Sudan – The Failing Economy and The Future

Over the past few months, I have written several articles dealing with the state of the Sudanese economy and implications for the ongoing conflicts in which Sudan is involved. I wrote in October about ongoing attempts to bail out the Sudanese government in direct contradiction to the sanctions imposed upon it for its genocidal actions, but I wrote as early as May and  June that the economic situation will eventually have a major impact on Sudan’s ability to maintain its military or to avoid uprisings in the streets. Economically, things have gotten much worse in the months since. Professor Eric Reeves wrote a lengthy description of the economic situation faced by the Sudanese government in which he detailed an array of major problems. I encourage you to read the full article, but wish to highlight here some of what Professor Reeves describes. He notes that:

  1. Sudan is one of the most corrupt countries in the world which makes business investment there very difficult and expensive to conduct as well as causing resentment and distrust.
  2. Sudan is one of the worst performing economies in the world. There is negative economic growth in Sudan. The economy is getting smaller at a rate of -11.2% per year.
  3. Inflation is sky-high. In October the official rate was 45.3%. Meaning that next year, everything will cost nearly one-and-a-half times what it does right now. The inflation rates for food and fuel are much worse than that. As bad as this is, Reeves notes that in September, the official rate was listed at 42% but some suggest that the actual rate was closer to 65%.
  4. The Khartoum Regime has sold off much of its oil assets in order to pay current bills.
  5. Anti-regime protests forced Khartoum to reinstate fuel subsidies that the World Monetary Fund demanded that it end so that Sudan’s currency market could stabilize.
  6. The Sudanese government is now printing money to service its increasing debt resulting in both inflation in prices and devaluing of its currency. One US Dollar now is exchanged for 6.5 Sudanese Pounds in the black market compared with 5 pounds earlier this year.
  7. Sudan has limited foreign currency reserves and thus is facing a situation in which it is forced to use its own devalued currency to purchase needed items in foreign markets including the 400,000 tons of Sugar it imports each year.
  8. Arab governments are reticent to offer financial backing to the regime. Only Qatar (and I would add, probably Iran) has offered aid. Claims to the contrary about large deposits in the Central Bank of Sudan actually diminish the regimes credibility and therefore credit with other nations and exporters.
  9. Future prospects of oil income are far more limited than they once were with most of the oil reserves located in South Sudan. In April, 2012 Sudan was actually listed as a net oil importer by the International Monetary Fund meaning that it uses more oil than it produces.
  10. Agricultural land has been poorly managed or destroyed and Sudan no longer has sufficient native agriculture to meet national food needs.
  11. A huge percentage of Sudan’s gross domestic product GDP is going to pay for military operations. These bills are being paid in Sudanese Pounds which are being devalued. Thus soldiers who are being paid the same wages each month are seeing the value of what they are being paid diminish. With 50% inflation, someone paid $3000 per year is now being paid the equivalent of $2000. That is going to promote resentment and could spell the collapse of the regime’s efforts to defend itself.
  12. Political support is weakening along with increasing resentment among those who work for and support the regime.

Professor Reeves concludes:

Despite the already acute and growing danger of complete economic implosion, the regime persists with immensely expensive and unproductive policies, including war in Darfur, South Kordofan, and Blue Nile, as well as hostile actions along the North/South border, and the supplying of renegade militia groups inside South Sudan.  For a regime that is ruthlessly survivalist, this makes no rational sense: current economic realities are diminishing the chances that the regime will survive.

The world needs to stand up to the Khartoum Regime and force it to change its ways or leave power, not only for the benefit of the greatly suffering peoples in Darfur, the Nuba Mountains, and Blue Nile, but also for the sake of Sudan itself and its population held hostage by an irrational, destructive, and hate-filled regime.

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