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This has exacerbated the rise in the prices of basic services and commodities, in a country where 65 percent of the population lives below the poverty line and more than 60 percent depends on foreign markets for their needs.
Economists told “Sky News Arabia” that the Sudanese economy needs a complete restructuring to emerge from its current crisis, and reported that around 82% of state-owned enterprises do not report to the Ministry of Finance. means the budget is based on only 18 percent of potential income.
Economists have called for speeding up currency change or pulling out large groups to soak up the liquidity leaking outside the banking system, estimated at 90%, or around £ 90 trillion, and cutting government and sovereign spending in order to get the economy back on track.
Budget 2021
Finance Minister Heba Muhammad Ali stressed that the new budget was financed with real income while reducing borrowing from the Central Bank from 200 to 52 billion pounds, confirming the ministry’s commitment to increase the burden. of inflation on the citizen and stabilize it at 95%. by the end of the year, compared to 270% currently.
However, according to the economist and member of the Economic Committee for the Forces of Freedom and Change, Mohamed Sheikhoun, the 2021 budget “rested mainly on the pocket of the citizen, because it covers most of the expected increase in its resources from the fact of the large increase imposed. on fuel, estimated at 300 billion pounds. “
Sheikhoun, who spoke with “Sky News Arabia”, believes that “the budget failed in many ways because it raised the rates of sovereign, security and government consumption spending, which were over 60%, which which is a high percentage compared to the allocations for the education, health and development sectors which should have been a larger share. “
Inside front outside
And crises exacerbate the demands of daily life in terms of bread, cooking gas and fuel oil in the face of daily rising prices for goods and services.
Economist Yasin Hassan, member of the Sudanese Consumer Protection Committee, attributed the current crisis to “the great confusion that has accompanied the performance of the current government, and its focus on the external dimension to the detriment of internal problems”.
Despite his recognition of the great achievements that have been made in terms of external relations, Hassan stresses that “this was not enough given the neglect of the interior design of the house”.
Hassan told Sky News Arabia: “The Sudanese citizen is fully aware that the revolution has inherited a heavy economic burden and a situation of corruption, but the transitional government has not come up with convincing policies or plans with tangible economic benefits “and that” increasing subsidies or liberalizing the economy is not being done the way it is now. “The government should follow suit. Rather, it must be part of well thought out and clear economic packages that are delivered to citizens in a transparent way. “
The economist believes that “the solution lies in forming an economic bailout government with a realistic and clear agenda, and forming a legislative council capable of holding the executive branch accountable and evaluating it.”
Businessman Dafah Abdullah Abdullah diagnoses the problem in the government’s “loss of the compass of solutions” and asserts that he “has not yet been able to choose between a free, socialist or mixed system”.
In his interview with Sky News Arabia, Abdullah believes that “the weakness of the economic staff, the non-consultation of the people concerned and the increase in salaries without the contribution of real resources, which have all led to the current economic decline and to inflation.”
On the other hand, Abdullah does not find sufficient justification for the removal of fuel subsidies, noting that “pro-security and government consumption accounts for 75% of fuel consumption, while agricultural, individual and other consumption does not. is only 25%. “
He confirms that the bread and gas crises are caused by bad policies and mismanagement, as Sudan’s annual wheat consumption is around two million tonnes, 60 percent of which is produced locally, and the state has not been able to provide the resources needed to fill the sheer shortage, as he said, and has failed to provide the necessary storage facilities to keep gas supplies flowing.
Does the currency of Sudan change?
The deterioration in the value of the local currency is one of the most important causes of the economic decline, as the pound has retreated over the past year by about 300%, and a dollar is currently trading in a range between 290 and 300 pounds after. hit 310 pounds last week, before declining slightly in the past two days.
Observers attributed the significant drop in the price of the pound to structural problems plaguing the national economy, the trade imbalance due to heavy reliance on imports, which, unofficial estimates, amounted to around $ 7 billion. dollars in 2020, and weak exports, estimated at $ 3 billion in the same year, on top of speculation by some large companies, most of which follow the previous system.
