27 November 2016

Sudan: Recent Financial Measures - Are There Other Alternatives?

Photo: Radio Dabanga
Sudan go on strike to protest recent govt's austerity measures.
opinion

Khartoum — The repercussions of the recently announced financial policies adopted by the government early this month, are still reverberating. The liberalization of the rate of exchange has led to increase in the prices of medicines, fuels and other consumer commodities, thus spurring a public discontent, limited demonstrations and a call for civil disobedience.

Numerous government establishments have come out to justify these policies, arguing they were sin qua non to avoid a total collapse of the national economy. They went on to say that these measures would not have impact on the weaker sectors of the society which are under health insurance umbrella. They further added that the increase in the bill of electricity, according to consumed meters, will solely impact the well offs. These officials wrapped up their argument by pinpointing to increases in government employee's monthly salary.

In the following excerpts, the reporter Tagwa Fatahul Rahaman, tapped the views of two economic experts who examined the government arguments and come up with their own argument about a better way to remedy the critical economic situation:

For Dr Abdul Hameed El Yass, Develppment Studies and Reaearch Institute of the University of Khartoum, even if we put aside the fact that the health insurance umbrella does not cover all medicines and cover some of them partially, still this umbrella does not include the poor sectors in all areas of the country. And here we have clear situation of inequity. The ideal situation is of course for the state to cover all people, be an all-inclusive policy, leaving no one out.

As to the electricity bill, he argued there are considerable sectors which are totally deprived of any electricity service. Thus it would be futile to talk about providing subsidies when a sizeable sector of the community is not enjoying such a service.

There is no study, he argued, or a transparent policy whereby electricity consumption is clearly indicated. Furthermore, there are other services more important than provision of electricity, that require subsidies as they touch the life of the ordinary citizens. Within this context the increase of prices of medicines and drugs is a real threat to the livelihood of the ordinary people. The container of one asthma spray costs 700 SDG which is only a drop in an ocean. So a tiny addition in subsidies is not a genuine remedy, nor could it absorb the public discontents about the increase in the price, he maintained.

He was also critical of the fact that the price of cooking gas has risen multiple times, considering that this is one of the essential and basic commodities. The people are also suffering in transport and in education.

For him, applying all these remedies at once and in one package was revealing of a lack of efforts and a tendency for simplification of serious matters.

It is regrettable, he lamented, to talk about providing assistance to the poor families and to employees to the tune of 200 Sudanese pounds in face of such whooping prices hike.

For him, the basic and fundamental challenge facing the Sudanese economy is the recession of production. And to the contrary, he said, these new policies are not encouraging production. Rather, he explained, they are undermining production. How could the reformists, he said, talk about expanding the umbrella of tax collection when there is a lack of production? Who, he asks, would shoulder this increase? He argued that the tax network in Sudan is inadequate. This is because the taxes are directly extracted from the people and are unfair. This is, he explained, because 90% of the taxes are directly imposed on the poor people.

Asked about the possible solution for these economic challenges, the economic expert, Dr Abdul Hameed, was of the view that he agrees with the view that the solution for the Sudanese economic problem comes through resolving the internal conflict and putting an end to expenditures on war. He said the expanded government apparatus is also one of the areas that are fatiguing the national budget. Thus one of the most important moves the government has to make in the road for bringing down expenditure (which was supposed to have been brought down during the implementation of the 3-year and 5-year economic reform programmes) is to cut down government expenditures. But, he lamented, the expenditures are actually soaring up steadily.

"All treatments should be based on studies that take into consideration resolution of the basic economic problems: increasing production, competitiveness and decreasing production costs. These remedies are not eclipsed from the official, but we don't know they fail to implement them" he concluded.

On his part, Dr Abdul Azeem Al Mahal, lecturer in economics at the Sudan University for Science and Technology, has argued that these policies are in no way the best. He said for now the rate of exchange of the US dollars against the local currency is 19 pounds a US dollar and this will result in a wave of high prices. The ordinary people are finding it more and more difficult to secure their living needs. But the overall objectives behind these measures, he noted, have not been reached. The goal was to attract the Sudanese expatriates' transfers. He said at present no bank could nod in consent that it is receiving expatriates' transfers. The banks will tell that these transfers take place outside the Sudan.

He said the economic planners, as a byproduct of these policies, would lose the sympathies and interaction of the people with regards to development projects.

The formula, he said, is to have a charismatic minister who would not resort to traditional and obsolete solutions. "We do not need a government secretary", the economic expert argued.

He was in agreement with Dr Abdul Hameed that there are alternatives to these solutions but the government is not considering those options that would not burden the people. Theorization has become far more separate from the actual life in the streets, "and I believe decision to adopt these economic measures was more of political than economic" the experts concluded.

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