21 November 2012

Sudan Scraps Plan to Increase Sugar Prices

Photo: John Mbanda
Weighing sugar (file photo).

Khartoum — The Sudanese finance ministry Undersecretary Abdel-Rahman Dirar today denied that he has issued a decision imposing new taxes and fees on sugar and accused merchants of artificially bumping prices.

This week decree number (83) signed by Dirar itemized several increases in fees and taxes associated with 50 kilogram (110 pounds) sugar bags bought by wholesale merchants.

The move angered the lawmakers in the national assembly and prompted consultations among them to formally summon the finance minister to question him while calling the price increase 'illegal'.

But Dirar said that no new fees were imposed on sugar adding that traders have reduced the supply of sugar on the expectation that price increases are forthcoming.

He stressed that the current price of 50 kilogram sugar bag is 225 Sudanese pounds (SDG) adding the sugar production this season is "very promising".

Bakri Mahjoub Mohamed Ali, the head of the Sudanese Sugar Corporation, also dismissed the reports and disclosed that the finance ministry conceded portion of the required duties to stabilize prices.

Sugar prices were already raised last summer from 156.5 SDG to 225 SDG as part of an austerity package that partially lifted subsidies on several basic commodities.

Sudanese officials have said in the past that more cuts will need to be made to subsidies in order to reduce the budget deficit estimated to be close to $3 billion. This financial hole was mainly caused by secession of South Sudan in July 2011 which contained most of the country's oil wealth.

A recent report by the International Monetary Fund (IMF) showed that oil now accounts for 3%-5% of Sudan's gross domestic product, down from around 15%, while providing a much-reduced 20%-25% of revenue.

On Monday, the Sudanese labor union warned the government against any attempt to increase prices of basic commodities such as bread, sugar and electricity in the 2013 budget.

Last month Sudan's inflation was estimated to be at 45.3% compared to 41.6% in September driven mainly by food prices.

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