Home BANK SOUDAN: Sudanese pound devalued to reduce the country’s debt

SOUDAN: Sudanese pound devalued to reduce the country’s debt

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The Sudan Central Bank devalued the Sudanese Pound on Sunday, 21 February. The currency will now align with the currency market exchange rate which is 375 pounds to 1 dollars against an official rate previously 55 pounds.

Sudan’s new transitional government made the decision on Sunday to devalue the Sudanese pound. This devaluation was long desired by the international creditors of Sudan and the International Monetary Fund (IMF). But it has been delayed because of the shortage of commodities and high inflation.

The indicative exchange rate was set at 375 Sudanese pounds to the dollar against a previous official rate of 55 pounds. Very recently, the dollar was trading between 350 and 400 Sudanese pounds on the black market. The harmonization of the exchange rate will therefore make it possible to correct structural imbalances, in particular the budget deficit, the balance of payments deficit, high inflation rates and attract foreign investment. 

Britain has declared its willingness to pay Sudan’s debts to the African Development Bank, which amount, according to Finance Minister Gibril Ibrahim, to $100 million.

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The United States and Great Britain have also pledged more than $1.5 billion to help the country. It is therefore planned to create a programme of 450 million for the poorest families. The IMF, welcoming the government’s economic reform program, will now be able to restructure the country’s debt, which exceeds $60 billion.

To prepare for a possible popular uprising, Minister Gibril Ibrahim announced that the family allowance would be increased to $5 per person. A family will receive money directly instead of subsidies on fuel, electricity and bread.

The Sudanese banking system has been operating under the Islamic system since 1984, which prohibits certain transactions of the conventional financial system, such as lending money at interest rates considered as usury.

       

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