Hamdok defends unification of Sudanese Pound exchange rate
During a speech to the leaders of the Sudanese Business and Employers' Federation, Prime Minister Abdallah Hamdok announced yesterday that the new government agreed on economic priorities, including the handling of the livelihood distress in the country, controlling inflation, stopping the devaluation of the national currency, attracting investment, encouraging local production, and implementing the provisions of the Juba Peace Agreement.
Hamdok also emphasised that the transitional government is working to address many of the economic challenges it inherited from the former Al Bashir regime “through an integrated vision and clear priorities.”
On unification of the exchange rate, a measure taken by the government last week to halt the ongoing inflation and economic crises in Sudan, Hamdok emphasised that it was necessary to remove distortions from production and export on the one hand, and revenues on the other hand.
He said that the measure is an important tool to attract investment and financial liquidity through official channels and fight the parallel market, money laundering and smuggling, in addition to stabilising the price of basic goods. “The policy is directed towards supporting production as the outlet for the economy, instead of supporting consumption.” The government also aims to support health, education, and poor families who are affected by these policies.
“The model of partnership between the government and the private sectors is the basis for achieving a sustainable development project, and our economic policy is directed towards supporting production, education and health rather than supporting consumption, as production is what will save our country at this stage,” tweeted Hamdok following the meeting with the federation.
He also announced the acceptance of a USD 1 billion employers' deposit to stimulate the implementation of the exchange rate policy and stabilize the national economy. Financial liquidity, remittances, and domestic and foreign investment will contribute to stabilising the exchange rate, according to the PM.
The Sudanese Professionals Association (SPA) described the decision to unify the foreign exchange rate as “throwing the national currency and the Sudanese economy into the sea without equipment or training.”
The group said in a statement that the move should have been preceded by reform and restructuring of the banking system, as well as building reserves that allow an impact on the exchange rate.
“The decision will lead to a significant increase in inflation rates, increased pressure on the vulnerable parts of society, and collapse of the middle class. The transitional government is pushing ahead before controlling the economic institutions of the military and ending the daily leakage of the country's wealth through smuggling,” explained the statement.
Sit-ins organised by the Sudanese Bankers Association on Wednesday and Thursday demanded reform of the banking sector, improvement of banking laws and working conditions. The sit-in denounced the dismissal of a number of Qatar National Bank employees.
On Wednesday, a group of ministers visited Sudanese banks to monitor the procedures regarding the recent adjustment of the exchange rate, and to address the challenges within the economy and banking system.
In an interview with Radio Dabanga this week, Professor Bashir and Professor Esam El Zein warned that the new measures issued by the Sudanese government and Central Bank of Sudan (CBoS) to unify the Sudanese currency will increase poverty and inflation. At the same time, economist and professor Hasan Bashir said the measures will stabilise the exchange rate and encourage grants, loans, and emergency subsidies.
*USD 1 = SDG 378.0327 at the time of posting. As effective foreign exchange rates can vary widely in Sudan, Radio Dabanga bases all SDG currency conversions on the daily US Dollar middle rate quoted by the Central Bank of Sudan (CBoS)
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