Sudan to tackle fuel subsidies as economy hangs on the edge

Full Screen
1 / 2

Copyright 2020 The Associated Press. All rights reserved.

In this Sunday, Jan. 28, 2020 photo, Ibrahim Elbadawi, Sudan's interim minister of finance, speaks in an interview in Khartoum, Sudan. Sudan is moving forward with an ambitious economic plan that will slash subsidies and replace them with direct cash payments to the poor, Elbadawi said. (AP Photo)

KHARTOUM – Sudan hopes to cut fuel subsidies over the course of 18 months, starting as early as March, and replace them with direct cash payments to the poor, the country’s finance minister said, laying out a timetable for sweeping economic reforms sought by international lenders.

The plan comes as Sudan's fragile democracy is slowly taking shape after the ouster last year of the country's long-time autocrat Omar al-Bashir.

In an interview with The Associated Press on Tuesday, Finance Minister Ibrahim Elbadawi said the decision was a “no brainer." The government has previously said it will not change bread and flour subsidies.

Elbadawi's comments are the first to reveal a planned timeline since the Sudanese government skirted the issue of slashing subsidies late last year, after the country's pro-democracy movement rejected the move. The government included subsidies in the 2020 budget.

In the interview with the AP, Elbadawi said the plan now is to gradually lift fuel subsidies, which take up 36% of the nation's budget, as early as March and following an economic conference with civil society groups, and continue into the next year. A former World Bank economist, Elbadawi was appointed to the country's interim government last year. He said gasoline subsidies would be removed first, before tackling those related to diesel in mid-year.

Sudan's new leadership is navigating a treacherous transition to civilian rule. Two-thirds of the country's more than 40 million people live in poverty, and slashing the fuel subsidies could lead to destabilizing protests reminiscent of the large-scale demonstrations that ended al-Bashir's 30-year rule in April. At the same time, sweeping economic reforms are required to re-integrate Sudan into the international economy and win support from international lenders.

Since al-Bashir's ouster, an interim government made of civilian and military representatives has been leading the country and the economy — already in a severe downturn and battered by a weakening currency, shortages and inflation — has become the lynchpin of the fragile transitional period.

Sudan has been an international pariah after it was placed on the United States' list of states that sponsor terror, more than two decades ago. This largely excluded it from the global economy and prevented it from receiving loans from international institutions like the International Monetary Fund.