Sudan’s economic crisis is exacerbated by the deterioration of the pound, and the arrival of Ethiopian refugees to eastern Sudan, which are the poorest areas, threatening the continuation of the economic reform program.
Sudan believes that the deterioration of the pound’s price against the dollar will threaten the continuation of the fuel subsidy rationalization program, and the international community’s failure to provide aid to take care of Ethiopian refugees will lead to a humanitarian disaster.
Fuel subsidy rationing is under threat
Khairi Abdul Rahman, Sudanese Oil Minister, said that the continued depreciation of the pound against foreign currencies poses a serious threat to the policy of rationalizing fuel subsidies.
Khairy clarified in press statements, Thursday, that the decline of the pound will lead to an increase in the price of free fuel that is imported through the private sector, and therefore this contradicts the state’s goal of the continuous decrease in the selling prices of gasoline and gasoline.
About a month ago, Sudan began gradually liberalizing fuel, as it set two prices for sale, the first is commercial, imported by the private sector and sold according to the free international price, and the second, services subsidized by the state.
The price of free fuel rises and falls according to the exchange rate of the pound against foreign currencies in informal transactions, as private companies rely on the black market to provide dollars for the import of petroleum products.
The pound fell
The pound witnessed a steady decline this week, as the dollar rose to more than 265 pounds, in black market transactions.
The Sudanese Oil Minister said that the state resorted to a policy of “rationalizing support” by importing petroleum products by private sector companies due to the lack of hard currency with the government, so the price is calculated according to the free price of the dollar.
He added, “As part of the subsidy rationalization policy, a set of steps were supposed to take place that would ensure the continued decline in the dollar price in the free market and thus a decline in the price of gasoline and gasoline.”
He continued, “What is happening now is a serious threat to the policy of rationalizing fuel subsidies, and is completely inconsistent with the principle on which it was founded. All measures and policies that lead to strengthening the Sudanese pound must be taken, so that the prices of gasoline and gasoline will decrease and people will suffer less.”
Khairy announced that the main refinery in Khartoum will be stopped at the beginning of next December for maintenance purposes.
He indicated that all arrangements were made with the private sector companies to import fuel ships to cover demand from the global market.
“The decline of the Sudanese pound in the free market will inevitably lead to an increase in gasoline and free gasoline prices, after we succeeded in reducing them this week,” he said.
Khairi called for the intervention of all relevant state institutions to stop this rapid deterioration in order to avoid subjective and unlikely increases in fuel prices.
He appealed to citizens to rationalize consumption, not to deal with illegal channels of distribution, and to follow the controls that have been put in place so that the derivatives that have been provided are well organized and employed.
The economic crisis worsened with the arrival of Ethiopian refugees
On the other hand, the Sudanese fear that the massive arrival of Ethiopian refugees will exacerbate the economic crisis in their country resulting from years of war, mismanagement and finally catastrophic floods.
More than 40,000 refugees have entered Sudan since the start of the conflict on 4 November, between the Ethiopian federal government and the rebel Tigray region, which borders Sudan.
Those who fled the fighting were set up in unsanitary camps on the other side of the border in eastern Sudan, where they lack food, water and sanitation.
“The number of (refugees) is greater than our capacity (to receive), and any increase in the numbers will lead to additional pressure not only on the state, but on Sudan as a whole,” Suleiman Ali, governor of Gedaref, told France Press.
“Since the beginning of the crisis, the response of NGOs has been weak and certainly not at the level of the current crisis,” he added.
On Thursday, Ethiopian Prime Minister Abiy Ahmed ordered the final attack on the rebel authorities in Mekele, the capital of Tigray.
The exodus of refugees to Sudan comes at a time when the country is witnessing a fragile transition process since the ouster of Omar al-Bashir in April 2019, following mass demonstrations against him.
The new authorities seek to rebuild the economy of the country, which has been suffering due to years of US sanctions, mismanagement and armed conflict.
About 65% of the nearly 42 million Sudanese live below the poverty line, according to government figures.
The economy was also severely affected by the catastrophic floods that swept a large part of the country, as well as the repercussions of the Corona pandemic.
The inflation rate in Sudan exceeds 200%, and the country suffers from a chronic shortage of foreign currencies, which leads to long lines to buy bread and others in front of gas stations … while electricity is cut off for at least six hours a day.
Helping the international community is essential
The people of eastern Sudan, in Gedaref and Kassala, are especially feeling the severity of the economic crisis, which are the two states that received refugees.
“Eastern Sudan is the poorest region in the country and an influx of refugees will lead to increased competition for resources and aid,” said Jonas Horner of the International Crisis Group.
“The government should rely heavily on the aid of local and international organizations,” he added.
The border town of Hamdayit, on the outskirts of Kassala, received about 28,000 refugees. Residents say that with their arrival, prices have risen in the local markets.
“We were already suffering from a shortage of flour, fuel and other basic commodities,” said the governor of Gedaref. “But the current crisis has made obtaining these commodities more expensive.”
“Terrible” health condition
In addition to the economic problems, the sanitary conditions are poor in the refugee camps.
Camp doctors confirm that cases of AIDS, dysentery and tuberculosis have already appeared among the refugees, but no official number has yet been announced.
But overcrowding and poor living conditions can make the situation worse, especially with limited opportunities for asylum in hospitals and health facilities.
No case of corona has been officially recorded, but there are still fears of the virus spreading in the camp and neighboring villages.
“The health situation is now terrible,” says the governor of Gedaref.
Others are calling on the international community to play a more important role if the conflict continues.
The Sudanese economic expert, Mohamed Al-Nayer, believes that “a greater influx of refugees will have very dangerous economic repercussions on Sudan.”
“We need the help of the international community … Otherwise, the economy in Sudan will collapse,” he added.
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