The eruption of the situation in Sudan during the past weeks came to exacerbate the crisis of the faltering Sudanese economy, warning of serious humanitarian and social crises unless a solution is reached to end the conflict and prepare the atmosphere for the start of a long journey of convalescence.
The conditions of the Sudanese economy did not need to worsen. For years or decades, that economy has suffered from problems, the most prominent of which may be the persistent deficit in the trade balance since the secession of the south in 2011 with its oil resources, which the IMF expected to continue until 2028 or later.
And there is an acute shortage of foreign currencies, as the reserves in 2021 did not exceed $1.85 billion, which leads to a repeated decline in the value of the Sudanese pound against the dollar, and weak economic growth rates in the last six years, of which deflation dominated 4 years of them (2017-2022). .
Inflation rates reached 63% last February, some of it due to imported goods and some due to local factors, and the value of external debt increased to $62.2 billion in 2021, and domestic debt to $12.5 billion in the same year, until the government debt rate reached 128% last year. Unemployment rates rose to 19.8%, poverty to 46.5%, and hunger rates rose with the continuation of tribal conflicts and the large number of refugees from neighboring countries.
The international blockade and the political and economic isolation initiated by the United States since September 1983, with the declaration of former Sudanese President Jaafar Nimeiri, the laws of Islamic law, as well as the trade and investment embargo imposed by the United States on Sudan from 1997 to 2020, and the recurrence of civil wars for many years between the north and south From 1955 to 1972, then from 1983 to the beginning of 2005, the most prominent role in Sudan's economic crisis.
The recurrence of military coups since independence in 1956 also played an important role in the economic decline, causing instability, and the first of these coups was led by Ibrahim Abboud in 1958 and lasted 7 years, the coup by Jaafar Nimeiri that lasted 16 years, and the coup of Omar al-Bashir in 1989 that lasted 30 years, then the experience of the army commander, Abdel Fattah Al-Burhan, and the Rapid Support Forces, from 2019 until now, which included a coup against the civilian government in October 2021, before confrontations broke out between the two military parties; That is, during the 67 years that have passed since independence, Sudan has lived 58 years under military rule.
The economist Abdullah Hamdok, who took over the ministry in August 2019, tried to implement the well-known IMF “prescription” to obtain international support, so he partially cut fuel subsidies in October 2020, then announced the unification of the exchange rate to overcome the black market for the currency in February. February 2021, then release petrol and diesel prices in June 2021.
These economic measures were accompanied by secret contacts with Israel to obtain American and Western approval. Indeed, Army Commander Abdel Fattah Al-Burhan met Israeli Prime Minister Benjamin Netanyahu in Uganda in February 2020, and an Israeli delegation visited Sudan in October of the same year, which witnessed The announcement of the establishment of official diplomatic relations between Sudan and Israel on October 23, 2020, and on the same day, US President Donald Trump signed the decision to remove Sudan from the list of state sponsors of terrorism.
This was followed in March 2021 by the visit of the US Secretary of the Treasury to Khartoum, and the agreement that the United States would repay the loan owed by Sudan to the International Development Association of the World Bank, as Sudan’s obtaining of Fund loans required repayment of overdue loans to several international and regional bodies, and for this reason The big countries intervened to temporarily repay those loans, provided that they get what they paid from the loan that Sudan will then get from the International Monetary Fund.
Following in the footsteps of America, the United Kingdom, Sweden and Ireland paid the arrears of Sudan to the African Development Bank Group, and France settled in June of the same year the arrears owed by Sudan to the Monetary Fund, and thus the field became available for the Fund to announce on June 29, 2021 that it granted Sudan a loan in the amount of 2.473 billion dollars over 39 months, 1.415 billion dollars are disbursed immediately, and of course this amount went to countries that paid arrears.
Thus, after paying arrears and decisions to reduce fuel subsidies and exchange rate flexibility, the International Development Association and the International Monetary Fund announced that Sudan had qualified to obtain external debt relief through the “HIPC” initiative for heavily indebted poor countries, by reducing its debt by $50 billion, representing More than 90% of its total foreign debt amounting to 56.2 billion dollars, if it can reach the completion point according to the HIPC initiative within 3 years.
However, the army's overthrow of the civilian Prime Minister Hamdok and his ministry, and the accompanying killing and wounding of peaceful demonstrators without accountability for the actors, made the major countries reconsider their calculations with regard to exempting Sudan from this large amount of its foreign debt, and the United Arab Emirates intervened in September of last year by depositing $1.4 billion in the Central Bank of Sudan to support the weak exchange rate.
But what does the value of UAE aid make in a country whose trade deficit last year amounted to $6.7 billion, which is the largest trade deficit Sudan has witnessed in 11 years since the secession of the south, as the rise in global oil prices causes an increase in the trade deficit, in a country that imports more than half of its consumption from Oil, as the value of imports of petroleum products last year amounted to 2.87 billion dollars, in addition to imports of food commodities amounting to 2.89 billion dollars, manufactured goods with a value of 1.4 billion, machinery and equipment 1.1 billion, medicines 572 million, other chemical products 648 million, means of transportation 571 million, and textiles 435 million. Total merchandise imports amounted to $11.1 billion, compared to $4.357 billion in merchandise exports, at a rate of no more than 39% of imports, which is the lowest in seven years.
The dilemma of the currency shortage was exacerbated by the fact that the service trade, which was achieving a surplus, albeit slightly, due to tourism revenues between 2015 and 2021, returned to achieving a deficit last year due to the deficit in the balance of transportation services, financial services, and communications, computer and information services.
The (small) Sudanese banking system cannot play a major role in resolving these conditions, as the value of its assets in 2021 did not exceed $9.3 billion, its deposits more than $5.5 billion, and its loans over $2.8 billion, which reduces its financing role for companies and individuals, which is the same. What the Khartoum Stock Exchange suffers from, which suffers from weak capital value, which reduces their financing role, whether through listing companies or increasing the capital of listed companies.
Sudan remains with the proceeds of remittances of workers abroad, and their number is more than two million, but that proceeds are difficult to go to the banking system in light of a black market for the currency, and the foreign aid that increased after the departure of President Al-Bashir remains, but both are not sufficient to pay the deficit in the trade balance, as evidenced by the persistence of chronic deficit In the current account account, which increased last year to $4.443 billion.
So, political and security stability is required for the Sudanese economy to recover gradually, even by providing a safe haven for the leaders of the conflicting military forces outside the country, as happened with Zine El Abidine Ben Ali, as this option seems less harmful than the Libyan model in which two parties struggle with external support over Calculating the resources, stability and future of the people and the state.
