Finance minister links Sudanese pound’s decline to rising demand for dollars in oil imports
October 7, 2023 (PORT SUDAN) – Sudan’s Finance Minister, Gibril Ibrahim, attributed the decline in the value of the Sudanese pound to heightened demand for the US dollar, primarily for importing oil, following the closure of the country’s oil refinery on July 21.
In mid-September, the black market exchange rate for the dollar reached approximately 900 pounds per dollar before experiencing a modest improvement and stabilizing around 840 pounds per dollar.
In statements to the official Sudan News Agency, the Minister said that the drop in the Sudanese pound’s value can be attributed to “the increased need for the dollar to import petroleum derivatives, especially after the Khartoum refinery’s closure.”
He further noted a significant reduction in national income, with state revenues declining to less than one-third of their previous levels due to the ongoing conflict. The war has resulted in the cessation of factory and bank operations and a halt in exports and revenue streams to the state treasury.
Sudan had a longstanding reliance on imports for oil, wheat, medicines, and raw materials, resulting in a persistent trade balance deficit even before the conflict erupted.
Ibrahim pointed out that currency traders have taken advantage of these challenging circumstances, exacerbating the Sudanese pound’s depreciation against foreign currencies.
The intense conflict that began on April 25 between the army and the Rapid Support Forces destroyed critical infrastructure and manufacturing facilities. According to the United Nations, the economy has seen a significant decline, estimated at up to 42%.
Nevertheless, the minister emphasized that the Sudanese economy has retained a degree of resilience, primarily due to its reliance on agriculture. The conflict has not significantly impacted agricultural, livestock, and gold production areas.
Addressing the calls for currency replacement following the looting of substantial sums of cash from banks and businesses in Khartoum, Minister Ibrahim noted that implementing such a change six months after the outbreak of the conflict might not yield substantial benefits.
He said that the looted funds would likely re-enter the banking system through economic transactions and could also be exchanged for foreign currencies, potentially contributing to the increased demand for foreign currencies.
(ST)