Sudan’s central bank said on Saturday it was ready to pump dollars into the market to halt a “temporary” slide in the Sudanese pound.
A severe economic crisis in the African country has sparked two small protests in the capital Khartoum in the past few days as anger builds over spiralling food inflation and the sliding value of its currency.
The Sudanese pound has fallen significantly on the key black market since South Sudan became independent on July 9, taking with it most of the country’s oil production. Some 80% of 40 million Sudanese live in the north.
Traders on the black market said one dollar was now buying 4.5 to 4.8 pounds compared to 3.5 quoted in July. This is well above the official rate of around 3 pounds to the dollar.
The central bank said the currency’s fall was due to dollar demand from Southern Sudanese changing their final pay checks into the United States currency before going home.
“The reasons [for the currency fall] are only temporary,” the central bank said in a statement, adding that it was willing to provide the necessary hard currency to help the pound.
Analysts blame the slide on the gloomy economic outlook following Sudan’s loss of 75% of oil production when the south became independent. Juba will have to pay a fee to use northern export facilities but analysts say the revenue Khartoum receives will be much less than under the existing 50:50 split.
Inflation jumped to 21% in August, driven by rising food costs. Sudan needs to import much of its food and consumer goods, which have become more expensive due to a shortage of dollars in the country.
The government has launched a package of counter-measures such as temporarily waiving duties for 12 basic food items but analysts are sceptical it will have much of an impact.
The central bank has asked fellow Arab states to put deposits in the central bank and commercial lenders to help the economy.
Sudan is also trying to diversify its economy to cut its exposure to oil costs by boosting mineral exports and the agricultural sector but economists say progress has been slow because of bad planning and a US trade embargo.
Foreign minister Ali Karti said on Friday that Sudan’s massive debt risks exacerbating the difficult economic situation following the secession of the south. Annual servicing costs for the country’s $38 billion of debt are currently about $1-billion, he said. — Reuters