20 June 2012

Sudan Details Hikes of Fuel Price As Central Bank Promises Injection of Foreign Currency

Khartoum — The Sudanese government on Wednesday revealed in greater details the increases it wants to introduce into the prices of fuel products.

Sudan is planning to implement an austerity package that will see subsidies on fuel commodities being terminated and government structures being slashed in order to make up for a huge budget deficit created by the loss of oil revenues with South Sudan's secession last year.

Addressing the parliament, finance minister Ali Mahmoud said that the government had decided to hike the price of one gallon of fuel by 5 pounds and Gasoline by 2.5 pounds.

Mahmoud also said that the added value tax would be increased from 15 percent to 17 percent. He further added that all government-owned security companies would no longer be exempt from taxes and customs fees.

According to Mahmoud, subsidies on certain commodities such as Sugar would also be lifted.

The finance minister went on to reveal that the deficit in the amended 2012 budget has reached 3.6 percent, amounting to more than 2 billion US dollars.

Mahmoud indicated that the amended budget adopts a 4.4 exchange rate for the dollar in order to match its value in the black-market for hard currency. The minister said that the amended budget aims to bring the inflation rate down to 25 percent and to achieve a growth rate of 2 percent.

Sudan's inflation rate jumped to 30 percent in May, mainly on food prices, as the local currency continued to reach new lows against the dollars. The dollar now trades for twice the value of the official rate in the black market.

Meanwhile, the Central Bank of Sudan (CBS) has announced plans to inject more foreign currency into the market as of next week in order to stabilize the exchange rate.

CBS said in a statement yesterday that the upcoming injection was made possible by the "great improvement" in the bank's foreign currency reserves due to revenues generated from gold and "outside movements"

Sudanese officials have recently made a number of statements suggesting that the country had received great amounts of foreign currency from unidentified foreign countries.

Sudan has been struggling to contain the deteriorating value of its currency which trades at 5.5 against the dollar in the flourishing black market.

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