Border areas between Sudan and South Sudan where the proliferation of oil resources is a major cause for conflict. The South Sudan government recently withdrew from the Heglig oil fields after international condemnation., a photo by Pan-African News Wire File Photos on Flickr.
Prices soar in Sudan, protests continue
Friday, July 20, 2012
Pakistan International News
KHARTOUM: Sudan’s millions of poor have yet to surge into the streets to back scattered Arab Spring-style protests as government austerity measures try to stem soaring prices and a falling currency.
Inflation reached 37 percent year-on-year in June and jumped almost 10 points in May but the demonstrations, sparked by high food prices, have been largely youth driven.
“So far the movement is concentrated with students and protest activists,” one veteran activist said, adding it could take time for the “oppressed” poor to rise up.
Sudanese history shows that “usually the poor join late”, following the professional classes, said University of Khartoum economist Mohammed Eljack Ahmed.
But more than a month after protests began at the University of Khartoum there has been no mass support from professionals, although lawyers have demonstrated.
“So far they are so limited,” Ahmed said of the protests.
Demonstrations spread to include a cross-section of people, but often only in groups of 100 or 200. Protests have lately focused on Fridays at a mosque linked to the opposition Umma party in Khartoum’s twin city of Omdurman.
Rallies have not attracted the tens of thousands of students, engineers, lawyers and trade unionists who toppled Sudanese military regimes in 1964 and 1985.
Sudan, with more than 30 million people, has a poverty rate of 46.5 percent, the United Nations says.
In its latest report on Sudan the World Bank described as “alarming” the 28.6 percent annual inflation rate reached in April, with prices having gone even higher since.
The bank said food prices were mainly behind the inflation, which was “partly due to the rising import cost of basic goods as a result of weakening local currency value”.
Sudan’s pound has tumbled on the black market from about four pounds per one dollar in September to around six now. Some say it could drop to 10 or more if inflation is not contained.
The pound has been under pressure since South Sudan separated in July 2011, taking with it about 75 percent of Sudanese oil production that is worth billions of dollars and was the country’s largest source of hard currency.
Loss of oil revenue has led to “serious external and internal deficits, inflation and economic hardship”, the World Bank said.
Failure to agree with South Sudan on oil fees cost the Sudanese economy another 6.5 billion pounds ($1.48 billion), Finance Minister Ali Mahmud al-Rasul has said.
The fees, which South Sudan would pay for exporting its oil through Sudan’s pipeline and port, are a major issue to be negotiated at African Union-led talks being held in Addis Ababa.
Trying to address the fiscal imbalance, Sudan announced measures in June that Rasul said would save $1.5 billion.
The government devalued the pound from 2.70 per dollar to 4.40, while sanctioning a trading band that lets the price range to 5.30, closer to the unofficial rate.
An international economist said the “very significant” depreciation should lead to a balance of payments adjustment, boosting exports and curbing imports after the loss of oil revenues.
But foreign reserves, needed to pay for imports, remain “very, very low” despite a “sizeable amount” that apparently arrived from offshore, said the economist, asking for anonymity.
The government also said taxes on bank profits will rise along with value-added tax.
It also cut five of 31 cabinet posts, trimmed ministers’ salaries and laid off presidential advisers.
Another move led to a rise of about 50 percent in the pump price of petrol under a phasing out of fuel subsidies which had been set at 2.2 billion pounds this year.
Despite the cut in subsidies there was a rise in social safety net spending, said Paul Jenkins, resident representative of the International Monetary Fund. On the revenue side the government measures were “quite solid,” he added.
Past experience has shown that official social assistance funds failed to alleviate the suffering of low-income groups, said Ahmed.
Rather than relying on government, most of the poor depend on traditional social support mechanisms through extended families, Ahmed said.
“These traditional mechanisms are actually playing a main role in alleviating the seriousness and the suffering of these poor.”
Rabbie Abdelatti Ebaid, a senior official in the ruling National Congress Party, also referred to traditional coping mechanisms.
“We are not like others... We can share each and every thing with each other,” he said, adding that Sudanese survived worse economic crises in years past and current problems should be overcome within six months. “Because now a lot of work is underway,” he said. “We know what we are doing.”