Sudanese pound crises economic analysis: reasons and repercussions| Sudanow Magazine

Port -Sudan ( Sudanow) Sudan suffers one of the most complex monetary and financial crises in its modern history. War has created a weak economic reality that has cast a heavy shadow over stability and value of Sudanese pound that caused state of security chaos, disruption of state institutions, and capital and investments run away from the country have all led to a near-total paralysis of the wheel of production, leading to an accelerating monetary collapse and a declining of the basic economic indicators.

( Sudanow) met with economic expert Dr. Haitham Mohamed Fathi to discuss the deterioration of national currency’s value and its causes, who said, “We shed light on the deep reasons that led to this deterioration, and we analyze current economic scene, to draw initial features of what the near and medium future may hold in terms of challenges and opportunities in light of this economic storm.”

First, Collapse of the Sudanese Pound- Reality in numbers.

1- Rate of exchange and collapse and depreciation of its value

Price of USA dollar in the parallel market reached to 3700 Sudanese Pounds in October 2025, compared to 2600 pounds at the Central Bank, including a price gap of 1100 pounds or 42%3.

*This retreat represents a sharp collapse in pound’s value, that was before war’s outbreak April 2023 600-700 pounds to the dollar.

2- Hyperinflation:

*According to Economist’s report (August 2025), that inflation rate in Sudan has reached to 400%which classifies the Sudanese economy hyperinflation economies, as local currency loses its basic functions( prices, savings, exchange).

3- Erosion of cash reserves and decline in remittances: -

*Expatriates remittances dropped by rate of 70%in official channels (banks), which is one of the most important sources of foreign currency.

* The local banks suffer massive shortage in foreign currency to finance imports which decline its ability to finance imports or replay market’s needs.

Second, the main causes of the cris

1-War and the disintegration of the state

*The War resulted to reduce agricultural and industrial production in most states, causing shortcoming of Growth Domestic Production ( GDP) by 18% in one year( 2024-2025) according to report issued by International Monetary Fund ( IMF).

* The collapse of the states and tax institutions, which has caused the state to lose its ability to implement its fiscal and monetary policy

2- Weakness of monetary policy tools

* Despite adopting a managed flexible exchange rate system, Central Bank of Sudan became unable to intervene effectively, due to lake of enough foreign reserves.

*Processes of the open market and control in the monetary block were disrupted that resulted to print more money without coverage and increase in money supply by more than 150% in less than year and added to inflationary pressure.

3- Lack of market confidence: -

*More than 80% of daily transaction are done in dollars or by barter, that reflects the loss of the pound’s function.

* The widespread presence of the parallel market and its control over pricing has isolated the Central Bank from the real economy.

Third: Economic and Social Repercussions:

1- Decline of purchasing power

* Salaries by local currency doesn’t keep with inflation, which has led to real decline in individual income by more than 60% within a year.

*Expanding circle of poverty due to downfall of support programs and shrinking of the unofficial economy.

2- Capital outflow and capital stoppage

* Increase risks of investment has led to stop flow of local and foreign capitals among absence of legal and banking guarantees.

*Efflux of local investors to the currency or gold markets led to unofficial dollarization of the economy.

3-Increase depending on foreign supports:

*After stoppage exports and retrogradation production leads to Sudan’s dependence on humanitarian and food assistances.

*The absence of an international rescue plan till the end of 2025 makes this situation more fragility.

Fourth: the available economic options

1- Issuing participating certificates

*Displaying participating of certificates based on natural assets (Gold, Oil, Gas) as alternative to foreign currency.

* These certificates could contribute to provide a cash cushion for the pound and supporting the balance of payments.

* Financial re-engineering for Shahamah and Shammam - Central Bank Participation Certificate with a focus on attractive rates of return.

2- Structural and monetary reforms

Put an urgent plan to rebuild banking system.

Combining the parallel market with the official market via realistic incentives.

Targeting for regular stability of currency instead of forced installation attempts.

3-Stop conflict and restore trust

*No economic reforms could success without stop war and rebuild the state institutions.

* Restore trust building starts from political stability and retune of production.

Concluding his interview with ( Sudanow) , Dr. Haitham Fathi said, “The Sudanese economy is going through a critical period that reflects all indicators of monetary and financial collapse, due to war, the disintegration of the state, loss of economic tools, and collapse of the pound. This is nothing but a symptom of a deeper disease that requires comprehensive reform, starting with political stability, moving on to the restructuring of economic institutions, and ending with adopting innovative financing solutions. Without that Sudanese pound is in danger threatens with losing its entire value as enter the country in period of long- term of ”war economy’’.

Dr. Haitham emphasized that the stability of the Sudanese pound can only be achieved through an effective and transparent monetary policy adopted by the Central Bank of Sudan, based on controlling inflation, stop unregulated printing of money, and building foreign exchange reserves to mitigate external shocks. And indicated the need to encourage exports and reduce imports by supporting local industries, simplifying procedures for investors, and combating corruption and illicit financial flows. Cooperation with international financial institutions, especially International Monetary Fund, can provide technical and financial support that enhances Sudan's credibility in global markets and attracts foreign investment. solving crisis requires comprehensive political, economic, and social solutions based on exploiting the country's vast potential in agriculture, livestock, and minerals, ensuring economic rebalancing and the stability of the national currency.

Whatever the case, the accelerating deterioration of the Sudanese pound can no longer tolerate temporary solutions. But it requires a comprehensive reform plan adopted by the "Government of Hope," with clear political will and realistic economic programs that restore confidence in institutions, stop currency’s depletion, and put Sudan on the path of recovery and stability.

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