against 5m capacity). 
• Some examples: 
• - 8 million acres sesame: 100kg/acre ($300m exports). For comparison, Turkey produces around 1,700kg/acre.
• Yousif Elmahdi
  Another example:
• - 2 million acres sorghum: 3 sacks/acre ($20-60m exports).
• Yousif Elmahdi
  — Business environment beset by corruption, especially around natural resources.
• - State-owned enterprises completely off-budget, no forensic audit etc.
• Yousif Elmahdi
  To fill gap: 
• — Govt. monetized (printed money), especially as couldn’t sell debt due to lack of credit worthiness of Govt. bonds. 
• -> Inflation 73% by end-2018.
• — KSA and UAE also provide $100m monthly in fuel, wheat, medicine, fertilizer etc.
• Yousif Elmahdi
  In the backdrop you have:
• — Real exchange rate that’s hugely overvalued. This of course:
• - renders the whole economy uncompetitive
• - while different exchange rates create distortions (80% transactions in parallel market).
• Yousif Elmahdi
  Given this context, the new government’s priorities must necessarily include:
• 1. Competitive exchange rate 
• 2. Tax reform 
• 3. Business climate reform (including banking sector) 
• 4. Infrastructure (especially energy sector)
• 5. Agriculture 
• 6. Health and Education
• Yousif Elmahdi
  The key priority, however, for new #Sudan Govt. will be to find the resources to finance all of this; to fill the budget deficit; and to cushion the poorest.
• Yousif Elmahdi
  On the latter, previous government social safety net program reached 500-600,000 families against 800,000 target. 
• With poverty rate currently estimated around 36%, about 3 million families (today) need same level of support. 
• Gap is around 1% GDP (based on $5/month support).
• Yousif Elmahdi
  Above all, any reform measures need to be grounded in citizen engagement, trust and awareness building, and transparency.
• Yousif Elmahdi
  A few additional points to this thread:  
• — Any serious & sustainable reform package would have to include (as priority) removal of fuel & wheat subsidies, esp. fuel. 
• - #Sudan fuel prices are amongst lowest in the world and the country simply can’t afford to maintain these
• Yousif Elmahdi
  Difficulty with fuel is that once the subsidy is removed, even if gradually or partially, prices will sky rocket across the entire economy. 
• We would be dealing with the sorts of numbers (in the 000s) you hear in some other countries across the continent.
• Yousif Elmahdi
  Exchange rate competitiveness would also entail initial inflationary pressures, but ultimately helps private sector development by improving competitiveness.
• Yousif Elmahdi
  Ramifications in the short to medium term would be severest on those whose incomes are not inflation adjusted (public sector especially), and on the poorest. 
• In theory, some of the savings could be directed towards expanding social safety nets and adjusting public sector wages
• Yousif Elmahdi
  Ultimately the public sector is severely bloated due largely to excessive administrative structure. 
• This would need to be reformed at some point but I won’t get into this rabbit hole right now.
• Yousif Elmahdi
  Basically, the medicine will be very bitter, for very long before it’s positive effects can start to be felt. 
• Postponing it only exacerbates magnitude of problems to be addressed. This is what previous regime did, ironically because of regime sustainability considerations.
• Yousif Elmahdi
  Previous regime structured economy in this way also for regime sustainability considerations (and perverse incentives) and could afford it while it had substantial oil revenues.
• Yousif Elmahdi
  What works in incoming transitional government’s favor is that it won’t be encumbered by election mandate or future election campaign. 
• In terms of resourcing it would potentially have many friends.
• Yousif Elmahdi
  So in theory provides an ideal platform to initiate difficult and politically divisive reforms. 
• However, this assumes the coalition remains stable, Cabinet is well constituted, and public trust can be quickly gained and sustained.
• Yousif Elmahdi
  On wheat imports (approx. $800m), I’ve heard that the major mills believe actual import needs are around $500m i.e. substantial amount of smuggling when you add on the subsidy (approx. $500m).
• It’s believed Khartoum consumes 65% of actual wheat needs.
• Yousif Elmahdi
  Staying on agriculture, livestock is a significant export source, generating around $800m from 5 million heads. 
• But when you consider total livestock population, this is paltry, and largely due to lack of transport infrastructure.
• Yousif Elmahdi
  Value could also be significantly increased by exporting as meat (instead of live) but at present the infrastructure and value chains don’t exist.
• Yousif Elmahdi
  I sincerely hope those that assume power will recognize this and will be bold, empowered and supported to initiate reversal. We will need a significant leap in transparency and citizen engagement.
• Yousif Elmahdi
  @Fahad55121907  @Omer58606983  Macro data is from IMF. Agriculture productivity estimates come from a private sector study commissioned by government. Export data is from a mix of sources.
• 
  
• To visit and view the above series of tweets at Yousif's Twitter page click here:  https://twitter.com/Usiful_ME/status/1157545777243316227

Sudan economy collapse if deal not reached soon

ECONOMIC concerns were among the initial sparks for the protests, which broke out in December when the government announced it would triple the price of bread. Everyone is alert and waiting. If this state of tension and uncertainty continues, the economy will collapse. Full story here below.

