Sudan Shifts To Managed Currency Float Amid Economic Crisis

West Darfur State is one of the states of Sudan, and one of five comprising the Darfur region.
West Darfur State is one of the states of Sudan, and one of five comprising the Darfur region.

 

Sudan announced Sunday it was ditching its fixed exchange rate and adopting a managed float, in line with an IMF programme but at the risk of fanning already-smouldering discontent.

The move aims to stem a flourishing black market that has seen the local pound recently trade at around 400 to the dollar, while the official rate was fixed at 55 pounds to the greenback.

It is expected to substantially devalue the official exchange rate towards black market levels, sending prices higher even as citizens grapple with an inflation rate that topped 300 percent last month.

The transitional government has decided to undertake policies “aimed at reforming and unifying the exchange rate system by applying a managed flexible exchange rate system,” the central bank said in a statement.

Closing the yawning gap between the official and black market exchange rates is central to a reform programme agreed with the International Monetary Fund last year.

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The central bank said its policy shift, which follows the recent appointment of a new cabinet tasked with tackling the economic crisis, is “imperative” to help achieve stability.

It is one of several painful IMF mandated reforms, which also include reducing costly subsidies, aimed at securing debt relief and attracting investment following the April 2019 ouster of autocrat Omar al-Bashir.

Newly-appointed finance minister Gibril Ibrahim urged citizens to tolerate the impact of the policy change, saying in a press conference on Sunday that it “will require a high patriotic spirit” and “cooperation”.

Ominously for Sudan’s transitional authorities, protests have already flared in recent weeks in several areas over the skyrocketing prices, alongside bread and medicine shortages.

Sudan’s economy was decimated by decades of US sanctions under Bashir, mismanagement and civil war, as well as oil-rich South Sudan’s 2011 secession.

– Cushioning the blow –

The finance minister and the central bank governor, Mohamed al-Fatih, said the exchange rate policy shift will be cushioned by international donors financing a project aimed at supporting poor families from Monday.

The programme offers $5 dollars per month each to around 80 percent of the country’s 45 million population.

In January, the IMF said it was “working very intensively” with Sudan to build the preconditions for debt relief.

The US recently removed Sudan from its state sponsors of terrorism blacklist, another move Khartoum hopes will unlock debt relief and aid.

The central bank governor said Sudan has begun applying a dual banking system, instead of solely Islamic banking, in a move allowing international banks to operate in the country.

The exchange rate policy shift comes amid concern that Sudan’s level of foreign currency holdings are approaching exhaustion.

If the central bank is to be successful in drawing transactions away from the black market, then reserves need to stand at around $5 billion, Mohamed el-Nayer, a Sudanese economist, told AFP.

Authorities have not lately disclosed the level of reserves.

Asked if the country had enough reserves, the Ibrahim replied that funds had lately been received, but did not specify the origin or amount.

But the recent bread shortages — and also of fuel — point to the possibility of “severely lacking” foreign reserves, the economist Nayer said.

Bashir’s fall nearly two years ago came after months of protests against his autocratic rule that were triggered by his cash strapped government effectively trebling bread prices.

In October, Sudan signed a peace deal with rebel groups that observers hoped would end long-running conflicts in the country’s far-flung regions.

Last month, the government approved this year’s budget and it is aiming for inflation of 95 percent by end-2021.

Lebanon Enters Full Lockdown To Stem COVID-19 Uptick

ANWAR AMRO / AFP

 

Lebanon went into a tight lockdown Thursday, with residents barred even from grocery shopping and forced to rely on food deliveries as the country battles to slow spiking novel coronavirus cases.

The new restrictions were only loosely respected in some areas of the country, however, reflecting deep mistrust of a political elite held responsible for a deepening economic crisis.

The lockdown, ordered after some hospitals started to run out of intensive care beds, includes a 24-hour curfew until January 25.

Non-essential workers are barred from leaving their homes, and supermarkets are only allowed to operate by delivery.

Those needing an emergency exemption — to see a doctor, say — can request one via a text message or by filling in a form online.

In the capital, roads were quieter than usual, while non-essential shops remained shuttered. Security forces stopped drivers at several checkpoints in the centre of the city.

Security forces said compliance with the new measures stood at 94 percent.

But in some areas, some people ventured out to buy groceries.

As the lockdown went into force, authorities announced Thursday that 41 people had died of the coronavirus over the previous 24 hours, with 5,196 new infections registered.

– Heart attacks –

Recent days have seen Lebanon hit record daily Covid-19 caseloads in one of the steepest increases in transmission worldwide.

In Geitawi Hospital in Beirut on Thursday, director Pierre Yared said the emergencies department was brimming over with more than 30 people suffering from Covid-19 the previous day.

“The ER was filled with corona patients, there were no other patients,” he said.

Cases skyrocketed after authorities loosened restrictions during the holiday season, allowing restaurants and night clubs to remain open until 3:00 am, despite warnings from health professionals.

A partial lockdown in place since January 7 has failed to halt the spread of the virus.

Firass Abiad, the prominent director of the main state hospital treating Covid patients, warned the latest lockdown must not fail.

“In the last 24 hours alone, four Covid positive patients presented in cardiac arrest to our emergency room,” he wrote on Twitter.

“One of them was a 19 years old patient. This is serious.”

The new measures came into effect after caretaker health minister Hamad Hasan was admitted to hospital with Covid-19 late Wednesday, state media said.

The announcement on Monday raised fears of food shortages in impoverished and remote regions where deliveries are not readily available.

