Sudanese battle price hikes as economic crisis bites
Sunday, 17 June 2012
By AFP
KHARTOUM
Iman is grateful at least that she is healthy. But the Sudanese mother of two says she struggles to feed her family and fears for the future, as an economic crisis bites and food prices soar.
“Last year we used to buy meat three or four times a month. Now we buy meat just once per month, and sometimes we go without,” said the 35-year-old, who is pregnant with her third child.
“Praise be to God, I’m okay now because my health is good. But everything is getting more expensive. I’m very worried about the future,” Iman told AFP, as she shopped in a market in Khartoum with her two-year-old son.
Sudan’s economy is reeling, hit by soaring inflation and a rapidly depreciating currency, following the loss of three-quarters of Khartoum’s vital oil revenues when South Sudan seceded last July.
Since then, costly armed conflict on its southern border, which resulted in extensive damage to infrastructure at Heglig, Sudan’s main oil field, in April, has accelerated this trend, with the government desperately searching for solutions.
In a report late last month, the International Monetary Fund described the economic challenges the country faces as “daunting.”
Inflation officially hit 30.4 percent in May, compared with 28.6 percent in April, the central statistics bureau said last week, although some economists say the real figure could be more than 40 percent.
Traders say the price of beef has more than doubled over the past 12 months, from around 15 Sudanese pounds ($2.7) last year to as much as 35 Sudanese pounds ($6.4) now.
One plate of “fool,” or stewed fava beans, a poor man’s fare in Sudan and across Arab countries, has gone up over the same period from two Sudanese pounds to four or five now.
But the high prices hitting families in Sudan are set to jump if, as widely expected, the government follows through on a decision it has been mulling for weeks, namely to lift fuel subsidies which it can no longer afford.
Shopping in another market in Khartoum, Sabir Jumaa, 50, says he has already cut back on what he buys for his family, including meat.
“But there are some things we cannot avoid paying for, like medicine for the children and school expenses. If the government removes fuel subsidies we will be in a critical position,” the private company employee added.
Economists and some within the ruling National Congress Party itself warn of the consequences of such a move, especially for Sudan’s burgeoning poor.
“Definitely the burden of this and the social cost of this will be borne by the low income groups and the poor… These are the people who will suffer,” Mohammed el-Jak, professor of economics at the University of Khartoum, told AFP.
Even the finance minister, Ali Mahmud al-Rasul, admitted during a speech in parliament last week that it was the policy of what he called a “bankrupt state.”
In another move to reduce its expenditure, the government is also expected to abolish a number of ministries, as well as possibly dissolving state legislative assemblies and even reducing the number of states.
Safwat Fanous, professor of politics at the University of Khartoum, argues that the financial problems facing the government stem from its dependency on oil revenues over the last 10 years and its failure to diversify the economy.
“It’s a very serious situation… There is no quick, easy substitute for that loss of oil revenue,” he said, adding that that unless the government cuts its expenditure and increases its revenues, it will run out of money.
But scrapping fuel subsidies, although economically “badly needed,” will also be politically “very dangerous,” as it drives up overall prices for people already experiencing serious hardship, Fanous argued.
“So there is concern among many members of the NCP that this move might cause people to come out onto the streets.”
http://english.alarabiya.net/articles/2012/06/17/221160.html
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