VENTURES AFRICA – The International Monetary Fund (IMF) on Wednesday commended Sudan’s decision to devalue its currency and cut back on its fuel subsidy policy, these it said are required to achieve stability in the nation’s economy.
The north African nation of Sudan is currently contending with several economic challenges resulting from protests and a huge budget deficit due to the three-quarter of oil production capacity it lost to South Sudan when the later got independence in 2011.
“The mission underscores the need for continued policy reforms to ensure medium-term macroeconomic stability that would enable more inclusive economic growth, boost job creation and contribute to poverty reduction,” said the international agency.
Reuters reported Sudan’s inflation rate hit 37.2 percent in June, a figure that is two times more than the rate it had in the same period in 2011, the increased cost of food importation was suggested as being responsible.
Sudan’s revenues are mainly gotten from oil which is also the main source foreign exchange through which the government pays for imported foods and other products. But with the independence of oil-rich South Sudan in 2011, Sudan’s oil-production capacity was slashed by three-quarters.
To control the deficit, Khartoum commenced the removal of fuel subsidies, it also cut state jobs and increased taxes and customs duties.
The apex bank also devalued the nation’s currency (pound) against the dollar in an attempt to control increasing spread over the rates at the black market.
While the IMF believes the new measures will bring about fiscal sustainability over time, some Sudan residents are protesting against the 23-year rule of Omar al-Bashir.