Chronicle of the Middle East and North Africa

Sudan Descends into Abject Poverty Despite IMF Deal

Sudan IMF Deal
A Sudanese protester holds a placard reading ” No to IMF’s policies ” during a demonstration in the capital Khartoum on June 30, 2021. ASHRAF SHAZLY / AFP

Ali Noureddine

This article was translated from Arabic.

It has grown amply clear from the start of the year that Sudan is headed toward one of the worst humanitarian crises in the world today. The United Nations World Food Program has been warning since the early months of 2022 that a third of the country’s population suffers from “acute food insecurity.” In practical terms, this means these social strata are on the brink of famine, which automatically exacerbates existing social and security upheavals.

In addition, numerous economists have warned of the increase in poverty rates, which in January exceeded 80 per cent. This came as a result of rising unemployment rates, declining production rates, decreasing wages due to a drop in the value of the local currency, in addition to an increase in inflation rates.

Rising poverty entails more than a lack of sustainable financial resources; it also means worsening access to educational and health facilities, resulting in the deterioration of the quality of social safety networks.

Impact of the crisis on women and children

The most worrying dimension of Sudan’s current humanitarian crisis is its impact on the most vulnerable communities, particularly women and children. According to UNICEF, almost 14.3 million people in Sudan will require immediate humanitarian assistance, with around 8.2 million of them being women and girls.

The UN agency also estimated that 3 million children below the age of 5 suffer from malnutrition, and 650,000 of these suffer from severe acute malnutrition. 78,000 children die every year from preventable illnesses.

UNICEF joint-agency studies based on data from human rights organizations indicate that extreme poverty has contributed to increased rates of child labor, which have exceeded 25 percent. This means that rather acquiring an education, almost one-quarter of all Sudanese children are active in the job market from a young age.

In certain states, such as eastern Darfur, this proportion jumps to 49.4%, demonstrating the severity of the situation. Poverty and deprivation also pose greater risks to women in particular. Due to a lack of opportunities for education, work and involvement in the local economy, child marriage has become more prevalent, with the percentage of girls married before the age of 18 reaching 38 per cent, and those married before the age of 15 reaching 12 per cent.

The numbers also indicate that there are more than 2.2 million people who have been displaced within the country, due to poverty, lack of job opportunities and high unemployment rates. This has resulted in a large proportion of children being separated from their immediate families and forced to work in markets far from home, under harsh and unfair conditions.

Around 64 per cent of Sudanese children have suffered from various forms of violence and abuse, including being coerced into engaging in armed conflict. All these developments have reduced the the percentage of children currently living with their original families to just 82 per cent, meaning 18 per cent of Sudanese children live outside the traditional nuclear family. Beyond all these tragic circumstances, chaos and poverty have resulted in more than a third of Sudan’s children not being registered in the official state records, which in the future will make it difficult for them to be enrolled in schools, or verify that girls in this group have reached the legal age for marriage.

The impact of the IMF program and its painful terms

Sudan has been subjected to a slew of tough social changes since joining the International Monetary Fund program in 2021, the most notable of which being market liberalization, subsidy reductions, and the floating of the Sudanese pound’s currency rate. Sudan’s implementation of the Fund program was driven by the government’s efforts to restructure its obligations, decrease them to manageable levels, and lower the burden of paying these loans on the public budget. The government also intended to return to international financial markets and recruit more external help through this program, fueled by the confidence that stringent IMF plans often provide.

The harsh conditions associated with the Fund’s program have resulted in painful measures for low-income groups, such as a significant increase in fuel prices following the removal of subsidies, an increase in electricity tariffs as a result of the rise in fuel prices, and a rapid decline in the exchange rate of the local currency following its flotation. Sudan has also been compelled to undergo a series of socially difficult tax adjustments, such as altering the exchange rate used to calculate Customs charges, imposing additional tax fees, and withdrawing from some of the economic activities in which it had previously engaged.

The dollar exchange rate in the Sudanese market rapidly surged to approximately seven times its previous level when the Sudanese pound was floated, sparking a wave of consecutive spikes in market prices. With local incomes relying on local currency, this scenario has resulted in a quick and continued drop in Sudanese purchasing power.

Sudan‘s GDP fell from over $108 billion in February 2021 to just $13 billion today as a result of the rapid collapse in the exchange rate and mass closures of private institutions and businesses. As a result of this reality, the average yearly per capita income, which once topped $2,500, has dropped to $314.

While the terms signed with the IMF resulted in an immediate financial and monetary shock that disproportionately harmed low-income households, the most severe impacts would occur later. In October of last year, the Sudanese army launched a military coup, detaining prominent officials and activists before formally seizing control.

Since then, foreign assistance has continued to diminish, and Sudan has reverted into global financial isolation. Despite participating in the IMF program with the purpose of expanding into the international financial markets, Sudan has receded.

Sudanese families have been suffering as a result of the cessation of assistance since the coup. Inflation has further risen, worsening poverty and the malnutrition crisis. The war in Ukraine has compounded the impact of the crisis in Sudan due to the high cost of imports. The government has been forced to stop the last forms of support that relied on external funding.

The consequences continue

As is typical during economic downturns, a ripple effect spreads throughout industries. These consequences include a scarcity of pharmaceuticals, which began with the floating of the Sudanese pound and has since resulted in a sharp surge in drug costs at pharmacies.

Long bread lines reappeared at periodic intervals, and several agricultural sectors have begun to deteriorate, increasing the country’s reliance on imports to meet the population’s food demands. Sudan today, despite having enough agricultural land to be a worldwide food hub, imports approximately 90% of its grain needs.

Sudan’s situation is similar to that of many other countries in the region, where public mismanagement coexists with political upheaval and external interference, in addition to historical internal instability. As a result, harsh structural economic disparities and hard external conditions imposed by the IMF have resulted in an increase in poverty and destitution.

The primary challenge today remains the ongoing political turmoil, which prevents the state from recovering its role as a protector of the most vulnerable, not to mention restoring its ability to support the productive sectors.

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