The Economic Impact of U.S. Sanctions on Sudan
Sudan Events – Rehab Abdullah
On May 22, the U.S. administration imposed sanctions on Sudan, citing allegations of violations of the 1991 Chemical and Biological Weapons Control and Warfare Elimination Act. According to official statements, these sanctions are set to take effect on June 6, following notification to Congress. They include bans on certain U.S. exports to Sudan, restrictions on Sudan’s access to loans and credit guarantees from the U.S. government, and formal accusations that Sudan violated its obligations under the Chemical Weapons Convention.
These sanctions are not unprecedented, though the reasons cited vary. Previously, Sudan was under sanctions for 20 years. The pressing question now is: what will be the economic impact of the new sanctions, and how can Sudan overcome them?
Impact on the Economy
Economic experts emphasize that the sanctions will severely affect Sudan’s economy by prohibiting dealings in U.S. dollars, freezing government assets, banning the export of U.S. technologies or products to Sudan, and denying access to American or internationally supported financing, especially credit lines and financial facilities.
They also highlight that the sanctions’ impact is compounded by the already struggling economy due to the ongoing war.
Direct Economic Impacts
Banking and finance expert Omar Sayed Ahmed stated that the direct consequences of the sanctions include Sudan’s effective exclusion from the global financial system. Sudan is already semi-isolated, and these sanctions will further cripple Sudanese banks from opening letters of credit to import goods, conducting official bank transfers, or dealing with intermediary institutions in international trade.
He explained in an article that this effectively shuts down legal trade and pushes economic activity toward the black market and smuggling. As a result, imports of wheat, medicine, fuel, and life-saving drugs will decline. This will lead to severe shortages in essential supplies, a spike in prices due to increased insurance and transport costs, and a widening gap in healthcare services.
Loss of State Revenue from Gold
Omar Sayed Ahmed added that in the absence of proper oversight and the rise of the informal economy, it is estimated that between 50% to 80% of Sudan’s annual gold production is smuggled. Losses from smuggling over the past decade are estimated between $23 billion and $36 billion. The current sanctions will only fuel more smuggling, depriving the state of its most valuable monetary resource.
Worsening Currency Crisis
Ahmed also noted that these developments will accelerate the depreciation of the Sudanese pound against the dollar, exacerbate hyperinflation, and collapse citizens’ purchasing power.
Commercial Deals as a Solution
Economic advisor Dr. Abu Bakr Al-Tijani downplayed the feasibility of suggestions that Sudan turn to the East (Russia and China) to counter U.S. sanctions. He argued that past attempts at economic cooperation with those countries during earlier sanction periods yielded little.
He attributed this to the fact that China and Russia have significantly greater interests with the United States and are unlikely to jeopardize them for Sudan. Thus, any cooperation with Sudan will be limited to their own interests and will not reach the level Sudan might hope for.
Dr. Al-Tijani believes the solution lies in forging trade agreements with multiple countries (import/export) and agreeing on specific payment mechanisms to bypass U.S. sanctions. This must be coupled with boosting the productivity of Sudan’s agricultural and mineral resources and combating smuggling by offering competitive prices through special portfolios or companies dedicated to purchasing such products. If necessary, the government could resort to deficit financing and currency printing, provided inflationary effects are managed with internal measures such as incentivizing savings.
He stressed that if Sudan’s commodity offerings — like gum Arabic — dominate the global market or have a comparative advantage, sanctions would lose their sting, and international partners, even the U.S., would come seeking cooperation.
Tapping Sudan’s Potential
Banking expert Dr. Loay Abdel Moneim stressed the need to avoid letting Sudan-U.S. relations be driven by emotion. He acknowledged the complicated and tense history between the two countries but emphasized that Sudan poses no threat to any nation and could be a valuable partner in global trade and investment.
However, he pointed out that some nations fear Sudan’s potential and its commitment to independence and openness. These nations prefer to keep Sudan entangled in internal conflicts to prevent it from leveraging its resources.
Loay urged Sudan to deal with international relations with awareness and insight into the tactics used against it. He warned against being provoked by unjust sanctions or manipulated decisions influenced by corrupt officials. He called for stronger diplomatic outreach, especially to allies within the U.S. administration who support Sudan based on principle rather than politics.
He noted that recent U.S. sanctions on the UAE — due to its support of Sudan’s Rapid Support Forces (RSF) — are a positive sign. Such actions show that advocacy can influence U.S. policy. Loay believes Sudan must now leverage the leadership of Prime Minister Kamal Idris, who has strong popularity and international connections, to correct the country’s course. He warned against efforts by the UAE to drive a wedge between Sudan and the U.S., painting Sudan as anti-American, and stressed the need for calm and strategic diplomacy.
Sudanese Pound’s Decline
Banking expert Walid Dalil believes the war has a more significant impact on Sudan’s economy than U.S. sanctions. He expects further deterioration in the economy and currency due to rising demand for U.S. dollars ahead of the Hajj season and Eid Al-Adha, along with increased commercial activity in some cities.
He pointed out that the pound’s sharp decline began in mid-April 2023, driven by the Central Bank’s eroded ability to meet foreign currency needs and the resort to unbacked currency printing.
Dalil stated that the war has caused catastrophic economic damage, with losses in assets estimated between $500 billion and $700 billion. The conflict has shrunk GDP by over 40%, reduced public revenues by nearly 80%, and forced reliance on printed money in the absence of international financing. The collapse of banks and productive projects has devastated Sudan’s economic foundation.
Among the most affected sectors are industry, agriculture, and banking. Around 75% of industrial units have been lost, 70% of service sector capacity destroyed, and agricultural output has dropped by more than half.
The war has also destroyed vital infrastructure, including bridges, dams, power and water networks, telecommunications, healthcare and education facilities, public buildings, and markets — in addition to widespread damage to homes and property and severe environmental degradation.
He concluded that Sudan’s economy has suffered immensely due to the war. Recovery must begin with ending the conflict, restoring political stability, revitalizing the agricultural sector (a pillar of Sudan’s economic potential), and investing in infrastructure and basic services such as electricity and water.
