December 9, 2012 (KHARTOUM) – The inflation rate in Sudan edged higher in November compared to the month before as rising food prices continued to push the cost of living upwards, the Central Bureau of Statistics (CBoS) reported on Sunday.
- FILE - Men wait to buy meat at the market in Khartoum, Sudan (REUTERS/Mohamed Nureldin Abdallah)
"The [annual] inflation rate in Sudan reached 46.5% in November compared to 45.3% last October," the CBoS said in its monthly report. On a monthly basis inflation was 1.2% in November from October.
Prices rose year-over-year by 83.8% for meat, 45.4% for sugar, 40.2% for vegetables and 70.2% for transport.
The figures will likely undermine the government’s case for further cuts in subsidies it insist is needed as opposed to demands by labor union for higher wages.
Sudan has been scrambling to secure new sources of revenue following the secession of South Sudan in July 2011 taking with it 75% of the country’s oil reserves. The lost oil made up most of Khartoum’s revenue and exports as well as source of hard currency.
Since then the Sudanese pound (SDG) lost more than 50% of its value given the sharp drop in exports and drying sources of foreign currency. The situation meant that the tab for imports grew larger forcing the government at one point to restrict the list of items that can imported while raising duties on others.
Faced with a big hole in the budget and lack of near term solutions the government rolled out an austerity package last summer that cuts the size of federal and state governments as well as partially lifting subsidies on food and fuel. It also devalued the currency to bring the exchange rate closer to the black market. The move sparked rare but small and scattered anti-government protests across the country.
Yet Sudanese officials insist that more needs to be done in terms of cutting spending particularly by completely phasing out subsidies. They also pointed out that austerity measures have not been entirely successful due lack of commitment by some government agencies and state governments.
Sudan is subject to comprehensive U.S. financial and economic sanctions and is unable to borrow from international institutions or rich western nations due to arrears and its hefty external debt. Oil-rich Arab Gulf nations have been reluctant to adequately assist Sudan despite Khartoum dispatching several delegations over the last year.
This week the government tabled the 2013 budget which forecasts 25.2 billion SDG in revenues and 35.0 billion SDG in expenses leaving a deficit of 10 billion SDG ($1.5 billion) which equals 3.4% of the country’s Gross Domestic Product (GDP).
The budget opens up a new source for revenue by proposing increases to automobile licensing fees which government says is needed to cover the increasing cost of subsidies particularly fuel.
However, the head of a parliamentary subcommittee said today they recommended rejecting the hike in licensing fees.
MP Muhammad al-Hassan al-Amin was quoted by state media a saying that the fee is a state matter and not federal one and as such it is in violation of the constitution. The fee if struck down will mean that the government will need to look for new revenue source.
The budget targets an inflation rate of 22% compared to 46.5% this year and an exchange rate of 4.42 to the dollar as opposed to 6.50 in the black market this month.
The finance ministry had said it will not include export fees paid in dollars by landlocked South Sudan, which needs to ship its crude through northern pipelines and the Red Sea port of Port Sudan to get to international markets.
The two sides also agreed last September on fees for exporting the oil. South Sudan halted oil production in January after accusing Khartoum of theft in a long-running fee dispute.
But Khartoum’s insistence that security agreements be concluded delayed the resumption of oil production which was scheduled for this month.