Sudan: Inflation Enters a Vicious Circle

Business

February 17th, 11:52am

Khartoum - Asharq Al-Awsat

A Sudanese vendor waits for customers at a bazaar in Khartoum, Sudan, June 17, 2019. REUTERS/Umit Bektas

With the continued drop in the value of the local currency and the increase in the cost of imports, Sudan has entered a vicious cycle of rampant inflation, which has reached its highest levels in decades. Data from the Central Bureau of Statistics showed on Monday that the annual rate of inflation in Sudan jumped to 304 percent in January, from 269 percent in December. The country has registered the highest rates of inflation in the world, while its currency’s value is dropping in the foreign exchange markets, which makes imports costlier and leads to more inflation. On Monday, dealers said that the US dollar on the black market reached 350 Sudanese pounds, compared with the official rate of 55 pounds. In a statement, the Central Bureau of Statistics attributed the increase in inflation to the rise of food and beverage prices. Inflation rate in urban areas reached 279.20 percent in January, compared to 244.68 percent in December, while the monthly inflation rate in rural areas reached 324.31 percent in January compared to 288.74 percent in the previous month. A new government was announced this week, with a mission to revive the economy, which has been suffering for decades under the weight of US sanctions, mismanagement and civil wars under the regime of Omar al-Bashir. The economic situation is the biggest challenge facing the new Sudanese government. Prime Minister Abdalla Hamdok emphasized last week that the government would focus on reforms. Sudan suffers from an economic crisis due to decades of US sanctions, the secession of the oil-rich south from Khartoum in 2011 and an external debt estimated at USD 60 billion. The government hopes that removing the country from the US list of states sponsoring terrorism would help it solve the problem of foreign debt and attract foreign investment. Last month, it approved the 2021 budget aimed at reducing the inflation rate to 95 percent.

from Asharq AL-awsat https://english.aawsat.com/home/article/2811151/sudan-inflation-enters-vicious-circle