Home | News    Saturday 1 October 2011

Sudan pleads for help to avert economic collapse; pound continues its free fall

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September 30, 2011 (KHARTOUM) – The Sudanese economy faces collapse unless the international community steps in to provide assistance in the area of debt relief, the foreign minister Ali Karti said on Thursday.

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A man counts notes after receiving the new Sudanese currency at a central bank branch in Khartoum July 24, 2011 (Reuters)

"We are working also on debt relief with France and others, because debt servicing incurs more than $1 billion annually," Karti told reporters in Paris following a meeting with his French counterpart Alain Juppe.

He said that the world could not simply stand back and watch the economy collapse describing the economy’s woes as "really serious".

Kart’s grim economic warning marks a departure from his peers in the government who sought to downplay the magnitude of Sudan’s troubled finances.

The Sudanese south became an independent nation last July and took with it 75% of the country oil wealth which meant that the north lost billions of dollars in revenues that have helped fuel an economic boom particularly since a peace agreement was signed between Khartoum and southern rebels in 2005.

Analysts and critics say that the Sudanese government failed to use the oil money to diversify the economy and help non-petroleum sectors such as agriculture. They also accuse the government of overspending and mismanaging the country’s resources with special focus on defense and security.

Khartoum is hoping that fees it wants to charge the landlocked south for transporting its oil through the infrastructure in the north will partially offset the economic impact of the country’s breakup. But to date negotiations between the two countries on how much the fee should be per barrel failed to yield results.

The Sudanese president Omer Hassan al-Bashir said in an interview published last week that unless a deal is reached on this item by end of October, Khartoum will resort to other unspecified options.

In the meanwhile, food prices in Sudan have jumped to unprecedented levels with rare but small demonstrations breaking out in protest over the last few days that were quickly crushed by the police.

The Sudanese pound on the other hand continued its sharp deterioration with the dollar selling for 5 pounds in parts of Sudan and close to that figure in Khartoum, according to the pro-government al-Rayaam newspaper.

The official exchange rate is around 2.7 pounds for the dollar.

The Bank of Sudan (BoS) issued a statement on Saturday stressing that the slide in the pound’s exchange rate is a result of “temporary” factors including the leakage of Sudanese pounds from South Sudan during the currency conversion process and disbursement of severance pay recently to Southerners who worked in the federal government.

BoS added that this led to an increased demand for hard currency and urged citizens to refrain from resorting to the black market. The central bank reiterated its commitment to supplying the market with the needed forex.

The statement however did not promise any special forex injections into the market in the coming period.

BoS governor Mohamed Khair al-Zubeir told Reuters this month that he asked his Arab peers to make deposits into the central bank and other commercial banks. He said that Sudan needs around $4 billion which would boost the country’s ability to contain the exchange rate.

Sudan’s foreign minister suggested that the world did not properly reward his country for facilitating the secession of the south.

"We knew and now know that the secession of the south would be a great cost to the north and, in spite of that fact, we were determined to help the process and leave it to go its own way and respect that" Karti said.

The Sudanese top diplomat was in Paris to promote his country and the argument for relief on a $38 billion debt pile that remains a bone of contention with the now separate South Sudan.

The World Bank has said Khartoum would need to introduce wide economic reforms to qualify for relief of multilateral debt. Nearly 90 percent of Sudan’s external debt is owed to bilateral and commercial creditors, with their own requirements, and would take at least three years to clear, according to the Center for Global Development, a Washington think tank.

"These were debts of one country and now there are two countries, so the question of debt and how to resolve it must be done jointly," Karti said.

Legal experts say that until a deal is reached on splitting up national debt, Khartoum is liable for making the necessary payments.

(ST)

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  • 1 October 2011 09:37

    Why help Sudan’s economy when it uses that money to increase its military budget at the expense of social programs? Sudan should be allowed to face its economic problems on its own until it is willing to end wars on marginalized populations.

    repondre message

  • 1 October 2011 09:54, by Anyangaliec

    Let’s them faces their own making. Khartoum and its crooks are clearly out of touch with the reality, and it’s pretty hard to believes whatever they says or do.

    repondre message

  • 1 October 2011 10:11, by Gabriel T.

    Khartoum must stop crying and start paying the debt to the owners. Bashir must show Juba the shopping list of 20 + years, that he wanted to share with the New Country - South Sudan. The money was used to pay Janyjaweet, deadly traitors in the South against the movement. Some have been paid to neighboring Countries so they could kill Southern Sudanese stop SPLA from advancing to the North.

    repondre message

  • 1 October 2011 12:55

    you have to ask the international community to help you get ready of Omar AL beshir
    the best way forward
    S,S WITH OUT SALVA KIRR & N,S WITH OUT AL BESHIR

    repondre message

  • 1 October 2011 15:02, by Shadrack Nuer Machut

    What goes round comes around! This is an indication that Omar al Beshir corrupted the country’s wealth from the oil which is now owned the Southerners.

    Besides, Pres. Omar al Beshir is making the matter worse by wanting to replace this country economic downfall by high raised charges on South Sudan oil transit/transportation.
    This idea is strongly denied by Southerners.

    repondre message

  • 1 October 2011 23:41, by Czech boy

    No debt for South Sudan!
    South Sudan cannot pay for weapons bought by Kartoum to kill southeners.

    repondre message

  • 2 October 2011 09:09, by konan

    The two parts of old Sudan are now on the brink of collapse, the North is running out of money while the South is running of food. This proof one thing separation wasn’t good for both. Politicians on both sides should be held accountable for this mess.

    repondre message

  • 2 October 2011 09:27, by AMBAGO RAMBA

    There much for the SPLM led RSS to learn from this development. Unless you start using the oil money in diversifying the economy and become careful about how you spend and prioritise projects away from just amassing huge arsenals, the country’s fate will not be any different to your northern neighbour.

    repondre message

  • 2 October 2011 09:28, by RAMBA

    There much for the SPLM led RSS to learn from this development. Unless you start using the oil money in diversifying the economy and become careful about how you spend and prioritise projects away from just amassing huge arsenals, the country’s fate will not be any different to your northern neighbour.

    repondre message

  • 17 April 2013 20:12, by dennishobson

    t1DqfMz5JCCgEYtBfjDh4X8ReZYEN3ssanyong madeira plastica composite decking Aw, this was a really nice post. In idea I would like to put in writing like this additionally – taking time and actual effort to make a very good article… but what can I say… I procras

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