Prices

The Ministry of Finance and Economic Planning's Department of Statistics compiled monthly data on consumer prices in Sudan based on approximately 100 items on sale in the capital area's three cities, Omdurman, Khartoum, and Khartoum North. This report contained two indexes covering the cost of consumer goods used by Sudanese having incomes below and above £Sd500 a year. At the beginning of the 1970s, annual price rises were moderate. From 1973 onward, the inflation rate grew, because of continuing worldwide inflation, an increase in the money supply resulting from the central government's deficit financing and from borrowing by state corporations, shortages of consumer goods, and problems of supply caused by transport deficiencies. Late in the 1970s, increased private sector borrowing added to the pressures on prices. In the six-year period from 1972 to 1977, inflation increased at an average rate of almost 24 percent a year for the low-income group and 22 percent for the higher group. In 1979 the official rate was 30.8 percent and 33.6 percent for the low and high groups, respectively. The reported rates were somewhat lower in 1980: 25.4 and 26.3 percent, respectively.

A series of currency devaluations took place, beginning in 1979, as part of the new financing agreement with the IMF (see Balance of Payments , this ch.). The economic results of the devaluations did not meet expectations, however, leading by the late 1980s to resistance to IMF demands for further devaluations. The accompanying austerity measures during the 1980s included attempts gradually to remove subsidies on food and other products, reductions in public expenditures, real wages, and nonessential imports, as well as an effort to reinvigorate the export sector. Such efforts, however, had little impact on Sudan's economic viability as far as international financial lenders were concerned.

Annual inflation was estimated at 300 percent in mid-1991, with the market value of the Sudanese pound deteriorating at a constant rate. Sudan's debt burden, estimated at US$4 billion in 1981, rose to US$13 billion by mid-1990, with debt arrears to the IMF alone since 1984 totalling more than US$1.1 billion, a situation that led the IMF to threaten to expel Sudan unless it settled its debt arrears. In September 1990, the IMF adopted a Declaration of Noncooperation regarding Sudan, as a prelude to expulsion. In May 1991, an IMF delegation arrived in Khartoum for discussions with the government, which by then had repaid the IMF a token US$15 million and reaffirmed its determination to cooperate with the IMF. The IMF then postponed for six months its decision on whether to expel Sudan. The deterioration in Sudan's debt position also placed in doubt future World Bank lending to Sudan, with existing loans still secure.

Data as of June 1991