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Sudan’s economy “grave”, says ex-finance minister

Sudan’s economy “grave”, says ex-finance minister

When North Sudan losing 75 percent of oil output when the South seceded, fighting continues while food price inflation angers ordinary Sudanese.

October 9, 2011 8:00 by

Three months after the south seceded, Sudan’s economy is floundering, with rampant food inflation, lost oil revenue and costly military campaigns combining into a serious crisis for veteran President Omar Hassan al-Bashir.

Bashir has not faced a popular uprising like those that have deposed other Arab leaders this year, but ordinary people are fuming as prices of sorghum, a staple food, have doubled.

Khartoum lost most of its oil reserves when former civil war foe South Sudan became independent in July. The plunge in oil income, the mainstay of state coffers, has sent the Sudanese pound into free fall, driving up the cost of imports.

The North lost 75 percent of Sudan’s oil production of 500,000 barrels per day after South Sudan gained independence in July under a 2005 peace deal that ended decades of civil war.

Abda al-Mahdi, a former state minister of finance, said the economic crisis was very grave. “We’re suffering from inflation. Urgent measures are needed,” he told Reuters.

Annual inflation hit 21 percent in August. On the black market, the pound is trading 60 percent below the official rate despite central bank dollar sales to bolster the local currency.

Central bank monthly reports give no figures for foreign reserves. The bank has said it sold $500 million in July alone.

Perhaps in desperation, the central bank governor asked his Arab colleagues in September to deposit $4 billion in the central bank and commercial lenders. None responded publicly.

Sudan is roiled by instability in the joint border area with the south. The army has battled rebels in South Kordofan for months. Fighting spread to nearby Blue Nile state last month.

Bashir, who seized power in 1989, has ruled out talks with insurgents, but the conflicts drain resources and stretch an army already fighting rebels in the western region of Darfur.

Sudanese households also feel the impact. Meat prices soared 41 percent in August because fighting disrupted transport links to the cattle markets of South Kordofan. The United Nations says grain harvests in the violence-hit states are now at risk.

“Blue Nile and South Kordofan are two of Sudan’s main sorghum-producing areas. The latest fighting coupled with erratic rainfall means next month’s harvest is expected to generally fail,” the UN Food and Agricultural Organisation said this week. “The price of a 90 kg bag of sorghum, which cost 70 Sudanese pounds ($26) earlier this year, is now 140 pounds.”

The Sudanese Consumer Protection Society, which staged a meat boycott for a few days last month, plans more protests against food inflation.

Analyst Ali Verjee at the Rift Valley Institute said the economic crisis was worsening, but…


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