Sudan adopted on Sunday a floating exchange rate regime managed, that is to say regulated by the monetary authorities, in order to satisfy the demands of the International Monetary Fund (IMF), at the risk of causing a surge in prices and stoking discontent popular.
This measure is part of a series of reforms launched by Khartoum to attract foreign investment, but also allow relief from its crushing debt and facilitate access to loans from international institutions such as the IMF, to support the country in its delicate transition. Politics.
Sudan’s economy is in tatters, after decades of sanctions and mismanagement under the reign of autocrat Omar al-Bashir, ousted in April 2019.
“The transitional government has decided to adopt a set of policies aimed at reforming and harmonizing the exchange rate regime by applying a managed floating exchange rate,” the Central Bank said in a statement.
The official exchange rate is now determined by supply and demand, but the monetary institution retains a regulatory role.
On the black market, the dollar traded at over 400 Sudanese pounds, while the official – and hitherto fixed – exchange rate was 55 pounds to the dollar.
But the adoption of a floating exchange rate could drastically lower the value of the Sudanese pound against the dollar and thus drive up prices, at the risk of further fueling popular discontent in this country of 40 million inhabitants.
Demonstrations, sometimes peppered with clashes, against the high cost of living have taken place in recent weeks in Sudan, where the annual inflation rate exceeded 300% in January.
In 2018, it was the tripling of the price of bread that sparked the popular uprising that led to the fall of Bashir.
The Central Bank also announced restrictions on currency movements, such as a ban on going abroad with more than $ 1,000 in cash.
Khartoum adopted a new government last week, one of its priorities being the recovery of a bloodless economy, weakened by the pandemic.
Sudan hopes that its recent removal from the US list of states accused of supporting terrorism – with sanctions on the way – will allow an influx of foreign capital and give it the opportunity to restore its image.