Sudan in economic turmoil in absence of a working government

Article by AFP Agency Staff
Thursday, 18 July 2019 - 15:32

Mall operators, waiting for the transition to civilian rule, say sales are down as much as 40%, with investors and consumers playing a waiting game

Photo: Haj Abul Fadel, a Sudanese millionaire businessman, is pictured at his shopping centre in Khartoum on July 17, 2019. Picture: AFP/EBRAHIM HAMID

Khartoum — Sales have tumbled at Haj Abul Fadel’s shopping centres in Sudan, where he and fellow business owners fear that months of political turmoil could bring on a full-scale economic collapse.

Sudan’s ruling generals and protesters inked a deal on Wednesday aimed at installing a civilian administration and breaking months of political deadlock. But the country’s fragile economy has already been hard hit by months of mass protests, which led to the military council’s toppling of long-time president Omar al-Bashir in April.

Demonstrators have continued to demand a transition to civilian rule, keeping up their campaign despite a June 3 crackdown on a protest sit-in that left dozens dead.

Abul Fadel said the unrest had slashed his overall sales by 20% to 25% — and as much as 40% for some items. “The government has yet to announce its economic policies, and as an investor, I can’t take any decisions in the current climate.” 

The millionaire businessman depends heavily on imports to stock his five Khartoum malls, but he said many firms have stopped bringing in goods due to the uncertainty.

Fellow entrepreneur Mohammad Hussein Madwi, who owns a string of agricultural and manufacturing firms, echoed his concerns. “Sales are down by at least 30% because of the lack of demand and the collapse of the Sudanese pound,” he said. “The state of political uncertainty makes me hesitant to invest or import goods, so things have pretty much come to a standstill.”

Since the last devaluation of the pound in October by the then Sudanese authorities, the currency has plunged by a further 70% against the dollar on the black market.

Inflation has meanwhile fallen from a high of 70% in December to below 50%, according to the country’s central statistics bureau.

Mother of seven Hanadi Mohammad, shopping at one of Abul Fadel’s malls in northern Khartoum, said the lack of liquidity was stopping her spending. “I don’t know how long we can live like this,” she said, walking past household appliances which, despite heavy discounts, were sitting unsold on the shelves.

‘Rock bottom’

Economic concerns were among the initial sparks for the protests, which broke out in December when the government announced it would triple the price of bread.

Months later, the army and protest leaders have agreed on the form of the country’s governing institutions, but further talks will be needed to settle other contentious issues. This means political uncertainty — and economic woes — are likely to haunt the country for some time to come.

Decades of US sanctions had already devastated Sudan’s economy before the protests broke out in December. The demonstrations quickly grew into a nationwide movement against Bashir, and the resulting unrest, along with persistent power cuts, soon hit the economy.

“Trade activity has been at rock bottom since January,” said Khaled al-Tijani, a prominent business journalist. “The economy is suffering from a lack of confidence because of the lack of a government to oversee it.”

In April, Saudi Arabia and the United Arab Emirates announced a joint $3bn package of economic aid for Sudan, including a $500m deposit in Khartoum’s central bank to strengthen the currency. The remainder is allocated for food, medicine and petrochemicals purchases.

Agriculture is a major sector and a key source of income for most of Sudan’s 40-million inhabitants. The latest crisis has hit farmers hard, particularly as the collapsing pound has stopped them importing agricultural chemicals.

On Sunday, Riyadh and Abu Dhabi sent Sudan an emergency batch of more than 50,000 tonnes of fertilisers and other agricultural supplies, according to the official Saudi Press Agency.

Faisal Mohammad, an importer of agricultural supplies, said the lack of foreign currency has hit imports hard. “Even if they are available, we’re hit by the weakness of the pound and the rising price of goods, as well as a lack of confidence among buyers, all of which negatively impacts farming operations.” 

Tijani warned that damage to such a vital sector could harm Sudan’s economy more broadly — bad news for entrepreneurs such as Abul Fadel.

“Everyone is alert and waiting,” Abul Fadel said. “If this state of tension and uncertainty continues, the economy will collapse.” For the tycoon, there is only one way forward. “A political deal between the military council and [protest leaders] is the only way out of the current economic situation.” 

SOURCE: AFP

https://www.businesslive.co.za/bd/world/africa/2019-07-18-sudan-in-economic-turmoil-in-absence-of-a-working-government/