Sudan Central Bank Devalues the Currency to Revive Economy

Sudan’s central bank steeply devalued the country’s currency, as
part of a broader effort to win debt relief and revive the
struggling economy.

The move was demanded by international lenders but threatens to
pile on more hardship in a country whose inflation rate topped 300%
in January. The currency liberalization is a key component of the
economic reforms planned by Sudan’s military and civilian rulers,
who began transitioning the African nation to democracy after
decades of authoritarian rule.

The central bank instructed banks and exchange bureaus to adopt
the new system immediately, according to a statement on its
website. The move essentially aims to stamp out a black market and
control currency volatility in a nation with a foreign debt load of
around $60 billion.

The change is critical to helping Sudan win some debt relief,
Finance Minister Jibril Ibrahim told reporters, while acknowledging
that it will lead to a “soaring of prices.” He said “precautions”
would be taken to help cushion the impact, but offered no
details.

The central bank has yet to announce the new official rate for
what it said would be a “flexible managed float.” Bank of Khartoum,
the country’s largest lender, said on its website that the new rate
was 375 pounds per dollar, compared with the previous official rate
of 55 pounds. The new rate is near the one that had been offered on
the black market.

The International Monetary Fund in September had approved a
staff-monitored program for the country, which faces daunting
challenges including shortages of staples, soaring inflation and
political tensions.

Sudan has said it will raise spending by about 60%, to 1.02
trillion pounds ($18.6 billion) in 2021, to help the economy.

The central bank, in a letter to local lenders, said their rates
must fall within a range of 5% below or above the official one,
based on supply and demand.

Sudan’s central bank steeply devalued the country’s currency, as
part of a broader effort to win debt relief and revive the
struggling economy.

The move was demanded by international lenders but threatens to
pile on more hardship in a country whose inflation rate topped 300%
in January. The currency liberalization is a key component of the
economic reforms planned by Sudan’s military and civilian rulers,
who began transitioning the African nation to democracy after
decades of authoritarian rule.

The central bank instructed banks and exchange bureaus to adopt
the new system immediately, according to a statement on its
website. The move essentially aims to stamp out a black market and
control currency volatility in a nation with a foreign debt load of
around $60 billion.

The change is critical to helping Sudan win some debt relief,
Finance Minister Jibril Ibrahim told reporters, while acknowledging
that it will lead to a “soaring of prices.” He said “precautions”
would be taken to help cushion the impact, but offered no
details.

The central bank has yet to announce the new official rate for
what it said would be a “flexible managed float.” Bank of Khartoum,
the country’s largest lender, said on its website that the new rate
was 375 pounds per dollar, compared with the previous official rate
of 55 pounds. The new rate is near the one that had been offered on
the black market.

The International Monetary Fund in September had approved a
staff-monitored program for the country, which faces daunting
challenges including shortages of staples, soaring inflation and
political tensions.

Sudan has said it will raise spending by about 60%, to 1.02
trillion pounds ($18.6 billion) in 2021, to help the economy.

The central bank, in a letter to local lenders, said their rates
must fall within a range of 5% below or above the official one,
based on supply and demand.