CBS decided to partially float the pound. Will this going to save the local economy?
On Sunday, CBS issued an official decision to partially float the pound in an attempt to end the economic downturn.
Floating the pound means that the CB will not set the price of the US dollar, provided that its prices are determined based on supply and demand in a way that eliminates the multiplicity of prices.
A statement issued by the CB announced the unification of exchange rate to ensure the entry of foreign currencies into the banking cycle and to attract the savings of migrants.
Experts say that this policy requires a package of measures and large amounts of foreign currencies; otherwise the consequences may be catastrophic.
The CB appended its decision to other justifications such as: attracting foreign investment, normalizing relations with regional and international financing institutions, stimulating producers, exporters and the private sector. End smuggling of goods and currencies, stopping speculation, in addition to helping exempt Sudan’s external debts by taking advantage of HIPC.
The local currency price collapsed to less than 350 pounds in the parallel market, while inflation reached 304%.
The Bank said that ensuring the success of these policies requires solidarity and efforts of all relevant authorities.
The bank added: This includes government agencies and private sector besides the implementation of economic reform package immediately, without delay and with full coordination.
The price of the dollar in the banks remained at 55 pounds for more than two years.
The statement pointed to the economic difficulties facing the economy, including structural imbalances, high inflation rates, and high budget deficit.
It stressed that the lifting of US sanctions and Juba Peace Agreement, necessitates a review of all economic policies.
The decision is expected to lead to significant rise in commodity prices and the dollar, before they begin to stabilize and decline.
The government initiated economic liberalization policies that included fuel and bread commodities.
Several foreign countries stipulate their support for Sudan by implementing the economic liberalization policy and floating the pound’s price.
FFC Economic Committee refuses the World Bank’s recipe to solve the economic problems.
The local economy suffered for years due to south Sudan separation, al-Bashir regime corruption, and the absence of economic vision.