KHARTOUM - 29 Apr 2014

‘Sudan in need of $5 billion’: economist

The exchange rate of the Sudanese pound is falling again against the US Dollar, even after the State of Qatar deposited $1 billion at the Central Bank of Sudan early April this year to support the foreign exchange reserves in the country.

El Mujhar daily newspaper interviewed Sudanese economist Prof Esam Abdel Wahab Bob last week about the causes of the high exchange rate of the Dollar against the Pound.

“The combination of a weakening state economy and a weak productivity in general, together with the increase in government spending, and the continued military spending on civil conflicts in the country, constitutes one of the main causes. Another major cause is the collapse of the administrative economy system, infringing on public money reserves,” Prof Bob explained.

“All this has led to increased spending on imports. It is clear that the Sudanese economic policies are currently approached on an experimental basis, and not on a sound economic approach. This year, a number of factors have accumulated which led to the economic and financial collapse we are witnessing now. One cannot rely on economic reforms without administrative reforms. The economy cannot be managed by volatile and weak departments.”

Qatari deposit

According to Bob, the issue of the Qatari deposit is “unclear and ambiguous”. “Even if such a deposit existed, Sudan today needs at least 400 million Dollars to urgently import wheat so as not to worsen the food crisis. In addition, the country needs between 200-250 million Dollars to buy medicines, and some 300 million to purchase inputs for the coming agricultural season. If these figures are added up, the Qatari deposit will not meet the many needs of the country. Sudan is in need of approximately five billion Dollars on the condition of a sound planning and management of the national economy.”

Access to the Qatari deposit will take a long period of time, during which guarantees and conditions for its use and return are to be negotiated. “The short-termed decline of the Dollar against the Pound following the announcement of the Qatari deposit is in fact based on the ignorance of the Khartoum black market traders about the subject.”

Importers

The amounts of foreign currency dealt with at the black market are growing fastly in comparison with the banks and Forex bureaus, to the extent that the currency traders rule out the ability of the Sudanese government to control the price of the dollar on the “parallel market” as the black market has come to be known in Sudan. “Many importers are currently resorting to the black market in order to obtain dollars,” a trader told El Mukjar.

(Source: Seif Jami/almeghar.com)

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