Day: October 18, 2022

Member of the Transitional Sovereignty Council (TSC), El Hadi Idris, met at the Ambassador of Kingdom of the Netherlands to Sudan, Irma van Dueren, at the Republican Place in Khartoum on Monday. The meeting reviewed the historic relations linking Sudan and the Kingdom of the Netherlands in addition to aspects of joint cooperation between Khartoum and Amsterdam, according to the official Sudan News Agency (SUNA).

During the meeting, Idris briefed the Dutch ambassador about the current political developments in the country, and the challenges facing the democratic transition process, referring to important role of the international community in supporting the transitional period.

In a press statement, Ambassador Van Deuren confirmed that the meeting discussed support of Kingdom of the Netherlands and the European Union to Sudan to overcome challenges of the political transition.

She pointed out that Sudan and Kingdom of the Netherlands are linked with good historic ties, describing the meeting as “fruitful and constructive”.

In an interview published on her official Dutch state website, Ambassador Van Deuren acknowledges that “Sudan is in transition and on a path to democratic elections, more rights for women, and establishing a democratic state governed by the rule of law. This is an important process and the Netherlands is eager to lend a helping hand.”

“A great deal can be achieved by sharing knowledge and bringing the right parties together. Especially in the area of food supply,” she says. “Economically, Sudan is in bad shape, but the IMF has cancelled a lot of the country’s debt. That offers possibilities. The country is building a democratic state governed by the rule of law. The Netherlands wants to make a contribution in all these areas.”

Van Duren cites food security as the most important issue in Sudan’s transition. “Democracy is great, but many Sudanese don’t know whether they and their families will be able to eat today or tomorrow. So food security is essential for the country’s stability,” she points out.

“We support farmers [in Sudan] by sharing expertise on new techniques and crops. Through other programmes, such as Orange Corners, we support women and young people who are starting their own businesses. We provide them with mentoring, for instance, in partnership with the Netherlands Enterprise Agency (RVO), other embassies and NGOs. We are also contributing to the establishment of a processing plant for gum arabic in Sudan. It’s a widely used raw material – it’s even an ingredient of liquorice [for which the Netherlands is famous – ed] – that has always been exported immediately after harvest. Setting up processing facilities in Sudan will create jobs.”

Women’s rights

Prior to her appointment as Netherlands ambassador in September this year, Irma van Dueren worked with the United Nations in the area of sexual violence and women’s rights. Regarding the position of women in Sudan, she says “the change of power gives me hope. Certain laws are being changed, giving women more rights. In Khartoum there are clearly women who already have more freedom. The part they played in the uprising against the Al Bashir regime has empowered them. They want something in return.”

However Van Deuren laments that these is much still to be done I Sudan’s more rural areas. “There is a big difference between urban and rural areas. On March 8 I went to the east, near the Eritrean border, to visit the Beni Amir. I wanted to be there on International Women’s Day. In this remote area, women take care of everyone’s basic needs and they have very little autonomy. They provide food, drinking water and firewood. They take care of the family, educate the children and provide healthcare. But there is very little in the way of services and infrastructure. There is a lot to be done there and the Netherlands wants to make a contribution,” she concludes.

Source: Radio Dabanga

The White Nile state authorities in Sudan have issued a decree prohibiting the use of motorcycles and kadamol scarves that cover the face, in the localities of El Jebelein, El Salam, and Tandelti, in a move designed to reduce banditry in the localities.

This week, a joint meeting of the White Nile state government and the Security Committee, approved a number of temporary decrees, “to stave-off problems that occur from robberies perpetrated by bandits on motorcycle in these localities”.

The decree also stipulated a ban on carrying knives in markets and other public places, also designed to reduce crime.

Source: Radio Dabanga

The police in Zalingei, capital of Central Darfur, released journalist Hafida Abdallah Musa after arresting her while she was performing her work and detaining her for hours without following any legal procedures. The incident led to condemnation from the Darfur Media and Journalists Association and the local state government.

Police forces in Zalingei arrested the journalist when she was working to cover a vigil of vegetable traders in a local market. The traders object to the decision to move the market elsewhere.

The vegetable traders welcomed the journalist. One of them told Radio Dabanga that the police prevented her from filming and covering the event and took her phone before taking her to the police station and detaining her without following any legal procedures.

The Darfur Media and Journalists Association condemned the arrest of the journalist and considered ‘it illegal behaviour’. The association rejects any kind of policing that deprives journalists of their right to perform their professional journalistic duties and asked the police to take the legal route in confronting journalists.

Reporters Without Borders (Reporters Sans Frontières/RSF) also demanded her immediate release “and respect for the work of journalists in Sudan” on social media.

After the incident, the authorities in Central Darfur state demanded the immediate release of Hafida Abdallah Musa and asked the police hand over her phone. They said that no journalist should face objections when performing their duties.

Musa works for the State Authority for Radio and Television in Central Darfur.

