Sudan floats currency as it races to stop cash crunch

It is a brutal but expected devaluation of the pound that the Sudanese Central Bank announced on Sunday, February 21. Sudan is going through a serious crisis. Shortages and rising prices are making life difficult for the population. The measure, in the form of an electroshock would help stabilize the economy.

In concrete terms, the Sudanese Central Bank is aligning itself with the black market rate. The price of the Sudanese pound will rise from 55 pounds for one dollar to 375. The measure is accompanied by increased exchange controls and was expected by donors and the IMF, who demanded "monetary truth".

The measure was loudly demanded not only by the International Monetary Fund, but also by the donor community as a whole. For them, the Sudanese economy could no longer live in the monetary lie, with an official rate of the pound 6 times lower than the black market rate.

By aligning the two exchange rates, the Central Bank is paving the way for a whole series of financial support programs. Thus the United States and Great Britain will be able to release more than 1.5 billion dollars in assistance, including a 450 million dollar program for the poorest families.

Key IMF condition

The move was a key demand by the International Monetary Fund, which set last September as a deadline for the government to move to a “unified market-clearing exchange rate.” Sudan should conclude a 12-month Staff Monitoring Program with the IMF to win relief on its foreign debt, which is at $70 billion. The IMF was expected to brief its board on Sudan's measures in March.

Sudan has for years struggled with an array of economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples. The country's annual inflation soared past 300 percent last month, one of the world's highest rates.

The country was plunged into an economic crisis when the oil-rich south seceded in 2011 after decades of war, taking with it more than half of public revenues and 95 percent of exports.

Since the overthrow of al-Bashir, the transitional government has been working to transform Sudan’s economic system and rejoin the international community after over two decades of isolation.

Sudan was also an international pariah after it was placed on the United States’ list of state sponsors of terror early in the 1990s. This largely excluded the country from the global economy and prevented it from receiving loans from international institutions like the IMF.

Agencies