Khartoum — The Central Bank of Sudan has announced the launch of a new banknote of SDG 50 on Wednesday. Economic experts said the decision comes at the wrong time, with Eid El Fitr around the corner and an expected high turnout on the markets.
The Bank announced the launch of the renewed banknote, worth $1.77*, in the coming period. In a press statement the institution said that commercial banks receiving the bill from citizens will deposit and save it in their accounts; so as to enable them to use their money through various means of payment.
The bank stressed that the commercial banks will facilitate the process of opening accounts for citizens who do not have bank accounts. Which would enable them to deposit the new SDG 50 bills.
The bank explained the decision by stressing the leakage of counterfeit currency for trading that has clearly increased liquidity in Sudan. It will later announce a date to stop dealing with the old SDG 50 bills.
Professor Hasan Bashir, a professor of economics at the University of El Nilein, told Radio Dabanga that the government is still working hard to reduce the effects of the economic crisis. "These decisions were taken at the wrong and inappropriate time, with Eid El Fitr approaching and high turnout in the markets."
Bashir explained that the Central Bank aims to introduce the SDG 50 bill in circulation and then into its banking system. He warned that the decision causes confusion, as sellers who have not heard the news yet, do not accept this banknote from customers. "That would increase the suffering of citizens."
Banks would accept the deposit of these bills in the accounts of customers without compensation for the alternative bills equivalent to the amounts deposited, Bashir said. "The advantages of the decision are temporary, namely the entry of the accumulated bills into the banking system and the reduction of forgery.
'This can lead to distrust'
"However, the blocking of liquidity and indirect confiscation of customers' accounts could lead to serious consequences in the short and medium term, not to mention the long term." The professor stressed that reducing liquidity will lead to further recession and further distrust of the banking system.
Economic analyst Hafiz Ismael also expects that these decisions will deepen the economic downturn, reduce economic activities and deepen the recession.
"A result could be a lack of government revenue from taxes and customs. The government is then forced to print additional amounts of currencies, which would lead to high inflation rates."
Ismael told Radio Dabanga that the decision ultimately leads to the scarcity of commodities, leading to a steeper rise of prices. "Especially as the government continues to prevent imports through foreign currency resources and Sudan has witnessed a non-availability of foreign currencies for imports.
"This measure can lead to the loss of trust in the banking sector. For example electronic payment services are only dealt with in a narrow range in Sudan."
The current version of the Sudanese Pound is the third edition and was reintroduced in 2011, following the secession of South Sudan from the Republic of Sudan.
The shortage of foreign currency is impacting on industries and sectors dependent on imports. In addition, last week, Sudan's Ministry of Finance announced that the inflation rate has recorded a sharp rise by 54 per cent in the first quarter of this year, compared to 33 per cent of the same period in 2017. Minister of Finance and Economic Planning Majdi Hasan Yasin attributed the rise in inflation to the widening in the gap between the indicative US Dollar rate quoted by the Central Bank of Sudan and the price on the parallel market, as well as rising import costs.
Sudan's inflation rate hit a record 57.6 per cent in April, compared with 55.6 per cent in March. The inflation has a worsening effect on wages, unemployment, poverty and food and health conditions, as prices for basic goods in Sudan continue to rise.
* Based on the indicative US Dollar rate quoted by the Central Bank of Sudan (CBoS)