KHARTOUM - Sudan's central bank has sharply devalued its currency, the Sudanese pound, in an attempt to get debt relief, crack down on the black market, and attract money back to the country. The bank unified the price of the currency with the black market at 370 pounds for one U.S. dollar. Sudan's annual inflation rate is more than 300%, one of the world's highest, and sparked protests over the struggling economy.
The government says the decision is aimed at attracting investments and controlling imports and exports.
Khartoum-based economist Abubakr Omer welcomed the government's decision.
Omer says it is a positive step and it is necessary to reform the Sudanese economy. Unifying the exchange price shall lead to stabilizing the exchange rate and encourage the investors to invest in Sudan. Investments shall create movement in the Sudanese resources that need big capital for production... and open doors for Sudan to get involved in the international economy by utilizing its natural resources.
Sudan's foreign debt reached $70 billion in 2020, and the budget deficit exceeded $1.5 billion.
The inflation rate recently surpassed 300 percent, and the Sudanese pound has steadily lost value against foreign currencies.
Some economists like Waleed Alnoor think the step to devalue the pound is risky and will have a severe negative impact on people and the economy.
He says the devaluation will be massive if the central bank does not have enough cash savings of the hard currency. He added that the greatest impact will be on the middle class and the people with low income.
But analyst Abubakr Mohamed says the effects on average people will be small, as the official economy was not controlled by the market.
He says the does not think the negative impact will be big, as the economy was not built on the official economy. All of the markets dealing prices, especially the imports and the exports and imported life necessities, were evaluated with the black market rate. Now the official sector and institutions will be rid of the political and administrative restrictions that forced them to set unreal prices on the market.
Late last year, the U.S. removed Sudan from its state sponsors of terrorism list, paving the way for the country to get financial help from the World Bank and International Monetary Fund.
A delegation of the World Bank recently visited Sudan and agreed to begin a loan relief program in March if Sudan made economical and structural reforms.