Cash runs out in Khartoum


Many cash machines in the Sudanese capital ran out of banknotes as government scrambles to prevent economic collapse with a sharp devaluation and emergency austerity measures.

Rising demand for cash due to inflation, lack of trust in the banking system and the central bank policy of restricting money supply to protect the Sudanese pound all contribute to a liquidity crunch that worsened in the past 10 days pending new banknote deliveries.

The banknote shortage comes a month after authorities allowed the value of the pound to slide from 29 pounds to the dollar to 47.5 pounds and announced measures to tighten spending.
“I move until I find a money changer with funds because a large number of cash machines are empty,” said Ahmed Abdullah, a 42-year-old government employee.
“Why are we suffering like this to get our money?”

Sudan suffered from a lack of foreign currency since losing three-quarters of its oil output when the south of the country seceded in 2011. The lifting of two decades of US sanctions in October 2017 did not bring a hoped for reprieve.

Rampant inflation, strict withdrawal limits and a currency crisis placed Sudan’s economy in trouble before the latest liquidity crisis.

President Omar al-Bashir, who seized power in a coup in 1989 and whose ruling party said it would nominate him to run for re-election in 2020, has taken steps to address the economic crisis in recent weeks.

A new central bank governor changed the system for setting the exchange rate and a new prime minister announced a 15-month economic reform plan.


Streets have been quiet after nationwide protests triggered by bread prices early this year, further price rises since last month’s devaluation have set off fresh grumbling.

Spot checks with traders and market vendors showed over the past month the cost of a kilo of flour has risen 20%, beef 30% and potatoes 50%. Sudan’s inflation stood at more than 68% in September, one of the world’s highest.

At the start of the month government bolstered flour subsidies to contain the impact on bread.

A week ago, the prime minister tweeted he met the central bank governor to address the cash machine problem and was reassured about the supply of banknotes.

An official at a commercial bank in Khartoum said the central bank was not injecting enough fresh currency, triggering the liquidity crunch and long queues at ATMs.

Sudan imported a shipment of new banknotes last month and three further shipments are due soon, a finance ministry source said, without giving further details.

Even after last month’s devaluation the pound is still under pressure and the gap between the official and black market rates has widened. On the black market, a dollar costs 52 pounds in sought-after cash and 58 pounds by cheque.
“We expect the dollar to continue to rise,” one black market currency trader told Reuters. “With the scarcity of foreign currency the practice of dealing at the cheque price has become widespread.”

The body of banks and exchanges that last month fixed the official rate daily strengthened the pound to 46.95 pounds days after devaluation but soon returned it to 47.5.
“The real exchange rate is the parallel market,” said University of Khartoum professor Mohammed al-Jak.
“The exchange rate mechanism should be based on supply and demand for it to have a true and realistic price, in line with the economic liberalisation.”