CAIRO — Sudan announced a managed floatation of its currency on Sunday, in an unprecedented but expected step to meet a major demand by international financial institutions to help transitional authorities overhaul the battered economy.
The move is the boldest economic measure taken by the joint military-civilian government that has ruled the African country after a popular uprising. The revolt led to the military’s overthrow of autocrat Omar al-Bashir in April 2019. The country has since been on a fragile path to democracy with daunting economic challenges representing a major threat to that transition.
The sharp devaluation could provoke a popular backlash as the price of goods and services rise in response to the fall of the pound’s value and possible hike in the price of fuel and other essential goods. There were already sporadic protests over dire living conditions in the past couple of weeks in the capital, Khartoum and other parts of the country.
The U.S. dollar had been trading at over 350 pounds to the dollar on the black market, while its official rate was at 55 pounds to the dollar. Following the devaluation, local media reported banks were selling the dollar at an average of 375 pounds, and buying the U.S. currency for an average of 390, in an attempt to attract those trading in the unofficial currency market.
Sudan’s currency will now fluctuate according to supply and demand and the the Central Bank of Sudan said it will announce a daily flexible indicative rate in a “flexible managed float” that banks and other exchange bureaus are required to trade at within 5% above or below.
The managed floating system, that took effect Sunday, gives the central bank the option to set a rate based on the trading average, Al-Fatih Zayed al-Abidin, the central bank governor said in a news conference in Khartoum along with Finance Minister Gibril Ibrahim.
The move was part of measures the transitional government has embarked on in recent months to transform the country’s economy and rejoin the international community after over two decades of isolation.
The Central Bank said its decision would help “normalization of ties with international and regional financial institutions and friendly countries to ensure the flow of grants and loans” into Sudan’s economy.
“Our economy is in a situation that cannot be addressed without making such a decision,” Ibrahim said. “It is in our interest, in the interest of the country, and in the interest of the citizen.”
Western governments welcomed the decision to liberate the exchange rate. The U.S. Embassy in Khartoum welcomed the “courageous” move, saying it paves the way for debt relief and significantly increases the impact of international assistance.
“This decision will also help Sudanese companies and attract international investment as both local and foreign companies will no longer encounter difficulties doing business in Sudan because of the dual exchange rate,” it said.
Volker Perthes, the U.N. envoy for Sudan, also hailed the floatation, saying, “It demonstrates that the transitional authorities can reach consensus, take difficult decisions and carry them through.”
The move was a key demand by the International Monetary Fund. Sudan should conclude a 12-month Staff Monitoring Program with the IMF to win relief on its foreign debt, which is at $70 billion. That program is set to end in September.
Sunday’s move came after Prime Minister Abdalla Hamdok announced a Cabinet reshuffle to add rebel ministers. The reshuffle was part of a deal the transitional government struck last year with a rebel alliance.
Sudan has for years struggled with an array of economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples. The country’s annual inflation soared past 300% last month, one of the world’s highest rates.
The country was plunged into an economic crisis when the oil-rich south seceded in 2011 after decades of war, taking with it more than half of public revenues and 95% of exports.
Sudan was also an international pariah after it was placed on the United States’ list of state sponsors of terror early in the 1990s. This largely excluded the country from the global economy and prevented it from receiving loans from international institutions like the IMF.
Former President Donald Trump removed Sudan from the blacklist after the transitional government agreed to pay $335 million in compensation for victims of attacks carried out by Osama bin Laden’s al-Qaida network while the terror leader was living in Sudan. The removal also was an incentive for Sudan to normalize ties with Israel.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
