Here you’ll find a diagnostic of the current macroeconomic problems in Sudan (esp. in terms of liquidity and exchange rates); and an analysis of the key challenges and risks that these problems pose for humanitarian operations.

<aside> <img src="/icons/link_gray.svg" alt="/icons/link_gray.svg" width="40px" /> Download

Report_Beneath the Surface_Sudan_NRC.pdf

Slidedeck_Beneath the Surface_Sudan_NRC.pdf

This is an initiative of the Norwegian Refugee Council (NRC) Sudan team, but this digital content does not constitute an NRC resource. Rather the backend content behind the report is being made available by the authors upon agreement with NRC.

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Beneath the Surface_Sudan_NRC_v1.jpg

The diagnostic as long as things continue in their current trajectory…

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1. High inflation

In recent years, there has been a high (and sometimes rapid) nominal inflation in Sudan. With the conflict, there are also new sources of real inflation as exchanges and production have become more constrained. Yet, inflation has so far remained stable enough to be forecasted.

<aside> <img src="https://prod-files-secure.s3.us-west-2.amazonaws.com/f2d23c50-b6ae-445b-9cc1-ed754b5ff580/cf41af85-4efa-426a-bf40-bb6d0a6c0a9a/fast-forward-double-right-arrows-symbol.png" alt="https://prod-files-secure.s3.us-west-2.amazonaws.com/f2d23c50-b6ae-445b-9cc1-ed754b5ff580/cf41af85-4efa-426a-bf40-bb6d0a6c0a9a/fast-forward-double-right-arrows-symbol.png" width="40px" /> Learn on how to deal with it

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2. Depreciation & multiple exchange rates

In Sudan, the discrepancies between the market rate and the official rate can become substantial and make business operations complex. The significant depreciation of the currency, which is mostly a result of trade imbalances, is reflected in the market exchange rate.

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3. Liquidity constraints

There are both perceived and actual liquidity constraints in Sudan currently. Part of it is a perception and likely temporary, due to the lack of circulation of physical currency. But there are also actual concerns about access to currency, in both SDG & USD, in the formal economy.

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4. Weak formal financial sector

Cross-cutting recommendations are provided based on our assessment of weaknesses and opportunities within the financial sector, in particular with regard to the use of the informal economy and the role of financial inclusion.

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The prognosis if things get (a lot) worse…

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Devaluations

Sudan has experienced multiple (pseudo-) devaluations in recent years. New adjustments to the official value of the SDG are highly likely to occur in the short and medium term. However, their impact on NRC operations should be minimal.

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Findings

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Fast inflation & inflation-depreciation spirals

There is a high probability that the current trends in inflation and depreciation could spiral out of control in the short or medium term due to money creation. Regardless of which authorities come into power, they will require financing for recovery and reconstruction.

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Hyperinflation

Considering the structural weaknesses observed in the financial system, there is a possibility of a more widespread failure of the banking system. As damages and losses of financial information will become increasingly visible over time, it could precipitate a complete loss of confidence in the formal financial systems.

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Dollarization

While the risk of dollarization is not likely in the short term, it is not impossible in the medium term. Particularly, as there is evidence of the population increasingly using USD as a refuge to protect the value of their savings.

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<aside> <img src="/icons/layers_gray.svg" alt="/icons/layers_gray.svg" width="40px" /> Cross-cutting themes

These pages cross-reference all the mentions of the theme across the discussions.

Social Protection

Formal financial systems

Financial Inclusion

Informal Financial Systems

Cash

Sanctions

Markets

Food

Digital

External Trade

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Index

Understand the analysis beneath the recommendations

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Background

Brief insights to help you understand the current economic situation in Sudan

Start with the long standing structural weaknesses, get into the aggravating factors and understand the characteristics of the population before looking at the direct impact of the conflict from April 15th.

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