Sudanese economist, Prof Hassan Bashir, warns that the collapse of the Sudanese Pound (SDG) "could catch up with the Lebanese Pound (LBP)* if the war continues," indicating that Sudan is in the "on the brink". On Sunday, the Dollar exchange rate on the parallel market reached SDG 875, while at Omdurman National Bank it reached SDG 700.
In an interview with Radio Dabanga Prof Bashir predicts that "the impact of the war will continue for decades even if it stops now," indicating that reconstruction will require huge resources. He adds that "the response of the international community to the government that is formed after the war depends on it being a credible civilian government," and that "it is likely that the economic situation will continue to deteriorate in the event of the formation of a government that is not accepted by the international community".
'The impact of the war will continue for decades even if it stops now...'
Bashir says that the war has caused a complete paralysis of the economy, suggesting a shrinkage of 60 per cent, coupled with a 50 per cent drop in gross domestic product.
"Sudan's economy is at its worst, and less active than the Khartoum government states," he says, pointing out that the number of people in need of humanitarian aid has doubled.
Bashir stresses that the war has led to the cessation of [collection of] tax revenues, and a closure of banking services, with the inability to control gold in light of the suspension of the gold refinery in Khartoum.
He warns of the longer term result of the displacement of millions of people as a result of the war and the spread of unemployment as the government stopped paying salaries, noting that university professors have only paid one month's salary since the outbreak of the war. He said Sudanese were at risk of dying from hunger or outbreaks of dengue, cholera, and malaria.
He says, "the country is threatened with disintegration amid external ambitions that threatened to divide Sudan and plunder its resources in the absence of a government".
Bashir attributes the initial relative stability of the value of the Sudanese Pound during the first months of the outbreak of the war to the cessation of economic activity and the decline in demand for the Dollar.
State revenues
Sudan's Minister of Finance, Jibril Ibrahim, has confirmed the decrease in state revenues to a third, indicating that the war has led to the cessation of production.
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According to the official Sudan News Agency (SUNA), Ibrahim pointed to failures in tax collection and the cessation of electronic revenue collection, as well as a shut-down of industry and the private sector.
Ibrahim attributed the rise in the Dollar exchange rate to the government's requirement to import petroleum derivatives due to the suspension of the refinery, and the decline in gold and oil exports.
He says that the war has not affected agriculture, livestock, gold, and petroleum production, however, he pointed to problems related to the transport of products because of the war.
*The exchange rate of the Lebanese Pound (LBP) was fixed at LBP 1,507.50 per US dollar from December 1997 through January 2023. However, since the 2020 economic crisis in Lebanon, exchange at this rate was generally unavailable, and an informal currency market developed with much higher exchange rates. On 1 February 2023, the Central Bank reset the currency peg at LBP 15,000 per US dollar. By mid-March 2023, the parallel market rate had fallen to LBP 100,000 per dollar. (Source: Wikipedia)
