Collapse of SDG, Hidden Hands Involvement to Sabotage Economy

Report – Rehab Abdullah

The Sudanese pound (SDG) lost half of its purchasing value against the prices of other currencies during the past year 2023, and the major collapse began after the outbreak of the war in mid-April between the Sudanese army and the Rapid Support Militia (RSF).
*Causes of the collapse*
The Minister of Finance, Dr. Jibriel Ibrahim, has acknowledged the decline in the value of the Sudanese pound and attributed it to the increase in military spending, along with a number of other reasons. He said in a press conference at the end of last February that military war obligations increase every day, and they are in hard currency, which is part of the problem of the exchange rate in which we live. He pointed out that the government sought to control the dollar, but the high demand for foreign currencies led to a decline in the local currency.
*Economy Sabotage *
Informed sources have revealed in their statement to (Al-Ahdath) the involvement of companies working for the RSF Militia, which buy the dollar in large quantities from the parallel market for the purpose of smuggling it abroad or to import fuel.
*Decrease rate*
The value of the Sudanese pound before the outbreak of war in the country did not exceed 600 pounds, although it is also large in terms of indicators of economic recovery. Sudan followed a managed flexible exchange rate that was stable at 550 to 540 pounds, and the volume of revenues in the state budget for the current year is 6 trillion pounds while spending is about 8 trillion pounds, so the deficit is 2 trillion pounds.
The former Secretary General of the Taxation Chamber, an expert in financial management, Dr. Ahmed Adam Salem, explained:
For several years, the Sudanese pound has been losing its value, indicating that in 1969, at the beginning of the May Revolution regime, one pound was worth 3.4 dollars meaning the dollar equaled 28 piasters, while the price of the dollar in 1985 when the fall of the May Revolution regime reached five pounds, so that at the beginning of the Ingaz in 1989 it was equivalent to 12 pounds, While the exchange rate of the Sudanese pound, when the Ingaz regime fell in 2019, reached 70,000 pounds against one dollar. The price of the dollar against the pound at the beginning of 2024 reached 1,150 pounds.
*Speculation in dollars*
Bankers attributed the rise in the price of the dollar to speculation in the dollar, taking it as a commodity, and increasing demand versus supply. Banking expert, Dr. Mohammad Abdul Aziz, in his statement to (Al-Ahdaath), attributed the rise to the cessation of exports, and considered it a major reason for the scarcity of the dollar, which caused its prices to rise, and every trader started setting a price “up to him” and not based on any logic.
*Citizen harmed*
While the economic expert, Dr. Mohammad Al-Nayer, confirmed the impact of the decline in the value of the Sudanese pound against the dollar and other foreign currencies, on the lives of citizens and the overall economic situation in a significant way. In his speech, he attributed the sudden decline in the value of the pound to (Al-Ahdath) for several reasons, including the state of looting that took place, whether Banks, factories, or citizens’ homes, obtaining large amounts of cash and trying to smuggle it into foreign currency to smuggle it abroad, in addition to the cessation of the Khartoum Refinery, which used to secure a large amount of the country’s fuel consumption, which made the state import all consumption from abroad, in addition to the weakness of the state’s revenues. During the war period, this may result in an increase in the budget deficit, and this requires wisdom in the issue of borrowing from the banking system not to exceed the recognized limits so that inflation rates do not increase significantly. The Sudanese economy was basically dealing with problems before the war, and the problems increased after the outbreak of the war, and certainly there will be many indicators of the decline in the value of the Sudanese pound and the increase in the rate of inflation, unemployment and poverty rate, confirming the emergence of these indicators during the next stage.
*Besieging Bankak*
As for the slowness in paying state salaries a lot could be done, indicating the slowness in the performance of the state’s executive apparatus. It was supposed to take the necessary precautions to confront the negative impacts of the issue of looting that took place in foreign and local currencies from citizens’ homes, especially since about 90% of the monetary mass is outside the banking system, and the state must take action, and we do not say currency change because it is expensive, but it was possible to speed up the pace in issuing a circular that allows the circulation of denominations of 1000 pounds and 500 pounds in commercial activity. Rather, to be only accepted in banks, which enables these denominations to be deposited in banks, and it requires activating banking applications and electronic transfers so that the citizen can deal smoothly and it was possible for the banks to know the source of the incoming funds, and exports must be activated and imports prioritized in a significant way. He appreciated the step of determining “Bankak” transfers, but he considered it too late. He also referred to other measures, including activating state revenues in the various states so that there is no a large budget deficit.
*Restoring the value of the pound*
Meanwhile, the former Secretary-General of the Taxation Chamber, an expert in financial management, Dr. Ahmed Adam Salem, subjected the recovery of the Sudanese pound on the government by adopting an economic policy that encourages production for the purpose of exports. He said in his statement to Al-Ahdaath: “It is possible for the Sudanese pound to recover.”
However, he made sure that this requires security and political stability.
*Attempts to control*
Al-Ahdath learned that the Economic Administration (Ministry of Finance and the Central Bank of Sudan), under the guidance of a member of the Transitional Sovereign Council, Lieutenant General Naval Engineer Ibrahim Jaber, began taking measures to control the exchange rate by increasing the country’s foreign exchange reserves, and sources revealed that the measures mainly include exports, especially gold, and noted that it included banning more than 200 export companies that tampered with export revenues, and warning 84 other companies that were procrastinating in returning the proceeds.