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Lifted subsidies cause knock-on inflation hike in Sudan

January 19 - 2017 KHARTOUM
File photo
File photo

Sudan’s Central Bureau of Statistics says that the annual inflation rate rose to 30.47% in December 2016, compared with 29.49% in November 2016. The climb is attributed to the rise of food and energy prices after cancellation of government subsidies two months ago.

In an interview with Radio Dabanga, economic analyst Kamal Karrar described the rise of inflation as “something natural in the light of the government's bad economic policies”.

He said that the government has failed to curb inflation by continuing to borrow from the banking sector, printing currency without a cover, a steady rise in the customs and tax fees including administrative categories, which in turn caused the rise of commodity prices.

He pointed to the close correlation between the high rates of inflation and low income among the public.

Pound tumbles

The Sudanese Pound price has fallen again against the US Dollar, after it witnessed a remarkable rally following the US Obama administrations valedictory decision to lift sanctions on Khartoum. A US Dollar now costs up to SDG 18 on the parallel market.

Traders said the buying price of a Dollar has ranged between 18 and SDG 18.5 and pointed out that there is a huge demand among the traders to buy the Greenback after they have refrained from doing so during the past two days.

They have predicted that the US Dollar, Saudi Riyal and Euro will rise in the coming period.

Foreign exchange

Karrar attributed the drop in the foreign exchange rates to the expectation of extra revenue of foreign exchange.

He said the Dollar's rise came after ensuring the lack of new revenue. He expects the Dollar to exceed SDG 20 in the first quarter of this year.

The former Director of Bank of Sudan, Sabir Mohammed El Hassan expects the Dollar prices to rise during a week to two weeks, should the State fail to take the financial policies to ensure stabilisation of the exchange rate.

He stressed that the lifting of US economic sanctions will not change the situation and solve Sudan's economic problems unless the government implements a package of reforms related to supporting production and exports.

He has acknowledged the state’ committing of a number of mistakes, such as the delayed economic reforms.

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