At a time when the transitional government was meeting at its highest levels to authorize the budget for the year 2021, the Sudanese pound was recording a terrible collapse in the parallel currency market (the black market), as Tuesday fell to its lowest level ever after trading one dollar at about 300 pounds, while its official price About 55 pounds.
There are increasing concerns about the strong impact of the collapse of the local currency on the already deteriorating economic conditions in this country, as it leads to an escalating increase in the prices of goods and services.
Economists and traders in the currency market attribute the reasons for the successive decline of the local currency to the presence of parties intending to buy huge quantities of currencies, especially the dollar, which is confirmed by an expert in economic affairs, Khaled Al-Tijani Al-Nur, to Al-Jazeera Net that the government is the largest buyer of foreign currency.
The first accused
Fingers of accusation are rising against the "strategic goods portfolio" that the government set up several months ago, consisting of major companies and businessmen, to take over the responsibility of importing basic needs of fuel and flour, as there is a widespread belief that the portfolio’s pioneers are forced to buy currencies from the parallel market in huge quantities and at the highest prices in exchange for import. .
However, the head of the portfolio’s executive committee, Abd al-Latif Othman, sought to dispel these doubts by saying that the portfolio secured import sums by relying on its own resources, represented by gold exports, and foreign banking financing lines available through the network of banks in the portfolio.
Othman explains that the strategic commodities portfolio contributed during the period from October 24, 2020 to February 28, 2021, in importing 37 ships, with a total load of one million and 270 thousand metric tons of fuel, and letters of credit totaling $ 602 million.
One of the major traders in the main gold complex (central Khartoum) speaks to Al-Jazeera Net that one of the reasons for the decline of the national currency is that foreigners sell large quantities of gold in the local currency, and then they immediately start converting it into a dollar in advance to benefit from it outside the country, and confirms that this also contributed The high demand for foreign currencies coupled with the scarcity of the supply of them.
In turn, the economic journalist, Nazik Shammam, attributes the unprecedented deterioration of the local currency to the country's weak foreign exchange reserves;
Because of the trade balance deficit resulting from weak Sudanese exports and high imports.
In her interview with Al-Jazeera Net, she points out that the trade balance deficit recorded for the period from January to September of 2020 exceeding $ 3.9 billion, in addition to other reasons that contributed to the decline of the Sudanese currency;
Among them, it opened the door for the private sector to import fuel and wheat, which would constitute additional pressure on the demand for foreign exchange in parallel markets, and help to increase the pace of speculation.
Fingers of accusation are directed at the strategic goods portfolio that the government formed a few months ago to take charge of importing basic needs (Reuters)
Change currency
As a way out of the worsening crisis in the economy, and because of the devaluation of the local currency, the Economic Committee of the Alliance for Freedom and Change - the ruling coalition - said that changing the currency may be a viable solution to the current situation, especially with the increase in fraud, as committee member Adel Abdul Ghani says that the proposal to exchange currency Prevail over the discussions that took place before the budget was approved;
But it seems without reaching a final decision about it.
However, the in-charge Finance Minister, Heba Muhammad Ali, settled the controversy by excluding this step, especially - as she says - it costs at least $ 600 million, and added in a press conference, Wednesday, that all the problems that will be addressed by changing the currency can be addressed in other ways. Less expensive and more sustainable, including strengthening the security and military services to combat counterfeiting, which it described as a major problem, as well as adopting reform economic policies to attract expatriate funds, foremost among which is the adjustment of the exchange rate;
To be attractive to expatriates, who confirmed that they do not enter a single dollar currently.
Al-Tijani supports the hypothesis of the futility of changing the currency, while confirming that the critical economic situation is not related to changing it or leaving it, especially since going in this direction will cost the state a lot of time when it does not have any cash reserves.
The economist points to liberalizing the exchange rate or floating the currency as one of the conditions for the International Monetary Fund to help the government, which he said would not be able to implement the flotation unless it had sufficient reserves.
Al-Tijani believes that the current real dilemma of the government is the unwillingness of any state to grant Sudan sums of money, and it is the wrong basis on which the transitional government has built to address the economic situation by obtaining external support without any of those aspirations being realized despite the conferences of Sudan's partners, and the pledges made by donors without Any result on the ground.
Shammam goes in the same direction, stressing that the efforts made by Khartoum have not succeeded in attracting external support and achieving sustainable stability for the Sudanese pound. The support that Khartoum received from the Sudan Partners Conference is still under complex procedures, in addition to the fact that most of this support is devoted to the Sudanese Families Support Project. .
"As for what was announced by the US Secretary of the Treasury and the President of the US Import and Export Bank who visited Sudan at the beginning of the month, it is intended for debt relief and for US private sector companies that want to invest in Sudan, which reduces their contribution to addressing the exchange rate crisis, which needs estimated sums to import goods. The strategy.
Economic analyst Haytham Fathy suggests that the pound will continue to decline against foreign currencies in the absence of foreign currency reserves (Al-Jazeera)
The pound fell
The economic analyst, Haitham Fathy, is likely to continue to retreat the pound against foreign currencies in the absence of foreign currency reserves, and indicates that the Sudanese economy is currently in the stage of combining factors (inflation, weak production and exports, the disintegration of the monetary mass, the psychological factor, and the state of mistrust in the sector Businesses, consumers and investors), and he believes that there is no way out of it but to rely on gold exports, as a quick solution that requires organizing it and benefiting from its returns.
In his speech to Al-Jazeera Net, Fathy pointed out the continuous decline in the performance of the main productive sectors - agriculture and industry -.
This led to the emergence of huge bottlenecks in production, which increased dependence on imports, especially food imports, and reduced the volume of exports, and thus increased demand for foreign exchange, noting that the revenue from gold exports does not exceed 1.2 billion dollars per year;
This is equivalent to only about 18% of the losses in oil exports before the secession of South Sudan in 2011.
The analyst does not believe that the new budget will be able to reduce inflation to 95%, given that the previous year, an inflation rate of 30% was targeted.
But it scored 250%, which raises expectations of further escalation due to the existence and continuation of the same reasons that contribute to raising the rate of inflation.
Which means, according to him, a further deterioration of the Sudanese pound.