Economic Briefing: Finance Minister Announces 9 month economic rescue plan

Overview

Sudan’s finance minister Ibrahim Elbadawi has announced a 9 month plan to rescue Sudan’s economy. He also said that he will go against iMF recommendations to float the Sudanese pound. Meanwhile, Sudan’s oil minister has urged foreign oil firms to increase investment.

Elbadawi’s 9 month plan (Reuters, 23 September)

Sudan’s transitional government will start a nine-month economic rescue plan next month aimed at curbing rampant inflation while ensuring supplies of basic goods. Elbadawi said the bread and fuel subsidies will remain until at least June 2020, and is asking the World Bank for $2 billion.

Among the stated aims of Finance Minister Ibrahim Elbadawi are:

  • Restructuring the banking sector

  • Rationalising government spending and addressing the state’s financial burden

  • Reviewing tax exemptions, as “60 of economic activity is tax exempt”

  • Combatting corruption.

  • Replacing commodity subsidies with direct cash transfers to poor families by the end of the rescue plan.

Elbadawi to reject IMF recommendations (Sudan Tribune, 23 September).

The IMF’s position is that poor countries must float their currency before embarking on structural economic liberalisation.

The IMF warns that attempts to fix the exchange rate and contain economic pressure through price controls and rationing risks depressing the economy, reducing fiscal revenue and causing trade to shift to the informal sector.

However, Elbadawi plans to go against the IMF’s recommendation, given Sudan’s fragile economic situation. He added that he expects that the Sudanese currency exchange rate will be liberalised within an emergency programme in the middle of 2020.

Attributing Sudan’s economic disaster to a multiplicity of exchange rates, Elbadawi suggested that attempts to address the issue should be handled with a global financial plan.

Sudan Oil Minister Calls for Foreign Investment (Bloomberg, 23 September).

Following a meeting with officials from oilfield services company Schlumberger, Sudan’s newly appointed oil and mining minister Adel Ali Ibrahim urged international energy companies to speed up efforts to find and develop deposits in Sudan.

Ibrahim said he is seeking “the return of the oil and gas sector to its leading role by developing the fields and solving the issues that caused the drop in production.”