10-December-2018

Keeping Fingers Crossed

Keeping Fingers Crossed

By: Alsir Sidahmed

 

The first and actual impact of the new economic and financial policies will be put to test today when the newly formed body of bankers, exchange bureaus start announcing the daily exchange rate. Outright depreciation of the pound is expected against the dollar, but what worth observing in fact is the extent of that depreciation and more important whether new policies will be attractive enough to lure some hard currency into the formal system instead of the well-entrenched black market.

 

Some analysts expect that there will be three prices for the dollar: the first one relates to government purchases and its customs and budgetary calculations, the second is the price set up by the new vehicle, through what is termed market makers and the third is the black market price. The gap between the newly set up price and that of the black market will determine the future of these new polices.

 

Observers can debate whether these measures are full liberalization of the exchange rate, a sound economic policy or a product of outright necessity where there is no other alternative. However, one thing is clear, Sudan is venturing into this exercise with no cushion of foreign currencies out of a deal with an institution like the International Monetary Fund, which usually has standard recipe of economic reforms against flow of loans. Also there was no hard currency flow for political or whatever reasons as happened with Egypt, which received billions of dollars to prop up the new regime of President Abdul Fattah El-Sisi after he deposed former President Mohamed Mursi.

 

That brings the discussion the central point that Sudan has to depend on itself literally to navigate out of this crisis and the only tool it can deploy is to apply sound policies in the right way at the right time and with determined follow up for successful implementation. And at least one action taken last week shows the possibility is there.

 

Following the council of ministers meeting in Medani last week Prime Minister Mutaz Mousa announced that the government has decided on a SDG1800 stabilization price for the sack of wheat. The move is quite significant compared to what happened in the previous season. Initially the government announced an SDG500 late in the season, to which the farmers objected to no avail. Then down the road it was raised by 50 percent, but the move was a bit too little, too late to make an impact.

 

It is true that the previous government has done some homework on the recommended price for the new season, but it was the new government that took the initiative of endorsing that recommendation and the credit for announcing the price on the appropriate time at the beginning of the season, thus sending the ball to the farmers’ court and put them to challenge.

 

Of course the success of the wheat season does not depend on farmers alone. A lot has to do with the government ability to deliver as well especially on pressing issues like making financial liquidity available or help in efforts to ease shortage of agricultural laborers and so on. After all it is not only the wheat crop, but a host of other crops that were planted into a record area of 54.4 million feddans that made use of the unprecedented rainy season.

 

Last week also saw the replacement of a number of undersecretaries of various ministries, a move that should help the new government work in more tandem and harmony as it will have its own right people in appropriate positions to carry on its duties. It was interesting to hear that a tough decision will be carried out against unlawful taxation levies that will be treated as a form of corruption.

 

It is this gap between declared policies and realities that have crippled various attempts in the past. What counts is not an academic debate on what to call these new policies. The bottom line is what impact they will have on people’s lives. It has proven time and again that chasing the black market prices after the depreciation of the national currency is a futile exercise. Better try a different approach, but with solid determination and on the top of that make self-dependence a national duty preached and practiced first by the government.

 

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SS/AS

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