Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Sudan Inflation Jumps 230% Year-on-Year

Mon 30 Nov 2020 | 01:13 AM
Taarek Refaat

Sudan's inflation rate rose to one of the highest in the world to 230% year on year in October, threatening to slide into hyperinflation, according to the Government Statistics Office.

Price hikes have prompted many consumers to spend their salaries on valuable durable goods, while the government is financing budget deficits by cutting fuel subsidies and by printing more cash.

Central bank figures show the volume of money printing by authorities increased by more than 50% annually and 7.13% in September alone.

Johns Hopkins University specialist Steve Hankey said the inflation rate has accelerated to around 24% month over month, making Sudan among the five countries with the highest inflation rate, however, there is no hyperinflation, which is estimated at 50%.

The US decision to remove Sudan from the list of state sponsors of terrorism provided little relief to the African country, which has turned to the International Monetary Fund (IMF) to help control a deficit that has been exacerbated by decades of sanctions and economic corruption.

According to data, Sudan's gross domestic product (GDP) shrank by more than 2% in both 2018 and 2019 and is expected to shrink another 8.5% in 2020 due to the pandemic.

The one-year IMF program requires the transitional government to reform energy subsidies and reduce government borrowing from the central bank, qualifying Sudan for debt relief from creditors.

Fuel subsidies account for 71% of all subsidies, and are equivalent to 10.6% of GDP in 2019. In 2020, the government started allowing private companies to import oil at market prices, and in October, it cut subsidies of locally produced gasoline to 56 Sudanese pounds per liter, which is still one of the lowest levels in the world.

In 2020, the government began allowing private companies to import oil at market prices, and in October, it reduced subsidies for locally produced gasoline to 56 Sudanese pounds per liter, still one of the lowest in the world. In 2019, Fuel subsidies represented 71% of all subsidies, and were equivalent to 10.6% of Sudan's GDP. 

This week, the dollar bought 255 Sudanese pounds on the black market, up from about 85 pounds a year ago, while the official exchange rate recorded 55 pounds.

The IMF said reforms should reduce fuel subsidies to 2.2% this year, yet, imported fuel will put more pressure as a currency collapse causes its price to rise.