{"id":62109,"date":"2026-10-21T22:20:20","date_gmt":"2026-10-21T19:20:20","guid":{"rendered":"https:\/\/sudanevents.com\/?p=62109"},"modified":"2026-10-21T22:20:20","modified_gmt":"2026-10-21T19:20:20","slug":"the-economy-and-the-four-sources-of-risk-2-3","status":"publish","type":"post","link":"https:\/\/sudanevents.com\/index.php\/2026\/10\/21\/the-economy-and-the-four-sources-of-risk-2-3\/","title":{"rendered":"The Economy and the Four Sources of Risk (2\/3)"},"content":{"rendered":"

As I See <\/strong><\/span><\/p>\n

Adel El-Baz<\/strong><\/span><\/p>\n

1<\/strong><\/p>\n

In the first installment, I identified four variables that pose genuine risks to the Sudanese economy: the exchange rate, inflation, energy, and food. Each represents an independent risk, but together they could turn the economic crisis into a comprehensive livelihood, production, and financial crisis, threatening both the state\u2019s ability to manage the economy and society\u2019s capacity to endure.<\/strong><\/p>\n

Having examined the exchange rate and its impact on the macroeconomy, today we turn to energy, followed by inflation, as two interconnected links in this crisis.<\/strong><\/p>\n

2<\/strong><\/p>\n

Sudan\u2019s average monthly fuel requirements are estimated at four diesel tankers and two gasoline tankers, each carrying 40,000 tonnes, amounting to approximately 240,000 tonnes per month, in addition to cooking gas and aviation fuel. Data for the first half of 2026 reveal the scale of the pressure generated by this demand. Imports reached $4.517 billion, compared with exports of no more than $1.816 billion, resulting in a trade deficit of approximately $2.701 billion. Petroleum products constituted the single largest import category, valued at $1.495 billion, or more than 30% of total imports.<\/strong><\/p>\n

This substantial volume of fuel imports underscores the strategic importance of energy across every sector of life. Agriculture depends on fuel to operate tractors, irrigation pumps, and harvesters; industry needs it for power generation and operations; trade relies on it for transportation and refrigeration; and hospitals cannot function without a stable electricity supply. Consequently, any increase in energy prices or disruption in its availability quickly spreads to other sectors of the economy.<\/strong><\/p>\n

The energy crisis cannot be separated from the war. The problem is not limited to fuel prices or the availability of foreign currency to import it; it also extends to damage to productive infrastructure, disrupted supply chains, and shortages of inputs. The war has deepened these imbalances through the destruction of productive capacity, displacement, looting, and disruption of agricultural activity. Ensuring that fuel reaches production areas is therefore no less important than ensuring its delivery to ports.<\/strong><\/p>\n

In agriculture in particular, higher diesel prices increase the costs of land preparation, irrigation, harvesting, and transportation, undermining production before it even reaches consumers. Farmers may find themselves facing two equally difficult choices: reduce the area under cultivation or continue production at higher costs without any guarantee of recovering those expenses when their crops are sold. In this way, the energy crisis becomes a constraint on food production, rather than merely an increase in transportation costs.<\/strong><\/p>\n

Rising fuel prices become even more dangerous when they affect gold production, one of the country\u2019s most important sources of foreign currency. Higher diesel prices increase extraction costs and squeeze producers\u2019 profit margins. However, higher costs do not automatically mean that the domestic price of gold will exceed the international price. Such a comparison requires accounting for the effective exchange rate, gold purity, and purchasing and export costs.<\/strong><\/p>\n

Accordingly, evaluating the viability of the Central Bank of Sudan\u2019s gold purchasing and export operations should be based on net foreign-currency returns, not the domestic price alone. The danger is that net export proceeds may shrink as production and trading costs rise, weakening the capacity of this resource to finance external needs.<\/strong><\/p>\n

3<\/strong><\/p>\n

Inflation, meanwhile, represents a central source of risk, driven by an interplay of domestic and external factors. Domestically, supply-and-demand imbalances, weak productivity, and rising production costs push prices upward. Externally, pressure comes from rising global prices for imported commodities, particularly fuel and food. Another channel is the depreciation of the national currency, which increases the cost of imports in Sudanese pounds even when international prices remain stable. When rising global prices coincide with a depreciating pound, the pressure on both producers and consumers intensifies.<\/strong><\/p>\n

Inflation affects various sectors, but its impact goes beyond increasing their costs. In agriculture and industry, it makes planning for a growing season or production cycle more difficult because input costs fluctuate while future selling prices remain uncertain. In trade and transportation, declining purchasing power slows markets, leaving producers and traders caught between rising costs and weakening demand.<\/strong><\/p>\n

This is where the most dangerous cycle takes shape: rising prices erode purchasing power, weaker demand puts pressure on production, and declining production further exacerbates supply imbalances.<\/strong><\/p>\n

4<\/strong><\/p>\n

The four sources of risk, therefore, do not operate in isolation. A decline in the value of the currency raises the cost of imported fuel and food, fuels inflation, and undermines the ability of productive sectors to operate efficiently. When production falls, the need for imports grows and demand for foreign currency increases, renewing pressure on the exchange rate. This interaction threatens to transform separate crises into a prolonged economic and livelihood crisis.<\/strong><\/p>\n

Accordingly, addressing the exchange rate without addressing production is insufficient, just as tackling fuel costs without considering electricity and transportation is inadequate. What is needed is a set of priorities centered on protecting productive capacity and securing essential services within a coherent economic policy, rather than a series of disconnected measures that treat each crisis in isolation. This approach is consistent with the need to combine macroeconomic stability with investment directed toward productive sectors.<\/strong><\/p>\n

5<\/strong><\/p>\n

In the next installment, we will turn to the final source of risk: food. Food is not merely another item on the list of crises; it is the point at which the effects of the exchange rate, energy, and inflation converge and reach the Sudanese family\u2019s table directly.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

As I See Adel El-Baz 1 In the first installment, I identified four variables that pose genuine risks to the Sudanese economy: the exchange rate, inflation, energy, and food. Each represents an independent risk, but together they could turn the economic crisis into a comprehensive livelihood, production, and financial crisis, threatening both the state\u2019s ability …<\/p>\n","protected":false},"author":2,"featured_media":58017,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-62109","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"_links":{"self":[{"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/posts\/62109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/comments?post=62109"}],"version-history":[{"count":1,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/posts\/62109\/revisions"}],"predecessor-version":[{"id":62110,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/posts\/62109\/revisions\/62110"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/media\/58017"}],"wp:attachment":[{"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/media?parent=62109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/categories?post=62109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sudanevents.com\/index.php\/wp-json\/wp\/v2\/tags?post=62109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}