Sudan will begin rolling out an experimental programme of direct cash transfers to its neediest citizens starting next week as the country tries to wean the country off costly subsidies.
Khartoum (the Sudanese capital) has been struggling to reorganise its floundering economy. Inflation has been running at nearly 100% and the currency tumbling, as the government prints money to subsidise bread, fuel and electricity.
With foreign debts reaching around $62 billion, Sudan last week began talks with the International Monetary Fund (IMF) on a non-funded programme that could pave the way for international financial support.
Under the new pilot cash payment programme, the government will be able to transfer 500 Sudanese pounds ($1 = 55.0002 Sudanese pounds, so about $9) per person per month, beginning in Khartoum’s West Soba district, quickly followed by four other areas in the country, the finance ministry declared in an official statement a few hours ago.
“These areas were carefully chosen to assess the appropriateness of the project’s mechanisms, plans and interventions” before being extended to the rest of the country, the ministry explained.
Finance Minister Ibrahim Elbadawi, formerly a World Bank official, told the media that, before joining Sudan’s government last year, he favoured cash payments over the country’s fuel, bread and medicines subsidies, which he said accounted for around 25% of the budget.
The cash payments, to be made to the heads of households, will eventually reach 80% of Sudanese families, the finance ministry statement announced. They will regularly be adjusted in case of inflation. The government is working to digitise the process as well.
The programme is being funded by the Sudanese government and international organisations, the statement pointed out.
Prime Minister Abdalla Hamdok promised two weeks ago that the government would not remove subsidies on bread or electricity, but instead would focus on reducing them on petrol and diesel.