Sudan had a long period of fiscal dominance and multiple exchange rates, before and after the Islamicisation of banking in the mid-1980s, followed by a period of successful stabilisation and partial financial liberalisation (along Islamic lines), within a wider context of political and armed conflict in various regions and the secession of oil-producing South Sudan in 2011.
|Years||Targets and attainment||Classification|
|1974-96||official exchange rate pegged to USD, but in effect second depreciated rate applied to most transactions, trade heavily regulated, foreign exchange allocated via FX budget; banks nationalised (from 1970) but operate independently and in competition; credit ceilings (not always well enforced), interest rates set by central bank, heavy central bank financing of fiscal deficits, high rates of credit expansion leading to rising inflation and balance of payments deficits; heavy price controls, large public sector, planning; 1978 both exchange rates depreciated; 1979 exchange rate system simplified, partially liberalised, but continued changes and regulations of various kinds, new parallel market emerges; from 1978, under repeated IMF stabilisation programmes, gradually increasing efforts to tighten financial policies, including fiscal policy, credit ceilings and interest rates, repeated changes to exchange rate arrangements, including dual exchange rates (also parallel market with rising premium), and some structural reforms; but domestic policy failures, especially failure to control fiscal deficits financed by central bank (plus unhelpful exogenous factors including drought, floods, civil war, internal displacement) prevent any clear turnaround or even halt to deterioration; Islamicisation of banking system announced 1983; intensified efforts to stabilise and reform from 1987 including exchange rate unification and new peg to USD but programme not fully implemented, unpaid arrears to IMF from 1984; currency (banknote) exchange programme in 1991, intended to help contain liquidity; 1991 depreciation, 1992 large further depreciation plus short-lived exchange rate unification, followed by float within semi-liberalised forex market, but continued regulation means parallel market premium re-emerges; some wider liberalisation of prices and investment; but little fiscal or monetary stabilisation (not helped by absence of non-monetary financing of fiscal deficits under Islamic banking); 1993-96 greater fiscal and monetary stabilisation and forex liberalisation efforts but still limited success, continued high inflation||unstructured discretion UD|
|1997-2017||successful implementation of fiscal and monetary stabilisation plus exchange rate unification (late 1998) with managed float, initially stabilised but later more flexible, under IMF staff monitored programmes; unwinding of previous overvaluation; moves towards indirect monetary instruments (Central Bank and Government Musharaka Certificates, and later longer term Government Investment Certificates) and interbank market compatible with Islamic banking (hampered by banks’ large excess reserves); continuing adverse exogenous factors (civil war in south, then Darfur conflict), but oil production from 1999; gradual move from 2001 towards more flexibility of exchange rate; monetary policy now focused on OMOs rather than direct monetary instruments, but programme money targets typically exceeded (though occasionally undershot) by wide margins; 2003 rise in central bank independence; improvements in statistical database; 2007 new currency introduced plus conventional banking allowed in South; South Sudan independent 2011, Sudan loses 3/4 of its oil exports and half of its fiscal revenues, with major impact on fiscal and monetary policies; 2012 adjustment programme involves large devaluation and renewed role of multiple exchange rates, plus fiscal and monetary tightening, followed by stronger stabilisation programme late 2013, but economic performance remains weak; post-devaluation stability of official exchange rate implies large real appreciation; US sanctions since 1997, tightened in effect from 2014 by withdrawal of correspondent bank relations, but lifted late 2017; continuing arrears to IMF preclude most external financing||loosely structured discretion LSD|
Selected IMF references: RED 1975 pp31, 33, 45; RED 1976 p50; SR 1977 pp1-2; RED 1978 p43; SR 1978 pp6-8; RED 1979 p38; RED 1980 pp39-40; RED 1981 p42; RED 1982 pp51-2; SR 1982 pp17-18; RED 1983 pp42-4; SR 1983 pp3-4, 13-14; RED 1984 pp25, 42; SR 1984 pp1-4, 6-10, 19-20; RED 1986 pp47-9; SR 1986 pp1-2; RED 1988 pp49-50; SR 1988 pp2-3; RED 1989 pp51-3; SR 1991 pp12-13, 16, 20; RED 1992 pp47-9; SR 1993 p13; RED 1996 pp28-32, 41-6, 66; SR 1994 pp20-3; RED 1997 pp16-19, 27-31; SR 1998 pp29-30; RED 1999 pp32-47, 55-8; RED 2001 pp34-6, 48-9; SR 2001 pp17-20, 25; SR 2003 p13-15, 17-18; SISA 2005 pp13-14; SR 2005 p32; SR 2007 pp11, 30; SR 2008 pp27; SR 2011 p26; SR 2012 pp4-5; SI 2013 pp2-11, 27; SR 2014 pp5-6l SR 2016 pp5-6, 12.