Sudan is printing new banknotes to address liquidity crisis

Sudan’s central bank wants to start printing 100 pound bank notes to ease a liquidity crisis worsened by rampant inflation, according to state news agency SUNA. The previous largest banknote in Sudan was 50 pounds.

“Printing the 100-pound banknote is a step in the right direction, because the high inflation rate has dropped the value of the 50-pound banknote,” Reuters quoted Abdullah al-Ramadi, a Sudanese economist to have said. According to him, the move will help Sudan address the liquidity crisis.

Sudan’s economy has struggled since South Sudan seceded in 2011, leaving with it three-quarters of oil output, a crucial source of foreign currency for Sudan. Seven years later, the Northeast African country has not fully recovered, with local currency liquidity at commercial banks drying up in recent months.

Sudan’s central bank is one of the four African central banks on Economist Prof Steve Hanke’s list of 10 which are flunking his inflation test. Inflation rate in Sudan is at over 60 percent, making it one of the world’s highest. Prof Hanke had said countries like Sudan should dollarize as their currencies are increasingly becoming worthless as inflation rises. Although Sudan’s central bank devalued its pegged currency from 6.7 pounds per dollar to to about 29 in the last year, the black market rate remains lower, at about 45 pounds on Sunday.

How Sudan handles its current liquidity crisis may determine President Omar al-Bashir’s fate in the upcoming 2020 elections where he is up for a second re-election. Sudan’s 2005 constitution and the ruling National Congress Party (NCP) status prohibit an incumbent president from serving more than two consecutive terms. However, al-Bashir openly declared his readiness for the elections on Sunday, after he was nominated as the party’s candidate by the NCP Shura (Consultative) last August. The opposition has vowed to stop him.

“It is the duty of all of the Sudanese, to confront him and his regime through various means of peaceful resistance,” a statement by opposition umbrella group the Sudan Call Alliance said, rejecting a scrapping of term limits for al-Bashir, who they blame for the dismemberment of the country and collapse of its economy.