Military takeover could deepen Sudan’s economic crisis

Thousands of people took the streets in Sudan on Monday after the country’s military seized power in a coup earlier in the day.

Military leaders dissolved the transitional government and arrested the prime minister as well as a number of civilian ministers, further threatening the country’s precarious transition. 

A joint military-civilian government has governed Sudan since 2019, after widespread protests led to the ouster of autocrat Omar Al Bashir, who had ruled the country for thirty years.

Dozens of people were killed in a military crackdown on pro-democracy protests in 2019, failing to quell them and eventually leading to the power-sharing agreement.

The spark for those protests was a government decision to impose emergency austerity measures to avoid economic collapse. Cuts to wheat and fuel subsidies led to protests in the country’s east, which soon spread to the capital as the price of bread tripled.

The country’s battered economy has remained an unresolved issue and has continued to threaten the transition. High inflation and shortages of medicine, food and fuel have continued to plague the population, with the global economic crisis triggered by the Covid-19 pandemic further exacerbating the country’s economic woes.

The economy is “in many ways” key to the transition, according to Jonas Horner of the International Crisis Group.

“The misery on the streets is deeply unpopular, and I think [military leaders] are about to find out just how popular they are,” Horner told TRT World.

The military announced on Monday general elections will be held in 2023, but protests continued on Monday evening, with at least three protesters killed and 80 wounded after security forces fired on crowds.

We examine the economic forces that led the country to this point.

Decades of crises

Already pummeled by years of mismanagement and sanctions, Sudan’s economy lost 75 percent of its oil revenue when resource-rich South Sudan gained independence in 2011. The Sudanese Pound plummeted against the dollar, while inflation and public debt rose.

Since 2019, measures taken by the transitional government to revive the country’s battered economy have been deeply unpopular among some sectors of the population.

According to Sanya Suri, Africa analyst at the Economist Intelligence Unit, the military takeover could “derail Sudan’s recent economic reform progress and democratic transition.”

“The sentiment on the ground is divided as some public suffering from increased hardship owing to IMF-backed reforms is now favouring a coup,” Suri wrote on Twitter. 

At the end of September, the World Bank held its first visit to Sudan in nearly 40 years when its president David Malpass held talks with Sudan’s now-detained Prime Minister Abdallah Hamdok, the President of the Sovereign Council, General Abdel Fattah Abdelrahman al-Burhan, and the Minister of Finance,  Jibril Ibrahim. 

“We are eager to work with Sudan as it reengages with the international community,” Malpass said. “Over the next year, we will commit about $2 billion in grants to support the government’s efforts to reduce poverty and boost economic growth.”

Sudan embarked on a programme of reforms last year meant to transform its economy and end twenty years of international isolation.

Prime Minister Hamdok said the country had taken up “homegrown economic reforms”, backed by the World Bank and the International Monetary Fund. They included clearance of its overdue payments to the World Bank after the US provided bridge financing of $1.15 billion, allowing it to access new types of financing for the first time in nearly three decades.

But the reforms also involved austerity measures such as floating the currency and the removal of state subsidies, which led to further hikes in the price of fuel and other basic commodities. 

People queuing for several hours in front of gas stations became a common sight, and rising food prices pushed many into poverty while access to international finance and reforms take time. Nearly 10 million people are severely food insecure, according to the UN. 

The threat of further cuts to foreign aid remains hanging after the military takeover.

“As Chair of the Senate panel that funds foreign aid, I have fought hard for new assistance to Sudan to support the country’s transition to democracy and full civilian rule,” US Senator Chris Coons wrote on Twitter. “That assistance will end if the authority of PM Hamdok and the full transitional government is not restored.”