Sudan adopted on Sunday a floating exchange rate regime managed, that is to say regulated by the Central Bank, in order to meet the demands of the International Monetary Fund (IMF).
This new measure, which risks causing inflation, is part of a series of reforms launched by the country aimed at attracting foreign investment, allowing debt relief and accessing loans from international institutions with the aim of supporting the country in its political transition.
In a statement, the Central Bank of Sudan announced that “the transitional government has decided to adopt a set of policies aimed at reforming and harmonizing the exchange rate regime by applying a managed floating exchange rate”, which means that the rate official exchange rate will now be determined by supply and demand, but the monetary institution retains a regulatory role.
The IMF, which adopted in 2020 a program for Sudan requiring the harmonization of the exchange rate regime, said in January “to work very intensively with Sudan to create the preconditions for its debt relief” in the part of its initiative in favor of poor and heavily indebted countries (HIPC).
The new Sudanese government will have as a priority to recover the economy of the country after it had been weakened during the decades of reign of Omar al-Bashir, overthrown in April 2019.
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