Sudan eliminates customs exchange rate

24 June 2021 | Economics

Sudan has eliminated its customs exchange rate, used to calculate import duties, as the final step in a devaluation of its local currency, the finance ministry said on Tuesday.

It also represents the final major step in an accelerated IMF-monitored reform programme the country is pursuing in order to receive debt relief and attract new financing.

Earlier this month, Sudan fully removed subsidies on car petrol and diesel, and in February it devalued its currency and began a policy of a flexible managed float.

The customs exchange rate, last set at 20 Sudanese pounds per dollar, was used to value imports in order to calculate duties. On Tuesday, the official rate of the Sudanese pound was 438 pounds to the dollar, although the rate on the black market was around 465.

The reforms have been blamed for rising prices, with inflation in May rising to 379%. Prices of imported cars had increased in recent days in anticipation of the decision.

"We reassure citizens that this policy will not cause the prices of basic imported goods to rise nor that of agricultural or industrial inputs," the ministry said.

It had reduced tariffs across the board and even to zero for some necessary goods, it said.

"We undertook a commodity-by-commodity review," a ministry official told Reuters, noting that the tariff for an essential good like cooking oil fell from 40% to 3%, while the policy's effect would cause some non-essential goods to become more expensive.

The ministry said the business profit tax had been eliminated and additional fees taken by the government had been reduced.

When Sudan devalued the currency in February, officials said that some imports would be restricted so as to address the country's large trade deficit.

Sudan has pursued reforms in anticipation of relieving the bulk of its at least US$50 billion in debt through the Highly Indebted Poor Countries (HIPC) programme. The IMF board will decide on whether Sudan had reached the programme's "decision point" on June 28.- Nampa/Reuters

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