Taxes Increase Negatively Impacts on Sudanese Economy, Says Transparency Watchdog

Al-Arabi Market in Khartoum (photo Pedro Ribeiro Simões)

October 16, 2022 (KHARTOUM) -The drastic increase of tax rates on individuals and business activities by the military-led government has negatively impacted the Sudanese economy this year and would toughly worsen the living conditions next year, said a transparency watchdog on Saturday.

After three decades of isolation, the civilian government launched a series of economic reforms to redress the national economy and strengthen governance with the financial support of the World Bank to mitigate the negative impact of these reforms.

However, despite the signs of stability produced by the reforms, the October 25, 2021 coup put the whole process at risk, as the international donors and the international financial institutions paused funding of these reforms and stopped the debt relief.

In a new report released on October 15, the Sudan Transparency and Policy Tracker (STPT) said the military government resorted to raising prices and taxes on everything, worsening the economic impact on vulnerable segments and business activity.

“Business sector recession and reduced purchasing power are major concerns in the wake of the October 25 coup and are likely to drive Sudan’s economic growth rate into negative territory by December 2022,” reads the STPT.

“It is going to be a tough 2022 and possibly an even tougher 2023 in Sudan, with an increased risk of recession,” further stressed the report.

Suliman Baldo STPT founder and director regretted that the military-led government did not increase the spending to implement a programme to support vulnerable people to pay for their food, housing, and medical costs.

“While the coup government is increasing collection across the board, the government spending on essential services, such as the supply of clean drinking water to households and power to residential, industrial and commercial areas, is a fraction of what it should be,” he said.

Eddie Rowe, WFP Country Director in Sudan on Sunday released a statement saying that food prices in Sudan are climbing more than 140% per cent in a year.

In his statement to commemorate World Food Day, he stressed that vulnerable displaced people “can barely afford basics like oil, sugar and flour, even with the WFP cash assistance that she receives”.

In addition, the report voiced concern about governance and the increase in corruption as a direct consequence of the October 25 coup.

The STPT pointed to pervasive corruption, lack of judicial independence, weak rule of law and lack of public-sector accountability.

According to the transparency watchdog, the persistence of multiple currency practices and associated distortions encourage rent-seeking and increase vulnerabilities to corruption.

The deteriorating purchasing power of the pound is exposing a growing number of public sector workers to all forms of petty corruption.

The deterioration of the purchasing power of the Sudanese pound exposes public sector workers to all forms of petty corruption, emphasized the report.

(ST)