Home | News    Wednesday 26 December 2012

Sudan finance minister says "huge" Chinese loan will stabilize economy as currency slides further

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December 25, 2012 (KHARTOUM) – The Sudanese finance and national economy minister Ali Mahmood Abdel-Rasool disclosed that the country received a "huge" loan from China National Petroleum Corporation (CNPC).

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Sudan’s Finance Minister Ali Mahmood Abdel-Rasool (REUTERS/ Mohamed Nureldin Abdallah)

According to statements made by Abdel-Rasool to ’Al-Mashhad Al-Aan’ newspaper and carried by Sudan news agency (SUNA), the loan will cause a "radical change" in the structure of the Sudanese economy.

"This loan is good news for the people of Sudan as it will be reflected in the [form of an] increase in production and easing prices and [will] help stabilize the exchange rate of the Sudanese pound against other currencies," the finance minister was quoted as saying.

Abdel-Rasool did not provide any details on the amount of the new loan or when a deal on it was sealed with CNPC but said that the Chinese oil company also agreed to extend maturity on previous loans by an extra five years.

Sudanese officials in the past have said that China suspended funding for several projects in Sudan because they needed oil as collateral.

South Sudan took with it three-quarters of the oil held by the previously united nation, but the processing and shipping facilities remained in Sudan.

Remarks by the minister comes amid confrontation with the labor union on the issue of raising wages and as the Sudanese pound traded at a new low against the dollar on the black market.

This is one of several statements made throughout this year by officials in the government and central bank about "large" deposits Sudan received from unnamed countries for unspecified amount.

In each instance the officials asserted that the new cash infusion will reverse the depreciation of the pound.

But the Sudanese pound continued to lose value against other currencies as individuals and businesses alike found it increasingly difficult to obtain dollars through official channels and sometimes even the black market.

With the loss of oil-rich south last year, Sudan’s main source of hard currency has dried up leaving the government scrambling to secure new sources of Forex.

"It is almost impossible to get dollars in Khartoum and it is getting worse," one black market trader told Reuters. "The mood is very bad".

On Tuesday, a dollar bought up to 7.1 pounds, breaching 7 for the first time. Last week, the rate on the parallel market, which has become the benchmark, was around 6.9. At the time of secession it was 3.3. The official rate currently stands at around 4.4.

In a sign of growing government concern that the exchange rate is spiraling out of control, the central bank said that they issued a nationwide ban on unofficial trading in hard currency.

The deputy governor of Sudan central bank Badr Al-Deen Mahmood was quoted by government sponsored Sudanese Media Center (SMC) website as telling parliament that the jump in the price of the dollar is a result of practices such as linking the dollar price to gold.

Mahmood said the bank is collecting information on currency dealers suggesting legal action might be forthcoming against those implicated.

He said that there is no excuse for trading outside the official channels as the central bank permits anyone to apply for a license to establish a Forex bureau.

The black market rate is watched by foreign firms which sell products in pounds but struggle to convert profits into dollars.

Among those companies are mobile service providers Zain and MTN and Gulf banks such as Dubai Islamic Bank.

The exchange rate also impacts the price of basic commodities most of which are imported from abroad. Inflation rate in November hit 47% last month.

(ST)

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  • 26 December 2012 06:32, by South South

    Begger, China is not your father. which country in the world has the best economy because China gave then loan. The answer is no one. Begger, poor, stupid and penguins.

    repondre message

    • 26 December 2012 06:47, by South South

      Penguins are dying. USA dollar reaches 7.1 SP. Wow !!!! Poor country called Sudan is on the brink of collapse economically, who will save them ? not China of course, because China is not going to give away its money to poor people without any return, let them die.

      repondre message

  • 26 December 2012 07:11, by Observer

    IF this is true ( and that is a big if) doesn;t our government realise that loans have to be paid back?
    All our leaders seem to do is borrow money instead of putting in place measures ( such as reducing military spending, increasing the tax take, increasing exports and coming to an agreement with S Sudan on oil) which will help take our country of the despair we are in.

    repondre message

    • 26 December 2012 08:19, by Aaban

      Lying as usually who will benefit from that loan? The army of evil,who sold their soul to devil? No way Chinese are not that stupid to give their money to the CPU try that will never pay them back under the indicted criminal chairman called bashir and his thugs, lie to yourself but not the people you criminal murderer airhead gangs

      repondre message

      • 26 December 2012 09:32, by Lotodo Awino Odug

        All the foreign aids or gifts is /are being described as huge?what kind of trade gap do you have that swallowed everthings that is meant to stabilize the economy?

        repondre message

  • 26 December 2012 21:12, by Observer

    If this is true what did we secure the payments against?
    Our govt, and their puppets on here such as N Sudanese and Jalaby, think and act like these are gifts from good friends.
    Loans are commercial transactions where the lender ( China) sees that there are opportunitites for them to make money or get cheap access to resources such as oil and gold etc

    repondre message

  • 26 December 2012 23:34, by Yunnis Benjamin

    Sudanese government, for how long will you make fool of your citizens? Last time it was huge financial package coming from Gulf Arabs States will stablize currency, and now it is huge loan from China. What do you have at this point to offer as collateral? South Sudanese oil?
    It is naivety to think that this regime will survived by deceiving their citizens from economic realities.

    repondre message

    • 26 December 2012 23:59, by Observer

      Yunnis
      Not all of us are fooled by the lies from our govt but they are so arrogant that they think that we will believe whatever they say.

      repondre message

  • 27 December 2012 07:14, by panchol

    Mr. Minister of valueless notes.
    is it a loan or a Chinese Aid? Chinese mean to allow oil to flow so that they can give you a loan to serve your failing economic government. But your NCP. thugs have chosen war than building country economy. Hahahaha! lol! lol! hohohoho.

    repondre message

  • 27 December 2012 10:02, by solider

    observor , studies showed that sudan could be one of the richest nations .sudan is bordering 4 countries that don’t have an access to the sea CHAD ,MIDDLE AFRICA REPUBLIC ,SOUTH SUDAN ,ETHIOPEA. if we can link them to the red sea by roads and modern railways sudan will be the best spot for free duty,the AFRICAN SINGAPORE.add to that the undiscovered natural resorces and the huge agricultural lands

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    • 28 December 2012 05:48, by Observer

      Soldier
      Show me the studies.
      Middle Africa Republic ( I assume you mean CAR?) is in the middle of a new civil war, the relations with South Sudan are fragile, Chad has established fresh relations with Libya so why would they want to link with our country?
      Further three of the four countries you mention are desperately poor so how can we become one of the richest nations by linking to them??

      repondre message

  • 3 April 2013 11:27, by stefan

    Sudanese government, for how long will you make fool of your citizens? Last time it was huge financial package coming from Gulf Arabs States will stablize currency, and now it is huge loan from China. What do you have p?yn do e-papierosa at this point to offer as collateral? South Sudanese oil?
    It is naivety t

    repondre message

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