Sudan seeks US help over contentious subsidy reforms

Sudan seeks US help over contentious subsidy reforms
Bread and fuel shortages have prompted long queues and protests in Sudan in recent days.
4 min read
11 February, 2020
Abrupt cuts to bread and fuel subsidies were one trigger for Sudan's uprising [Getty]
Sudan is seeking US assistance in establishing a smart card system as Khartoum prepares to announce contentious reforms as part of a subsidy system next month, the finance minister said on Monday.

Cuts subsidies for bread and fuel amid existing economic turmoil fuelled the initial protests against former dictator Omar al-Bashir in December 2018.

The prospect of their internationally-recommended removal or reform has become a highly controversial issue for Sudan's transitional government.

Khartoum aims to propose reforms to the subsidy system next month as part of an economic summit between the transitional government and a civilian coalition borne out of the mass protest movement that led to Bashir's overthrow last year.

The transitional government is now in talks with the US to see Citibank enter the country and aid with cash transfers set to replace the current subsidy system, Finance Minister Ibrahim Elbadawi said on Monday.

Commodity subsidies make up 36 percent of Sudan's 2020 budget, Elbadawi said last year.

An earlier proposal for this year's budget - the first by the transitional government - had envisioned the gradual lifting of fuel subisidies but opposition from the Forces for Freedom and Change (FFC) forced the government to back down and postpone reforms until March.

The FFC is an umbrella body for protest leaders, unions, political parties and other civil society bodies that led protest efforts against Bashir and negotiated last year's power-sharing deal with the military.

While bread and fuel subsidies strain the public purse in a country that has around $60 billion in foreign debt, some are reluctant to see cuts, fearing that lower-income Sudanese desperate to see living conditions improve will be punished.

Critics of the subsidy regime argue that the measures will ultimately stifle the Sudanese economy and create supply and distribution problems.

This could lead to black market trade, an argument backed by bread and fuel shortages witnessed in recent days that have seen long queues at shops across Sudan.

The transitional government has also struggled to make progress on healing the debilitated economy due to continuing sanctions related to Sudan's inclusion on the US State Sponsors of Terrorism list.

Elbadawi said on Monday that such sanctions have hampered efforts to prepare smart cards for use in a reform subsidy system, Reuters reported.

Although Sudan's "state sponsor of terrorism" designation does not prohibit international banks from involvement in the country, they have been reluctant to resume transfers for that reason, the finance minister added.

Sudan is now in talks with Washington about Citibank entering the country and helping to enable the use of smart and ID cards to manage cash transfers, he told a press conference in Khartoum.

Relations with the US have much improved since the transitional government took power in August last year.

Despite Sudan's inclusion on a recent expansion of the Trump administration's travel ban, Washington has improved ties in recent months, signalling that it will soon exchange ambassadors with Khartoum. 

In December, Sudan was removed from the US list of nations that severely violate religious freedoms. Much improvement has also been made in the way of removing Khartoum's terror-sponsor designation with backing from the Gulf states and even Israel.

Khartoum is due to hold an international donor summit last month to attract foreign aid. 

Elbadawi said on Monday that the government will also report to the Paris Club of wealthy creditor nations in April to consult over possible mechanisms for forgiving its massive foreign debt.

Thousands of Sudanese are expected to protest across the country on Tuesday.

Demonstrators are calling on the military governors of Sudan's 18 states to resign and give way to civilian replacements, but the protests will also target the government over fuel and bread shortages.

The spotlight has returned to tensions between the civilian and military elements of the transitional government since a secretive meeting between military sovereign council head General Abdel Fattah Al-Burhan and Israeli Prime Minister Benjamin Netanyahu last week.

Follow us on FacebookTwitter and Instagram to stay connected