February 15, 2021 (KHARTOUM) – European Union diplomats in Khartoum urged the Sudanese government to take bold reforms to halt the deteriorating economic situation in the country.
Hamdok government had failed to stop the collapse of the Sudanese pound as one dollar is sold for over 400 pounds; while in January it was sold for over 250 pounds. However, the official exchange rate is 55 pounds for one dollar.
Also, the inflation rate in Sudan for the month of January jumped to 304.33% compared to 269.33% in December 2020, which represents n increase of 35 points.
On Monday, the head of the Sovereign Council Abdel Fattah al-Burhan received a number of EU diplomats to Sudan including ambassadors of the European Union, France, Germany, Italy, Netherlands, Spain and Sweden.
Following the end of the meeting, Robert van den, Head of Delegation of the European Union to Sudan told the media they discussed with al-Burhan a range of issues related to the recent political developments and the formation of the new transitional cabinet, tensions with Ethiopia, and the economic situation.
Dool said they briefed al-Burhan about the current size of the EU support to the democratic transition process and the humanitarian assistance to Sudan.
“We noted that the pressure on the Sudanese people is palpable, but we also noted that the government has to take bold and fast solutions to reform the economy,” he stressed.
The government has implemented a number of economic reforms and ended the fuel subsidy but it is reluctant to liberalize the currency and to end administrative controls over foreign exchange.
A week ago, a Western diplomat told Reuters that donors countries are frustrated by the government delay to float the pound would not trigger more pressure on the pound or inflation since almost all transactions are already carried out at black market rates.
The message from donors to Sudanese authorities was: “This will unlock huge amounts of financing, grants, assistance, development, investment, and the situation is just becoming worse and worse day by day,” the diplomat told Reuters.
The delay of the pound liberalization in exchange rate reform is holding up the launch of a family support programme to pay a monthly $5 cash subsidy to 80% of Sudan’s population.
“Some $400 million in aid and World Bank pre-arrears clearance grants for the first phase of the programme has been withheld because the money would be worth much less if converted at the official exchange rate,” further said Reuters.
Recently, a series of protests denounced the government’s failure to redress the economic situation, as Prime Minister appeared under pressure from the left groups.
Now, with his recently-formed all parties government, it is not clear if he would keep on reforms and meets the IMF requirements for debit removal and get the needed economic support from the international financial institutions.
EU Ambassador Dool said they also discussed the situation of the eastern Sudan border with Ethiopia, as the two sides are massing troops, creating conditions for a conflict that would destabilize the whole region.
He said they expressed “concern about the troubled period the Horn of Africa is currently traversing”.
“We commended the constructive role played by Sudan as the Chair of IGAD and declared our support for a peaceful and diplomatic solution to the tensions between Sudan and Ethiopia,” he further stressed.