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Exclusive: Sudan needs up to $10 billion in aid to rebuild economy, new PM says

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KHARTOUM (Reuters) – Sudan needs $8 billion in foreign aid over the next two years to cover its import bill and help rebuild its ravaged economy after months of political turmoil, its new prime minister said on Saturday.

Sudan’s new Prime Minister in the transitional government Abdalla Hamdok, speaks during a Reuters interview in Khartoum, Sudan August 24, 2019. REUTERS/Mohamed Nureldin Abdallah

Abdalla Hamdok, sworn in three days earlier to head a transitional government after the ousting of veteran leader Omar al-Bashir, said up to another $2 billion of foreign reserves deposits were needed in the next three months to halt a fall in the currency.

The 61-year-old economist, who has worked for the U.N. Economic Commission for Africa, said he had started talks with the IMF and the World Bank to discuss restructuring Sudan’s crippling debt, and had approached friendly nations and funding bodies about the aid.

Mounting public anger over shortages of food, fuel and hard currency triggered mass demonstrations that eventually forced Bashir from power in April.

“We are in communication to achieve this,” Hamdok said in his first interview with a foreign media outlet. “The foreign reserves in the central bank are weak and very low.”

“However,” he said, “there won’t be a forced prescription from the IMF or the World Bank on Sudan.”

On the politically tricky topic of government subsidies for bread, fuel, electricity and medicine, Hamdok said any changes would only be made after “deep discussions” with the people.

“The people are the ones who will make the decision on this issue,” he said.

He also said he had been talking with the United States to remove Sudan from its list of state sponsors of terrorism – a designation which has left Khartoum isolated from most of the international financial system since 1993.

There was no immediate comment from the U.S. government, the IMF or the World Bank.

DEVALUED CURRENCY

Sudan has been in economic turmoil since it lost the bulk of its oil production in 2011 when South Sudan seceded after decades of civil war.

It has devalued the pound several times but not been able to halt the fall. One dollar currently fetches 65 pounds on the black market versus the official rate of 45.

“We will work to unify the exchange rate, and to manage the exchange rate using a flexible managed exchange rate,” Hamdok said, without going into details.

He said Sudan needed to restore trust in the banking system.

Hamdok, who studied agricultural economics, has also worked at the African Development Bank and most recently as a special advisor at the Trade and Development Bank in Ethiopia. He said Sudan needed to tap its agricultural potential.

Sudan is rich in agricultural resources but high taxes, corruption and mismanagement have held back investment in the sector for decades.

“We want to take the Sudanese economy from an economy based on consumption and imports to a productive economy, and stop exporting products such as livestock and agriculture as raw materials,” Hamdok said. “Instead, we will aim to process them so as to create added value.”

He also said he wants to focus on peace-building in a nation that has seen conflicts flare in multiple parts of the country, and endured a civil war that ended in the succession of the South.

“Stopping war, which represents 70% of the expenditure in the budget, will create a surplus that can be invested in production and particularly agriculture, livestock, and related industries,” he said.

Shortly after Bashir was ousted, the United Arab Emirates and Saudi Arabia pledged $3 billion in aid to Sudan, in the form of a $500 million deposit in the central bank, which Sudan has already received, as well as fuel, wheat, and medicine.

The generals who forced Bashir from power took over and then, after months of wrangling and further violent protests, agreed to set up a transitional body including civilians to pave the way to elections in three years time.

Many hope Hamdok can shepherd Sudan through the transitional period, but some opposition members and analysts worry that the power-sharing deal may fall short of expectations in a country where the military, backed by Islamists, has dominated for decades.

Writing by Nafisa Eltahir and Ulf Laessing; Editing by Andrew Heavens and Daniel Wallis

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via Reuters