Sudan's economy slumps as inflation reaches record highs

Most foreign aid is still being disbursed, piling pressure on the transitional government

A Sudanese man wearing a face mask waves his country's national flag during protests in the capital Khartoum to mark the second anniversary of the start of a revolt that toppled the previous government, on December 19, 2020. AFPShow less

Sudan’s annual inflation soared to 304 per cent in January from 269 in the previous month, the state statistics bureau announced, amid a worsening economic crisis and a rapid decline of the local currency’s value against the US dollar.

The latest inflation figures are likely to be viewed as further proof of the failure by the transitional government to effectively overhaul the economy, nearly two years after the removal from power of dictator Omar Al Bashir.

In office since 2019, the government is led by veteran UN economist Abdalla Hamdok, picked for the job by the pro-democracy movement behind months of street protests that prompted the military to remove Al Bashir in April 2019.

Sudan experienced some of its worst, post-independence economic crises under Al Bashir’s 29-year rule, especially after it lost the majority of its oil wealth when the south of the country seceded in 2011.

The latest figures on inflation came as the dollar was sold at 390 Sudanese pounds on the streets of Khartoum.

The official exchange rate of the pound is 55 to the dollar. The country is also plagued by acute shortages of bread, fuel and electricity. Already, this month saw a series of street demonstrations protesting the country’s deepening economic woes.

The December 2018-April 2019 street protests that led to Al Bashir’s removal were initially sparked by a hike in bread prices.

“The high inflation is proof that economic policies followed by the transitional government have failed and must now be revised,” said economic analyst Ahmed Khalil.

"Sudan's problem has always been the shortage of foreign currency and to deal with that, we must grow crops that are in demand on world markets," he told The National.

The annual inflation rate in January, according to the statistics bureau, was even higher than 304 per cent in urban areas, reaching 324 per cent, up from 288 in December.

Sudan’s three-digit inflation places it among the world’s highest and means increased hardships for most Sudanese already struggling to make ends meet.

Sudan was finally removed last year from the US list of state sponsors of terrorism, a move that should make the country eligible for debt relief and release financial assistance from bilateral sources as well as international aid agencies. Sudan has a foreign debt of about $50 million.

But it is taking longer than expected for any significant aid to arrive and alleviate some of the economic hardships endured by the vast Afro-Arab nation of some 40 million people.

The country’s economic problems are also likely to compound Sudan’s already bumpy shift to democratic rule and raise questions on whether the civilian-led government of Mr Hamdok is qualified to lead the country at a difficult time.

They also offer a window of opportunity to Al Bashir’s Islamist supporters to discredit the new administration as inefficient and try to broaden their support base by taking advantage of growing disgruntlement over the economy.

In a surprise move, Mr Hamdok last week handed the key finance ministry to Jibril Ibrahim, a veteran rebel leader from the western Darfur region. The move was part of a reshuffle chiefly designed to include rebel representatives in the 25-member cabinet and improve the cabinet’s handling of the economy.

The inclusion of rebel representatives was made in accordance with the terms of a peace deal signed in October between the government and some of the rebel groups from the south and west of the country.