Billions needed to rebuild Sudan economy

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Sudan needs $8 billion (£6.5 billion) in foreign aid over the next two years to cover its import bill and help rebuild its ravaged economy after months of political turmoil, the new prime minister said.

Abdalla Hamdok, sworn in last week to head a transitional government after the ousting of veteran leader Omar al-Bashir, said up to another $2 billion of foreign reserve deposits were needed in the next three months to halt a fall in the currency.

The 61-year-old economist, who worked for the UN Economic Commission for Africa, said he started talks with the IMF and the World Bank to discuss restructuring Sudan’s crippling debt and approached friendly nations and funding bodies about aid.

Mounting public anger over shortages of food, fuel and hard currency triggered mass demonstrations that forced Bashir from power in April.

“We are in communication to achieve this,” Hamdok said in his first interview with a foreign media outlet. “Foreign reserves in the central bank are weak and low.”

“There won’t be a forced prescription from the IMF or the World Bank on Sudan.”

On the topic of government subsidies for bread, fuel, electricity and medicine, Hamdok said changes would only be made after “deep discussions” with the people.

“The people are the ones who will make the decision,” he said.

He was talking with the United States to remove Sudan from its list of state sponsors of terrorism – a designation which left Khartoum isolated from most of the international financial system since 1993.

There was no immediate comment from the US government, the IMF or the World Bank.

DEVALUED CURRENCY

Sudan has been in economic turmoil since it lost the bulk of its oil production in 2011 when South Sudan seceded.

It devalued the pound several times but has not been able to halt the fall. A dollar currently fetches 65 pounds on the black market versus the official rate of 45.

“We will work to unify the exchange rate and manage the exchange rate using a flexible managed exchange rate,” Hamdok said.

He said Sudan needed to restore trust in the banking system.

Hamdok, who studied agricultural economics, previously worked at the African Development Bank and recently as a special advisor at the Trade and Development Bank in Ethiopia. He said Sudan needed to tap its agricultural potential.

Sudan is rich in agricultural resources but high taxes, corruption and mismanagement held back investment in the sector.

“We want to take the Sudanese economy from one based on consumption and imports to a productive one and stop exporting products such as livestock and agriculture as raw materials,” Hamdok said. “Instead, we aim to process them and create added value.”

He wants to focus on peace-building in a nation that has seen conflicts in multiple parts of the country and endured a civil war ending with succession of the South.

“Stopping war, 70% of expenditure in the budget, will create a surplus that can be invested in production particularly agriculture, livestock and related industries,” he said.

Shortly after Bashir was ousted, the United Arab Emirates and Saudi Arabia pledged $3 billion in aid to Sudan, in the form of a $500 million deposit in the central bank, as well as fuel, wheat, and medicine.

The generals who forced Bashir from power took over and after months of wrangling and further violent protests, agreed to set up a transitional body including civilians to pave the way to elections in three years.



Many hope Hamdok can shepherd Sudan through the transitional period, but some opposition members and analysts worry the power-sharing deal may fall short of expectations in a country where the military, backed by Islamists, has dominated for decades.