Analyst: Khartoum economic conference ‘comes at time of disagreement’
Today, the National Economic Conference will be held in Khartoum following repeated postponement, against a background of expectation and hope that the deterioration of the Sudanese economy can be stopped and a road map can be created for its development.
Prime Minister Abdallah Hamdok will present development priorities of the transitional government in a working paper that carries the visions and challenges for a sustainable democratic state according to an integrated development project.
The conference will discuss, in nine sessions over three days, working papers and recommendations submitted by the eighteen sectoral workshops held to prepare for the conference.
Economic analyst and former banker Hafiz Ismail told Radio Dabanga that “the conference comes at a time of disagreement between the government and the Forces for Freedom and Change (FFC) over the economic programme for the 2020 National Budget and its amendments”.
He explained that this has had negative effects caused by a lack of confidence in the economy file. This has led to a “terrible deterioration” in the value of the Sudanese Pound against the US Dollar from SDG79* to SDG250 within a year and caused inflation.
The conference should adopt a pragmatic economic vision and put forward serious alternatives, in case the policy of the International Monetary Fund (IMF) adopted by the government is rejected, he said.
Ismail called for a review of resources available in the country and of the oil contracts signed during the former regime. The government should reduce unnecessary expenditures, and control the economy at all points, including companies owned by the military.
The conference should also focus on discussing how to create sufficient resources, the economic analyst stated. "If not, planning additional expenditures without specifying the resources to be used will lead to catastrophic effects and an additional increase in inflation rates, leading to the continued collapse of the national currency's value."
IMF development grants
The economic conference taking place today coincides with the approval of the IMF Staff-Monitored Programme (SMP), based on the government's request for assistance for its economic reform programme.
The 12-month SMP aims to support the government’s own programme of reforms in order to stabilise the economy, improve competitiveness, and strengthen governance.
Acting Minister of Finance, Heba Mohamed, announced on Thursday that the implementation of the programme will make Sudan eligible for more than $ 1.5 billion annually in direct development grants to stimulate investment and revive the economy.
However, Ismail expects the fund programme to be accompanied by harsh economic measures that would have a major impact on the economy.
"The IMF offered the government aid amounting to $400 million, in exchange for an increase in the official exchange rate from SDG55 to SDG130. Yet, an increase of the Dollar rate exchange rate on the parallel market is expected, in light of the scarcity of hard currencies in the country," he said. "This will of course increase the inflation as well."
The intervention is linked to an integrated economic programme based on gradually removing subsidies on fuel, while continuing to financially support cooking gas and flour. It is expected that this will lead to a significant impact on production inputs.
The IMF will cancel the payment of arrears in services and debt payments by Sudan. According to the IMF: “Sudan’s external debt is high and with longstanding arrears which severely limit access to external borrowing. In particular, Sudan remains unable to access IMF resources because of its continued arrears to the Fund. A strong track record of macroeconomic performance and implementation of reforms, together with a comprehensive strategy of arrears clearance and debt relief supported by Sudan’s development partners, is required for addressing Sudan’s high debt overhang.”
Ismail expressed his concerns that the outcomes of the economic conference that ends on Monday will conflict with the proposed fund's programme.
*USD 1 = SDG 55.0000 at the time of publishing this article. As effective foreign exchange rates can vary widely in Sudan, Radio Dabanga bases all SDG currency conversions on the daily middle US Dollar rate quoted by the Central Bank of Sudan (CBoS).
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