The price of the dollar on the parallel market jumped to SDG260* yesterday, halting the stock exchange and causing a partial closure of the gold market in Khartoum due to instability of the forex rates, meanwhile the Finance Minister declared a State of Economic Emergency.
In an interview with Radio Dabanga, economic analyst Kamal Karrar attributed the significant rise in the price of the Dollar against the Pound to economic policies of the 2020 national budget and amendments to it, along with Central Bank of Sudan policy. In addition, he said the establishment of an economic emergency committee, which is buying foreign currencies from the parallel market, has helped the exchange rate to rise.
High inflation rates are a result of the high exchange rate of the Dollar, increases in production costs and taxes, and the revised 2020 budget.
He expressed regret that “the revolution government is following in the footsteps of the former regime,” through covering the budget deficit by printing more banknotes.
Karrar described the current policies as harmful to the economy, launching a decisive attack on the Strategic Commodities Portfolio created by the Economic Emergency Committee: “It inhibits the government from importing strategic goods. It is a scourge for the Sudanese economy.”
Dr Abdellatif Osman, Chairman of the Executive Committee of the Strategic Commodities Portfolio, said in a joint press conference on Thursday that their business model depends on “exporting products made of materials bought with Sudanese Pounds, to finance the country’s imports of strategic goods in US dollars”.
The banks contributing to the Portfolio work on the principle of opening credits for the benefit of the portfolio depending on the external credit lines available and the Dollar’s capital of the portfolio. “Therefore, the Portfolio will never buy one single Dollar from the parallel market,” according to Osman.
State of Emergency
On the same day, the acting Finance Minister, Dr Hiba Ahmed, announced the activation of a State of Economic Emergency and the formation of a joint mechanism to protect the Sudanese economy.
She said that the measures include deterrent laws to protect the economy, including emergency courts and prosecutors.
A number of legal amendments were announced by Minister of Justice, Nasreldin Abdelbari, to address the economic crisis along with establishment of emergency courts. The minister explained in a press conference yesterday that the Foreign Exchange Bill, which still has to be passed, stipulates ten years imprisonment for illegal traders of gold, precious metals, and stones. Also, the penalty for smuggling commodities was raised from one month to ten years.
Regarding finding a solution to the current situation, economist Karrar has called on the government to implement the alternative plan of the Economic Committee of the Forces for Freedom and Change. This includes governmental control of foreign exchange resources, controlling foreign trade, and making the Ministry of Trade responsible for monitoring prices.
He also called for the devolvement of GIS-affiliated companies to the Ministry of Finance, and for adherence to the recommendations of the National Economic Conference to be held this month.
According to the Finance Minister, the unprecedented and accelerating rise in the Dollar’s price is not caused by structural changes in the economy, but rather “by attempts to sabotage the Sudanese economy and suffocate the government”.
The Minister of Information and the official spokesperson for the government, Feisal Mohamed Saleh, said in a press conference yesterday evening that the unjustified rise of the Dollar is in fact a war against the revolution and its government.
He said that the problems that have appeared this week are not due to the economy at all, despite his acknowledgment of a number of structural issues in the economy: “These are the actions of those whose economic interests were damaged by the revolution,” he said and stressed that the authorities are dealing with it.
These statements were echoed by Adam Hereika, Economic Advisor to the Prime Minister, who said that there is no economic justification for the soaring prices of goods, services, and foreign currencies in Sudan over the past weeks.
‘Protect the economy’
Deputy Commander of the Rapid Support Forces (RSF) militia, Lt Gen Abdelrahim Hamdan, said in press statement yesterday that his force is ready to implement the new measures, in order to protect the national economy and the revolution. “The RSF will strictly implement the procedures and laws, and will not allow saboteurs to deny people of sustenance,” he said.
The Director General of the Police Forces, Lt Gen Ezzeldin El Sheikh announced “a solid plan in which all regular forces will participate to protect the economy”.
The head of the Customs Authority, Maj Gen Yasir Osman, said that more operations will be implemented at the borders to control the smuggling of goods in the next few days.
*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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