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Sudan PM unveils extensive austerity measures to tackle economic crisis

October 25 - 2018 KHARTOUM
Sudan’s Prime Minister and Minister of Finance Motaz Mousa (Picture: SUNA)
Sudan’s Prime Minister and Minister of Finance Motaz Mousa (Picture: SUNA)

Sudan’s Prime Minister and Minister of Finance Motaz Mousa announced in Parliament on Wednesday an urgent 15-month economic reform programme which will starting this month. It includes extensive austerity measures to be implemented immediately, and more to be adopted in next year’s budget.

The programme is designed to fight the hyperinflation and liquidity crisis that the country has experienced over past months that has touched all levels of society, especially the most vulnerable.

Mousa summarised the most important goals of the austerity programme: Stability of the exchange rate, addressing the liquidity crisis, combating corruption in all its forms, and the mandate of the Ministry of Finance on public funds.

The prime minister announced the abolition of customs exemptions except for production exemptions and other austerity measures. He announced the freezing of the budgets of the management at the level of actual disbursement and the allocation of one vehicle for the constitutionalists.

Central Bank of Sudan

He pointed to the withdrawal of all Land Cruisers from the constitutionalists and allocating two vehicles for each ministry to perform tasks, prohibiting the purchase of imported furniture to the offices of the state, in addition to the cancellation of all activities that are carried out at the expense of the state such as festivals, workshops, and meetings.

He instructed the Central Bank of Sudan (CBoS) to stop issuing guarantees to commercial banks to finance government expenses, until the limit of government borrowing from banks. The CBoS should start the actual payment of previous guarantees, while allowing government companies and institutions to buy foreign currency only from the CBoS.

Economic crisis

However, economic analyst Hafiz Ismail downplayed the impact of the austerity programme. In an interview with Radio Dabanga, he said that tackling the economic crisis in the country needs reduced spending on security and defence through a serious political direction to achieve peace.

He welcomed the announcement of austerity and reduction of government spending, but stressed at the same time the need to determine the spending and the amounts that are provided through these measures.

Ismail considered the announcement about the increase in production without specifying the resources on which to rely on it as meaningless and that foreign investment should be obtained through a policy that encourages it. He stressed the inability of the government to address the liquidity crisis and curb inflation with the printing of new categories of currency without taking into account the compatibility with economic growth.

He expected a continuation of the liquidity crisis due to loss of confidence in the banking system.

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