Sudan's new prime minister, Abdullah Hamdouk, is counting on the international community and some regional powers to support the Sudanese economy, which, according to his estimates, needs an estimated $ 10 billion in funding to meet the country's basic commodity needs and rebuild foreign reserves that have eroded in recent months. In the past, Sudan has faced a clear crisis in fuel and wheat shortages, weak liquidity at local banks and a turbulent domestic exchange market. To be able to mobilize international financial resources, Sudan will need to develop and implement an urgent economic program that has the confidence of the people and internal actors involved in the political process, as well as containing existing political and security risks, in parallel with the United States removing its name from the list of state sponsors of terrorism.
Interrelated goals
Sudan has faced enormous economic challenges for a long time, requiring radical financial and economic reforms that affect the structure of the economy. The political and economic circles in Sudan are betting on Abdullah Hamdouk, who was unanimously chosen as prime minister after the signing of the constitutional document and the formation of the sovereign council, to deal with the current economic problems.
In his first remarks, Hamdouk expressed a clear interest in tackling the growing economic crises of several months, and set a set of priorities for the management of the economy in the coming period, the first is to fill the apparent shortage of basic commodities of fuel, wheat, medicines and other markets, which was one of the factors that caused Popular resentment has escalated over the past period.
The second is to provide liquidity in foreign exchange to fill the financing gap in the country, estimated by Hamdouk about $ 10 billion, of which $ 8 billion will go over the next two years to cover imports and help rebuild the economy, and about $ 2 billion in favor of rebuilding the reserves of the Central Bank.
The third is to deal with the distortions of the exchange market, which suffers from the existence of two markets, one of which is official at the exchange rate of about 45 pounds per dollar, and the other informal, where the price reaches about 65 pounds to the dollar.
The fourth relates to the management of the country's financial liabilities abroad, i.e. about $ 58 billion in foreign debt by the end of 2018.To ease the financial burden on Sudan, Hamdouk suggested that talks could be held with international funding bodies to discuss debt restructuring in the next phase.
All this is in parallel with the ongoing talks between Sudan and the United States of America, in order to remove the first name from the US list of state sponsors of terrorism.
Key determinants
Before the political parties finally reached a power-sharing agreement, Sudan received financial and commodity aid, which will play a major role in supporting the economy in the coming period. However, the mobilization of more financial resources for Khartoum in the coming period will depend on a set of determinants: First, the development of an urgent economic program that addresses the economic distortions of fiscal and monetary policies, and enjoys the confidence of the people and various political parties, and to support its implementation by government agencies.
Second, the United States responded to the demands of Khartoum and some regional powers to remove the latter from the list of state sponsors of terrorism. Recently, US officials have given some positive signals about the possibility of such a move, especially with the handover of power to civilians.
The move would reintegrate the Sudanese economy into the global economic system again, enabling Sudan to conduct trade and investment transactions with the world naturally, as well as gain the confidence of international borrowing institutions, such as the World Bank and the International Monetary Fund.
Third, contain the political and security risks facing the country, which are imposed by the continuation of some armed conflicts, as this will represent an important variable in achieving stability, at various levels.
Potential obstacles
The efforts of the new government to rebuild the economy may take a short time, for several reasons, including that the development and implementation of an urgent economic program is not only a technical process, but also a political one, where this process needs the consensus of the people, including It carries the consequences of its financial and social burdens. Moreover, the possibility of delaying the US administration's approval to remove Khartoum from the list of state sponsors of terrorism cannot be ruled out until a new president is elected and a stable government is established two years later.
In light of this, the international community may provide financial support to Sudan, but more slowly than expected, until further political and economic reforms are undertaken to enhance overall stability in the country.
The international community may provide financial support to Sudan, but more slowly than expected.
Sudan needs to develop an urgent economic program that enjoys the trust of the people, in addition to containing the existing political and security risks, in parallel with the removal of America from the list of countries that sponsor terrorism.