The finance ministry has promised to activate strict laws to limit exchange rate speculators in cooperation with the relevant authorities, in addition to improving performance with the economic sector, and the Sudanese finance minister said in statements to the media that the unification of the exchange rate is important, in particular that there are reserves and flows if employed will help to cope with the economy.
But Sheikhoun expects more chaos over Sudanese pound exchange rates given pressure on the government by financial institutions demanding the pound float, which in practice means reducing the official rate, which is currently stands at 55 pounds to the dollar.
Sheikhoun refers to similar pressures during the preparation of the 2020 budget, which was rejected by the Economic Committee of the Forces of Freedom and Change, and demanded that the customs dollar and support provided to commodities not be affected, but the government succumbed to these pressures. and reduced the official price at that time from 18 to 55 pounds to the dollar, which negatively affected economic performance and blatantly increased commodity prices, thereby reducing consumer spending.
Economist Sen Hassan shares Sheikhoun’s point of view that the depreciation of the pound is due to weak production and exports and poor financial policies, and he expects the decline in the book continues until strong and effective economic policies are put in place.
Hassan believes that “the solution is to stop the sale of gold and direct it towards building up a reserve at the central bank to support the position of the local currency, which will restore confidence in the banking system and allow attract expatriate remittances and investment flows. , thus gradually improving the exchange rate of the local currency. “
On the other hand, Dafallah Abdullah blames the monetary policies, and sees them as a direct cause of the current chaos in the currency markets, not the suppliers, and says that “the only way to save the pound is to change the currency, to control the gold trade. and stop the daily speculation. “
800 or 50?
There are conflicting estimates regarding businesses belonging to the armed forces and security agencies which were created by the previous regime and which are not subject to the jurisdiction of the Ministry of Finance, and are therefore not included in the budget figures. , and although some statistics indicate that it is more than 800 companies operating in various sectors, the finance minister says it is only in the order of 50.
According to a professor of economics at Sudanese universities, Abdel Wahab Bob, “The biggest flaw in the 2021 budget is its dependence on only 18% of the country’s resources due to the failure of the government and institutions of the Freedom Forces. and the change to present the 82 percent that Prime Minister Abdullah Hamdok has said in previous statements is not. “It remains outside the jurisdiction of the Ministry of Finance for public funds.”
However, the Ministry of Finance confirmed that it has provided a comprehensive vision of the reforms needed for the SOE sector, including military and regular institutions, admitting that “these enterprises face problems represented by weak governance, lack of transparency in the appointment of boards of directors. , performance monitoring and control, and conflict of interest between the roles of ministries vis-à-vis the supervisory authority. Technique and boards of directors. “
In the same context, Sheikhoun says that the Economic Committee for the Forces of Freedom and Change proposed to the Central Committee for the Forces of Freedom and Change to deal with the companies affiliated with the military and the security forces in two phases. , the first of which includes enumerating and identifying companies operating in non-military commercial sectors, and qualifying the Ministry of Finance and relevant sectors to be able to absorb these companies, and the second phase includes registering all companies with the Ministry of Justice, governing them, reforming their taxation files and submitting them to a public tender, to transform them into public limited companies in accordance with transparency controls and international standards, provided that companies operating in aspects and industries purely military are left under the aegis of the military institution.
Speaking to “Sky News Arabia”, Bob does not appear convinced of the justifications offered by the government and its policy incubator in this regard, and says that “not bringing these companies under the aegis of the Ministry of Finance means moving towards the ‘collapse and loss any possibility of economic reform. “
He believes that this “constitutes a clear failure to really determine the size of the economy, and even if the government has sufficient information, there is a high level of lack of administrative capacity and cognitive competence to deal with the issues. “
Bob recommends remedying these structural imbalances through transparent dialogue and building trust between the military and civilians, leading to effective and tangible reform that pulls the economy out of its current slump.
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