Statements by the Sudanese Minister of Finance that the priorities of the current year’s budget are to fund the war needs were taken by some economists as an admission that the government is buying the dollar from the black market to fund provision of weapons.
Khartoum: Altaghyeer
The value of the Sudanese pound (SDG) against the US dollar has continued to decline since eruption of the ongoing war between the Sudanese Armed Forces and Rapid Support Forces a matter that led to an increase in the costs of living and services in the country and a decrease in the citizens’ purchasing power.
Currently, one dollar is traded for 1200-1350 SDG compared to 570 SDG before the war, according to parallel market dealers and traders. There is an increased demand for the dollar while there is scarcity in supply, particularly in Port Sudan, the current headquarters of the government.
Financing the war
Last February, the Minister of Finance Jibreel Ibrahim disclosed in a press conference that the war is one of the factors behind the exchange rate problem in the country as military expending, which are in hard currency, are increasing. He said priorities of the current budget are to cover the war military needs and relief for the affected people.
The Minister statements were taken by some economists as an admission that the government is buying the dollar from the black market to fund provision of weapons.
World Bank Statistics
According to the World Bank, the Sudan’s economic growth has declined to 18.3% and the gross domestic product has shrunk by 151.1%.
The Bank said the Sudan’s exports have dropped by 60% due to the closure of the country’s main airport and suspension of work in most of the dry ports.
The goverment has also lost the gold revenues which equal 50% of the total value of its exports where the gold production has dropped during the war to only two tons compared to 18 tons in 2022.
The cultivated areas have also shrunk by 60%.
The Impacts on the Citizens
Devaluation of the Sudanese national currency will continue because circumstantial evidences suggested that the government is the major buyer of the dollar from the parallel market to fund provision of weapons and other war expenditures, said the professor of economics Mohamed Sayed.
The government also uses the gold revenues, which are estimated at 500 million dollars monthly, to fund the war. Thus such continuous extract of the dollar from the market and use of gold revenues in funding the war will lead to the depletion of this hard currency, said Sayed.
The pound devaluation has directly impacted the people whose purchasing power dropped to record low.
Economist Ahmed Wadeedi agreed with Sayed that declining of the pound will not be stopped in the near future even if the war ends.
He added that the government is funding the war at the expense of the Sudanese people. It is the major buyer of the dollar from the parallel market as it has lost two thirds of its earnings which are largely depend on taxes, customs and gold, he said.
“The fuel prices are on the increase, subsidies on the cooking gas were lifted and all services fees were witnessing price hikes”, he concluded.
