Sudan's economy 'in state of shock' after aid cut and surge in prices

Cost of fuel and everyday items is soaring, leading to a rise in poverty

Bread is among the everyday items that have become difficult to afford in Sudan, where prices continue to rise sharply. AFP
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Sudanese schoolteacher Babiker Mohamed barely covers his family's needs with his meagre income, but since last year's military coup he no longer knows if he can even keep afloat.

Like many in Sudan, Mr Babiker has been grappling with shortages in basic goods, as well as new taxes and steeply rising prices on fuel, electricity and food since a military coup led by army chief Abdel Fattah Al Burhan in October.

"I used to buy 20 loaves of bread at 100 Sudanese pounds before the coup," Mr Babiker, who provides for a family of six, told AFP.

"Bread alone now costs me about 27,000 pounds a month, which is like 90 per cent of my salary" of about 30,000 pounds ($50), he said.

"I don't know if I can afford to send my children to school any more."

Mr Babiker joined teachers who went on strike this week against the worsening living conditions.

Sudan's latest coup upended a transition painstakingly negotiated between civilian and military leaders after president Omar Al Bashir, whose rule was marked by crippling US sanctions and international isolation, was ousted in 2019.

It also triggered international condemnation and punitive measures, with the United States, World Bank and International Monetary Fund suspending badly needed aid to the impoverished country.

Sudanese exports have declined sharply, foreign currency shortages have been reported and efforts by local banks to re-establish ties with international counterparts in the US and the West have come to a screeching halt.

Return to isolation

"It's like the embargo was back since October 25," said economist Sumaya Sayed.

Protesters last week staged several rallies against the decline in living conditions.

Sudanese citizens have for decades endured severe economic hardship due to government mismanagement, internal conflict and the secession in 2011 of the oil-rich south.

Bashir himself was ousted in April 2019 after months of street protests initially triggered by the tripling of bread prices.

Essameddine Okasha, spokesman for the association of bakery owners in Khartoum, said bread prices have now surged "beyond people's reach".

He attributed the rise to increasing operational costs.

Sudan is also especially vulnerable to the effects of global supply shortages after Russia's invasion of Ukraine.

Protesters in northern Sudan have in recent weeks blocked a crucial trade route between Egypt and Sudan after a sharp increase in electricity tariffs.

In January, Sudanese authorities raised electricity prices across sectors, with households hit by an increase of about 500 per cent.

Fuel prices surge

Sudan had already embarked on plans to scrap fuel subsidies under the transition which was derailed by the coup.

Fuel prices have undergone several sharp increases over the past year.

On Saturday, petrol at the pump cost 672 pounds ($1.50) per litre, up from some 320 pounds before the coup.

Many local business owners have been forced to suspend operations.

"I have laid off some 300 employees, mostly women who were the breadwinners of their families," said a food factory owner in North Khartoum, speaking on condition of anonymity.

"I couldn't keep up with electricity and production input price hikes."

Economist Mohamed Al Nayer says Sudan is in "a state of shock".

"The absence of international aid and loans in the 2022 budget is having a negative effect," he said, pointing out that the fiscal plans rely heavily on tax rises.

"Taxes now constitute 58 per cent of the budget, sharply increasing prices and pushing the country into recession."

Sudan has been reeling from triple-digit inflation, which stood at 258 per cent in February.

"It will not be possible for the government to bring down inflation ... instead it will likely jump to 500 per cent," forecast Mr Al Nayer.

Sudan has yet to name a prime minister since the January resignation of UN economist-turned-premier Abdalla Hamdok.

This month, Sudan formed a council to address the economic challenges, led by the deputy head of its Sovereign Council, Mohamed Hamdan Daglo, known as Hemeti.

On March 9, Mr Daglo blamed a "mafia" of dealers responsible for currency and gold speculation on the local market.

Sudan's central bank announced this month it would allow the currency to float as part of measures to stem the black market.

"It was the right decision but at the wrong time," Ms Sayed said.

She said the move would drive up inflation and further weaken the local currency.

In mid-February, the Sudanese pound hovered at 450 to the dollar but now the greenback buys about 600.

"Central bank policies ... have so far failed," Ms Sayed said, in a situation that "requires proper reserves of funds and gold".

Updated: March 20, 2022, 9:58 AM