Sudan economy to get worse, as inflation rockets

Sudanese economists have warned that the economic situation in the country is likely to further deteriorate leading to considerable rises in food prices during the coming months, various Sudanese newspapers reported yesterday.

According to experts, the market prices will be difficult to control, especially because the month of fasting will begin in mid-May and will significantly boost the demand for sugar, flour and vegetable oils.

On Sunday, Sudan’s Central Statistics Office blamed increases in food and energy prices for the rise in the annual rate of inflation which rose in March from 33.53 to 34.68 per cent. Economists attributed the increase to the fall of the Sudanese pound which has lost 100 per cent of its value since South Sudan’s secession, pushing inflation rates to record levels. March is the eighteenth straight month that the inflation rate has risen.

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Last year, Sudan’s Central Bank introduced an incentive policy increasing the foreign currency exchange rate from 6.5 SDG to 15.8 SDG, representing an increase in commercial banks of 131 per cent. The Sudanese pound currently stands at 20 SDG to a pound on the black market. In a move to reduce the demand for the US dollar and protect domestic industry, the government banned the import of frozen meat and fish and raised tariffs on a number of imports. However, these restrictions pushed inflation higher given the country is heavily dependent on imported goods

In November 2016, following a major fall in revenue, the government cut fuel and electricity subsidies, resulting in a rise in petrol prices of about 30 per cent and pushing up transport costs. The projected deficit in Sudan’s 2017 budget is estimated at 2.1 per cent of the gross domestic product (GDP) compared to 1.6 per cent in 2016. This is expected to lead to a decline in the countries growth rate from 6.4 to 5.3 per cent with a targeted average inflation rate of 17 per cent.