The African Center for Justice and Peace Studies (ACJPS) documented and condemned harassment and censorship of journalists in Sudan last month. “Sudanese authorities continue to harass and make it difficult for journalists to do their work in Sudan,” they said.

Source: Radio Dabanga

After the Sudanese economy showed ‘dismal performance’ in the first half of the 2022 financial year, a report published by the transparency monitor Sudan Transparency and Policy Tracker (STPT) predicts a tough last quarter of 2022, and expects a tougher 2023 if military rule persists.

The report highlights that the overthrow of the Al Bashir regime in April 2019 created a window of opportunity for fundamental reforms. When Abdallah Hamdok was inaugurated as Prime Minster of a civilian-led government, Hamdok as Prime Minister and appointment of the civilian-led government, “Sudan embarked on a journey of re-opening itself to the world and began restoring normal diplomatic and economic relations with international financial institutions,” the report says. “Sudan also began a process of economic reforms under a Staff-Monitored Program of the International Monetary Fund (IMF) in 2020 to address structural distortions in its economy, allowing it eventually to benefit from the IMF’s Highly Indebted Poor Countries (HIPC) initiative for debt relief.

“This was welcomed by the international financial institutions, who pledged to support Sudan as part of its democratic transition. These active diplomatic efforts were made possible by the delisting of Sudan from the US list of State Sponsors of Terrorism (SSTL), the lifting of the remaining comprehensive sanctions, and the restoration of Sudan’s sovereign immunity in December 2020, which allowed Sudan to receive US financial aid and restore normal relations with the World Bank and the IMF.

‘All these positive developments are now at risk

because of the October 25, 2021 coup’

“However, all these positive developments are now at risk because of the October 25, 2021 coup. In reaction to the coup, many donors immediately stopped funding, paused disbursements, and stopped development of new programming. The debt relief process, the economic reform program, and assistance from the international community have also stopped. The effective functioning of government institutions has come under threat, especially after the reinstatement of former National Congress Party (NCP) senior officials to posts from which they had been removed. Economic activities have been disrupted. After decades of deep financial woes, the coup came at a time when Sudan was just starting to get back on the right track and make some economic progress.”

The report cautions that economic activity is projected to remain weak in the fourth quarter of 2022. “The Sudanese economy is expected to grow by around 0.5% in 2022, driven by growth in household consumption. Continuous external pressures and high commodity prices are expected to constrain this growth. The 2022 budget projects nominal GDP to be SDG 28.7 trillion, equivalent to US $49 billion if we estimate an average exchange rate of SDG 580/$. Currently, there are no real measures in place to contain the economic costs of the coup, and future projections are likely to be negatively revised in light of developments,” the STPT predicts.

“The IMF predicted prior to the coup, based on the assumption that reform measures would continue that macro-economic indicators would improve over the coming three years. It projected the real GDP growth to increase from 0.5% in 2022 to 6.8% in 2025, while inflation was expected to drop to 22.6% in 2025, while per capita income was projected to remain level through 2025.

“Whether this somewhat optimistic scenario would come to fruition was predicated on the conclusion of productive political settlements, Sudan having a government that is acknowledged by the international community and hence remain eligible to support the resumption of the debt relief path through HIPC process. However, if military rule continues GDP is expected to contract by three per cent.”

‘The coup interrupted the promised democratisation process’

The report laments that “failure to manage expectations and suspension of economic reforms could undermine the growth outlook. Sudan faces economic risks as the October 25 coup interrupted the promised democratisation process and returned Sudan to a state like the isolation that characterised Al Bashir’s autocratic rule”.

It shows that Sudan lost USD $4.6 billion in foreign assistance, of which the International Development Association (IDA) had allocated USD $2 billion to Sudan as part of a 2020 round of financing that Sudan was meant to receive to support projects in irrigation, agriculture, small producers, energy, health and water, and EU, World Bank Group (WBG) and other donors had allocated USD $760 million in support to the Sudan Family Support Project (SFSP). Sudan also was expected to receive $500 million from the WBG planned budget support and an additional $500 million as direct budget support, as of November 4, 2021.7 For its part, the US suspended, and subsequently repurposed, the congressionally approved USD $ 700 million assistance to Sudan. In addition, they suspended their annual grant of 350,000 metric tons of wheat earmarked for the supply of subsidised bread to the urban poor, which was worth another $125,000,000.”

It points out that “monetary aggregates have expanded rapidly, reflecting fiscal deficit monetisation and exchange rate devaluation. Money supply increased from SDG 3,820.4 billion at the end of Q1 2022 to SDG 4,086.0 billion at the end of Q2 of the year 2022, representing an increase of 7.0%.

“Credit to both private sector and State-owned enterprises provided by commercial banks in local currency increased from SDG 1,166.5 billion at the end of Q1 2022 to SDG 1,234.7 billion at the end of Q2 2022, 5.8% increase.

