The Transitional Civilian Government of Sudan today took bold step towards total unification of the official rate of the Sudanese Pound (SDG) with that of its parallel market. Plagued by a collapsing currency and sky-rocketing inflation, the Government decided that the best course of action was to liberalize the official exchange rate, allowing the rate to be set on a daily basis by market forces, and unifying the bank rate with the parallel rate used by the majority of the economy.
Although expected to lead to some greater fluctuations in the currency in the immediate term, this bold step will ultimately help drive foreign currency into the formal banking sector, strengthening the country's reserves, and over time, helping the Government rebalance its books.
Unification of the currency is also one of the final substantive reforms required under the Staff Monitored Program (SMP) agreed by the Government with the IMF, and will pave the way for Sudan to enter into the Highly Indebted Poor Countries (HIPIC) initiative. HIPIC is Sudan's best solution to free it from the burden of the almost 65 billion dollars worth of debt, it has inherited from previous regimes.
The unification of the currency will also trigger the injection of substantial volumes of humanitarian and development funding from Donor countries, pledged to support the transitional civilian government. Following receipt of those funds, the Government is expected to launch a new direct cash transfer system (the Family Support Program) to support the most vulnerable segment of the population.
In addition, it is also expected that large amounts of diaspora remittances will now flow through official banking channels - encouraged further by the removal of Sudan from the US State Sponsor's of Terrorism List and Sudan's reintegration into the global financial system.
Alsoug.com will continue tracking the daily fluctuations in the SDG and publishing exchange rates at the end of each working day on: https://www.alsoug.com/currency