Sudan’s revenues dropped 40 percent after the outbreak of the COVID-19 pandemic, as the government continues to subsidize wheat and medicine, estimated at millions of dollars annually.
The Sovereign Council and the government approved in a joint meeting the revised budget of 2020 with a decrease in public revenues and increase in spending.
Government spokesman, Information Minister Feisal Mohamed Saleh said that the changes in the budget were necessary to mitigate the negative impact of the spread of COVID-19 on the economy.
The constitutional document governing the transitional period in the country granted the Sovereign Council and the cabinet the right to pass laws until the Transitional Legislative Council is formed.
The government approved a gradual adjustment of the exchange rates of the dollar and the customs rate of the dollar over a period of two years “until the real price has been reached”.
Observers said the move comes within the government’s attempt to float the national currency.
On Monday, the Sudanese pound traded at SDG143 to the dollar in the black market, compared to the official exchange rate of SDG55 set by the Central Bank.
The transitional authority expects these measures to lead to an 8-point growth by the end of this year, which would also help in controlling the inflation that reached 136.36 percent in June.
The government allowed the private sector to import oil and gasoline to help resolve the fuel crisis, which has been growing for months.
Economic expert Khaled al-Tijani explained that many countries were forced to set austerity measures and reduce expenditures to counter the effects of the pandemic, but the Sudanese government increased expenditures, most of which were allocated to state employee wages.
Speaking to Asharq Al-Awsat, Tijani estimated that the deficit announced by the government would reach SDG254 billion, adding that it would have to print more money to finance the deficit, which would lead to high inflation rates and a devaluation of the currency.
The International Monetary Fund (IMF) predicted Sudan’s economy to shrink by 8 points due to the pandemic, in addition to the economic and social repercussions which it described as horrific.
The government is determined to resolve the economic crisis that grew under the ousted regime, however, its policies were so far unsuccessful in alleviating the deteriorating living conditions.
In July, Prime Minister Abdalla Hamdok announced a cabinet reshuffle including the Finance Minister, Ibrahim al-Badawi, whose extensive relations with international institutions helped organize an international conference of Sudan's friends to provide the necessary economic support.
The Sovereign Council and the government approved in 2019 the budget, with revenues amounting to SDG568.3 billion, while current expenditures amounted to SDG584.4 billion with a deficit of about SDG16.1 billion.