“Sudan consumer price (inflation) decreased year on year from 148.9% in June and 125% in July to 117.4% in August. This strong decline in recent months is due to the base effect (in which a period of high inflation tends to be followed by lower inflation due to high base prices and a period of low inflation tends to be followed by a period of high inflation, due to relatively low base prices), since inflation was already exceptionally high last year. The inflation rate, however, remains in the double-digit zone, which is concerning given that demand is still below potential output. The driving force behind higher inflation is the debt monetisation schemes that the government is undertaking. The Ministry of Finance First Quarter report (January to March 2022) indicates similar trends; with the decline of the first quarter inflation rate to an average of 260.5% compared to the 325.6% of the corresponding period in 2021.”

‘The exchange rate for the Sudanese Pound remains highly distorted’

The report points out that the exchange rate for the Sudanese Pound remains highly distorted. In February 2021, the CBOS official and commercial bank exchange rates were unified and devalued from SDG 55.2/US$ to SDG 375/US$. However, the weighted average exchange rate of the SDG in banks and exchange bureaus devalued further to SDG 436.32/US$ by the end of Q2 2021 and to SDG 568/US$ by the end of Q2 2022. Over the same period, the parallel market exchange rate devalued from 445 SDG/US$ to SDG 580/US$. Despite the difference in absolute numbers, both the official and parallel rates devalued by 30%. Interestingly, the Finance Ministry attributes the depreciation of the national currency to “several factors, of which the most important of which is the stoppage of foreign assistance and loans as a result of political developments in the country following the decisions of 25 October 2021.

“The customs exchange rate—which is only used in assessing customs duty and VAT on imports— was also adjusted from the SDG 445/US$ in June 2021 and unified with the market rate to SDG 565/US$ by August 2022, without having any measures from MOFEP to (1) limit the price impact, or (2) allow more time for importers and the general public to adjust to the significant impact on prices. In response, the Importers’ Chamber issued a statement condemning the sharp increase and pointing to its detrimental effects on the economy and people’s livelihoods. The Chamber asked all importers to stop operations and withhold payments of government customs and taxes dues for three days.

‘The parallel market accounted for about 80% of all foreign exchange transactions before the implementation of reform measures’

“It is worth noting that the parallel market accounted for about 80% of all FX transactions before the implementation of reform measures. Much of the impact of nominal exchange rate depreciation on the real effective exchange rate (REER) has been offset by sharp increases in inflation.”

The report analyses several aspects of the Sudanese economy from various angles, and concludes with recommendations for policy directions. It points out that “Sudan urgently needs to re-establish macroeconomic stability and create conditions for stronger inclusive growth after the phasing out of the current military rule. The October 2021 coup crushed the promises of a reformist, civilian-led democratic transition and returned Sudan to a state similar to the isolation that preceded the revolution. However, overcoming all the challenges previously discussed requires the steering of Sudan back to a path of well thought out macroeconomic reforms, fiscal transparency and accountability for public funds, and of rule of rule of law and equality among citizens. If ongoing domestic and international efforts to bring civilian political forces to agree on a consensus path to the restoration of democracy succeed, we make the following broad recommendations to the new executive emerging from this consensus that has proven elusive one year into military rule.

The STPT report recommends “formulation of a new economic recovery plan which contains specific elements to restore macroeconomic stability, external sector imbalances, and resume economic reform programs by fully engaging with the IMF, WBG, development partners, and the international community, especially with regard to HIPC debt relief. Moreover, a fiscal adjustment plan cantered on domestic revenue mobilisation, public expenditure review, strengthening social protection, enhancing the role of the private sector, banking sector reform, enactment of laws and regulation for gold production management should be adopted. Moreover, civilian control of the economy is a necessary prerequisite for a democratic Sudan, and the job creation for youth.

“Enhancing economic governance and reducing the opportunities for corruption in Sudan: Overarching challenges in Sudan in the wake of 25th October coup include fragility, lack of transparency, and poor data quality requiring urgent economic governance and addressing vulnerability to corruption, where Sudan has limited capacity and multiple constraints to move forward to pursue necessary reforms to strengthen public financial management and fiscal transparency, enhancing oversight of SOEs, promoting transparency in the petroleum and mining (especially gold) sector, reforming the tax exemption regime, enhancing CBOS governance and operations, strengthening financial sector oversight, and strengthening the anti-corruption framework and rule of law.”

‘Civilian control of the economy is a necessary prerequisite for a democratic Sudan to focus on sound economic management’

The report insists that civilian control of the economy is a necessary prerequisite for a democratic Sudan to focus on sound economic management to permit and facilitate the private sector actors to participate in the market, regulate when the public interest is impacted, build the capacity of civil society to hold the public sector accountable to the public.

It concludes that “the international community must play a role in restoring macroeconomic stability in Sudan. A transition to democratic civilian government is still a real possibility. Despite the military’s efforts to block this path, the protest movement and people’s resistance are still going strong and show no signs of waning. However, the people of Sudan need support from their international partners and friends, including the US, the EU and its member states, the Gulf countries and other Friends of Sudan. The restoration of the democratic path will serve not only the democratic aspirations of the people of Sudan, but also stability in the region and international democracy.”

Source: Radio Dabanga