Sudan 2020 budget will adjust currency, aim for float in 2 years -government source

PUBLISHED: Thu, 23 Jul 2020 13:13:57 GMT
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KHARTOUM (Reuters) – Sudan’s amended budget for 2020 includes a currency adjustment programmme beginning in August that aims to reach a full currency float in two years, a government source told Reuters on Wednesday.

The country’s currency recently fell to a record low of 150 Sudanese pounds to the dollar on the black market, compared with 55 at the official rate. The black market rate was 140 pounds to the dollar on Wednesday.

A little over a year after a popular uprising that put Sudan on a shaky path towards democracy, its economy is at risk of freefall, hammered by an inflation rate of more than 100% and frequent shortages of bread and medicine.

The private sector will be allowed to import unlimited quantities of fuel to address shortages, which will lead to a “rationalization” of its price, Acting Finance Minister Hiba Mohamed Ali said, referring to a removal of subsidies to help meet the reform demands of international donors.

The government source said the sector would be allowed to import fuel using dollars at the free market price in August.

Fuel imports would be secured through a previously announced trade financing fund, Ali said. The fund has a $1 billion portfolio to be used for imports, Prime Minister Abdalla Hamdok said in a speech on Wednesday. Resolving the country’s trade imbalance is a priority for the government, Hamdok said.

In an exception to the “rationalization” drive, subsidized fuel could still be sold to productive sectors like agriculture.

The reforms come as part of an adjusted 2020 budget to be passed by Sudan’s cabinet and sovereign council, acting in a parliamentary capacity, within days, the government source said.

Ali said a budget adjustment was necessary to reduce the impact of the coronavirus pandemic, which had cut public revenue by 40%.

Khartoum is in desperate need of international financial help to reorganise its economy, and the government is printing money to subsidise bread, fuel and electricity. The finance minister said the government would continue to subsidize bread, medicine and cooking oil as part of the 2020 budget.

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