For several days, Lebanese have flooded supermarkets and chemists to stock up on supplies.

Some are worried the new restrictions will pile additional suffering on the country’s poorest.

– Political crisis –

Lebanon, a country of more than six million, was already grappling with its worst economic downturn in decades when the pandemic hit.

Previous lockdowns have forced businesses to close and deprived some, particularly informal day labourers, of income. Around half Lebanon’s population lives in poverty.

The World Bank Group on Tuesday approved a $246-million aid package to help 786,000 vulnerable Lebanese, but it is unclear when it will arrive.

Lebanon has recorded 237,132 cases since February last year, including 1,781 deaths.

Parliament is expected to convene Friday to examine a bill to allow the import and use of Covid-19 vaccines, which authorities have previously said will arrive in Lebanon by February.

Coming after months of political crisis and mass anti-government demonstrations, the country’s Covid-19 response is being overseen by a caretaker administration.

The previous government had resigned after a massive explosion of ammonium nitrate fertiliser at Beirut port last summer killed 200 people, wounded thousands and ravaged large parts of the capital.

A deeply divided political class has been unable to agree on a new cabinet to launch urgently needed reforms.

Britain To Reveal Post-Coronavirus Recovery Plan

Britain’s Prime Minister Boris Johnson leaves 10 Downing Street in central London on June 24, 2020, to attend Prime Minister’s Questions (PMQs) at the House of Commons. Ben STANSALL / AFP.

 

The British government will on Wednesday unveil a mini-budget to kickstart economic growth after the coronavirus shutdown, with a jobs scheme for young people and investment in infrastructure among the big ticket measures.

Britain has suffered Europe’s deadliest outbreak of COVID-19 and a nationwide shutdown led to the worst economic contraction among the G7 leading industrialised states.

In a statement to parliament at 1130 GMT, finance minister Rishi Sunak will detail a £2 billion (2.2-billion-euro, $2.5 billion) jobs scheme for young people at risk of long-term unemployment.

He has also already announced £3 billion of green investment, after Prime Minister Boris Johnson vowed to “build, build, build” out of the economic crisis.

“As Britain recovers from the outbreak, it’s vital we do everything in our power to support and protect livelihoods across the nation,” Sunak said ahead of the statement.

The investment package includes £2 billion in grants for households to insulate homes and make them more energy efficient, and another £1 billion for public sector buildings, including hospitals.

The plan is part also of Britain’s long-term pledge to reduce carbon emissions to net zero by 2050 to tackle climate change.

In addition, Sunak is reportedly set to announce plans to reduce stamp duty, which is levied on real estate transactions, to boost the property market.

Yet he is not expected to alter Britain’s emergency jobs retention plan, or furloughing, under which the government pays up to 80 percent of salaries for private sector workers.

It is currently supporting more than nine million jobs, part of a series of multi-billion-pound packages to help those affected by the impact of the outbreak, but is due to end in October.

Since the global pandemic hit Britain in mid-March, more than 44,000 people confirmed to have COVID-19 have died.

Infection rates have now slowed and schools, shops and the hospitality industry are gradually reopening.

“Four months on from the outset of coronavirus, we have slowly and carefully reopened much of our economy, and we can now begin our national recovery,” Sunak told parliament Tuesday.

However, he acknowledged that “we cannot protect every single job”.

– Financial ‘hole’ –

Britain imposed a nationwide lockdown on March 23 to halt the spread of COVID-19 but has gradually begun easing restrictions in the hope of boosting ailing businesses.

Recent official data showed that the UK’s biggest quarterly contraction for more than 40 years — at minus 2.2 percent — in the January-March period.

However, the data included only the first full week of the lockdown and economists expect subsequent damage to be considerably worse for the second quarter.

Another contraction would place Britain in a technical recession.

Since the crisis began, the Bank of England has pumped cash stimulus worth £300 billion into Britain’s virus-hit economy and slashed its main interest rate to a record-low 0.1 percent — moves aimed at propping up businesses and saving jobs.

Experts estimate the total cost of state emergency measures meanwhile could run as high as £300 billion.

“As the UK begins to emerge slowly from lockdown, focus now turns to plugging the eye-popping £300 billion hole left in the UK’s finances by COVID-19,” said analyst Tom Selby at stockbroker AJ Bell.

“The chancellor will have to weigh up his desire to kickstart the economy after its slumber with the need to raise extra revenue via the tax system.”

Selby said “a strong recovery should boost tax receipts and lower the amount spent on benefits, automatically improving the government’s balance sheet.

“The chancellor may decide to front-load the ‘good news’ items on Wednesday as he attempts to kickstart the economy — and save the tax nasties for his Autumn budget,” he added.

AFP

Tunde Bakare Attributes Nigeria’s Economic Crisis To “Unprepared Leadership”

Setunde bakare, economic crisis, Nigeria, recession nior Pastor Of The Latter Rain Assembly, Pastor Tunde Bakare says Nigeria’s economic crisis coincided with the reign of an “unprepared leadership”.

“Unfortunately for Nigeria, our biggest boom experience fell into the hands of an unprepared leadership,” he said.

These were his words while speaking at the 14th anniversary celebration of the Foursquare Gospel Church, Abuja.

He is one among other pastors, political commentators and economic and financial experts, who have attempted to offer various solutions to the ongoing economic recession.

Pastor Bakare described the situation as self-inflicted while stating that it could have been avoided.

He explained that the season has however provided an opportunity for the church to bail out the country.

He therefore urged the church to influence public policy through God-inspired economic principles, and strategically position human resources to implement its principles.