Sudan has been suffering from an economic crisis since the separation of South Sudan in 2011, having lost 75 per cent of its oil revenues.
Violent clashes that broke out last week in several Sudanese cities are casting a heavy shadow over economic and living conditions in a country that has already been suffering due to accumulated crises.
A battle that is hammering Khartoum and dragging Sudan to the brink of civil war pits army chief, Gen. Abdel Fattah al-Burhan, and his regular forces against commander of the Rapid Support Forces (RSF), Gen. Mohamed Hamdan Dagalo, commonly known as Hemeti.
A continued and expanded war will put Sudan’s economy in the face of unimaginable losses, economists say.
Before the outbreak of current confrontations, Sudan’s economy suffered from a record inflation, a significant deterioration of the local currency against the US dollar and the disruption of financing operations due to the lack of political stability.
Sudan has been suffering from an economic crisis since the separation of South Sudan in 2011, a development that caused Khartoum to lose approximately 75 per cent of oil revenues.
Experts say the first spark of confrontations between the Sudanese army and the RSF caused Khartoum International Airport to go out of service, depriving Sudan of 5 per cent of its total exports and imports, worth $15 billion.
The Sudanese treasury, meanwhile, would lose revenues from gold exports which stand at $2 billion annually, making up 50 per cent of Sudan’s total exports.
The fighting also halted trade between Sudan and Egypt, which is estimated at 10 per cent of Sudan’s overall foreign trade.
The confrontations erupted on April 15, with the two rival forces using heavy arms, anti-aircraft weapons, and missiles. They inflicted heavy losses on vital facilities in Khartoum, especially its airport, the Army Command headquarters, the Presidential Palace, banks and hospitals.
They also affected water and electricity services, doubling the suffering of tens of thousands of citizens, reeling under bombardment.
The same confrontations will negatively affect Sudan’s inflation rate. Before the fighting started, the International Monetary Fund expected the inflation in Sudan to surpass 77 per cent by the end of this year. The war may make the case worse for inflation.
The World Bank (WB) also suspended an aid package to Sudan worth $500 million. The package would have supported Sudan’s budget. It was part of an aid package of $2 billion pledged by the WB.
The IMF, meanwhile, suspended $150 million in financing for Sudan, after it initially approved it in June 2021 as part of a loan programme worth $2.5 billion.
Daily expenditure on clashes between the army and the RSF exceeds $500 million, according to some estimates.
Sudan is one of the poorest countries in the world, even as it is Africa’s third largest producer of gold. It depends on the private sector for producing 80 per cent of this gold.
Sorry to say, over 70 per cent of Sudan’s gold output is smuggled outside the country, according to some media reports.
To finance military operations, Sudanese authorities will have to print money intensively, especially in the light of the blockade imposed on Sudan’s public treasury and the weakness of the tax base resulting from the contraction of economic activity in Sudan.
This will increase the prices of commodities in the local market and exacerbate hyperinflation, originally inherited from previous periods, economists predict.
With scant information about the war, questions arise about the duration Sudanese rival parties will be able to spend on battles.
With the current lack of financial resources, the Sudanese economy will most likely be thrown at the mercy of international capitals.
The war will also most likely result increase migration from the countryside to the metropolis and abroad as production levels slow down and basic infrastructure deteriorates.
Wars usually suspend development projects, bring funding down and raise inflation.
A continued war will mean a decline in exports, an increase in the cost of production, the disruption of facilities, including water and electricity supplies, and a significant increase in imports to end pharmaceutical and food consumables shortages, economists say.
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