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‘Change of currency needs supporting measures’: Sudanese banker

March 13 - 2020 KHARTOUM
Newly printed bank notes of 500 Sudanese Pound (File photo)
Newly printed bank notes of 500 Sudanese Pound (File photo)

According to a prominent Sudanese banker, lifting subsidies on basic commodities is just one of the possible solutions for the financial and economic crises in the country. Changing Sudan's currency should be accompanied by a series of supporting arrangements.

“Opinions about the lifting of subsidies differ, but before taking any decision, it is necessary to know the actual amount the state pays for the subsidies, banker Abdelkarim Abdelfattah said in an interview with Radio Dabanga on Thursday.

“This amount should be compared with the size of the National Product, with the total government spending on sectors such as defence and security, and the expenditure of the Sovereign Council and the Council of Ministers.”

The banker emphasised the aim of the subsidies. “The government subsidises basic commodities to provide a decent life for the citizens, and to indirectly support the production sector.”

He linked subsidies to the need to revitalise the production sector in the country. “America and the European Union provide various kinds of financial support, not only to consumers but also to producers.”

Abdelfattah warned for “social chaos” in case subsidies on basic consumer goods are lifted this year, and pointed to other solutions.

“The International Monetary Fund and other financial institutions put the lifting of subsidies as a prerequisite for obtaining financial support,” he explained. “That is why the government focuses on this particular solution.”

“The government subsidises basic commodities to provide a decent life for the citizens, and enable them to support the production sector.” - Abdelkarim Abdelfattah, Sudanese banker

There are other solutions available that obviate the need for borrowing, the banker stated. “For instance, the Ministry of Finance can take over government tasks, supervise factories and companies owned by members of the security apparatus, the police, and the army, and amend the laws that previously allowed these companies to be owned by the military establishment.”

Change currency

A solution proposed by many to replace the money still in the hands of the former regime's affiliates, is the changing of Sudan’s currency.

According to Abdelfattah, currency change as a means to restore a healthy banking system is possible, but must be accompanied by a set of arrangements, such as a stop on all purchases and sales, and a sufficient transfer of the ownership of real estate and movables before the date fixed for the change of the currency.

“Account holders should be asked to prove that the money they obtained is the result of a legitimate economic activity and that taxes and other fees imposed on revenues have been paid. If one fails to prove this, 80 percent of the amount in their possession should be confiscated,” the banker stated.

“After changing the currency, the authorities must set a specific ceiling for withdrawals,” he added. “The sale of real estate and vehicles should be done electronically, not in cash. People living in remote areas should be able to use the banking system as well, and get used to that.”

 


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