The Sudan and the IMF, a Policy with Disastrous Consequences
Please cite the paper as:
“Professor Ali Abdalla Ali, (2014), The Sudan and the IMF, a Policy with Disastrous Consequences, World Economics Association (WEA) Conferences, No. 2 2014, Greece and Austerity Policies: Where Next for its Economy and Society?, 20th October to 21st December 2014”
Abstract
Sudan has a long history in its relation with the IMF. Whenever it was in financial crisis it resorted to the IMF for assistance to set the economy in a right direction. The economy has entered in a series of such programmes but without any visible success. In fact in one case, and as a result of not abiding with the Letter of Intent, the Fund had to suspend drawing the last tranche. This happened in March 1969 when Sudan was under a Stabilization Programme which started in 1966. As a result, a military coup took place in May 1969 which lasted for 16 years. The latest engagement started after Sudan lost 75% of its oil revenues to its Southern part which chose to become independent from Sudan in 2012. This created a real shock for Sudan. Since then, the economic and financial conditions have deteriorated and, as a result, Sudan had to start extended programmes with the IMF. The relation took a serious turn when the government of Sudan was advised by the IMF in September 2013 to undertake certain policy measures which included waiving of subsidies on fuel and imposing certain taxes to cover up for the deficit. This resulted in a peaceful reaction from many cities in Sudan including the Capital Khartoum. It was the first challenge that faced the Islamic regime since its power in 1989. Considering these riots as being an attempt to topple the regime, the government reacted with brutal force which left about 220 citizens dead, among them some children. In its other round of negotiations with the IMF an agreement was signed and the IMF decided to remain a distant observer so that it will not be blamed in the case that the Sudanese authorities decide to take measures to correct a very intractable and complicated economic, financial and social situation where Defense and Security absorbs 88 % of the government budget (2014)!