June 24, 2020 / 4:08 PM / a month ago

Sudan to establish trade financing fund in face of forex shortage

KHARTOUM, June 24 (Reuters) - Sudan will create a trade financing fund with a portfolio of $2 billion to aid the import and export of key commodities such as wheat, the Finance Ministry said, as the supply of foreign currency in circulation dwindles.

Sudan’s economy is at risk of freefall, hammered by an inflation rate of more than 100% and frequent shortages of bread, fuel and medicine. The country’s currency has also fallen to a record low of 150 Sudanese pounds to the dollar on the black market compared with 55 at the official rate.

The exchange rate on the black market strengthened to 141 on Wednesday following the news, traders said.

The trade fund will pool resources from a number of banks and private companies to support the export of gum Arabic, livestock and gold while funding the imports of staple commodities such as wheat and fuel as well as medicine, the official state news agency said late on Tuesday.

The donations include $100 million from the gold firm Algunade which a Reuters investigation has linked to the brother of Mohamed Hamdan Dagalo, the deputy head of Sudan’s ruling sovereign council.

It was not immediately clear what incentives the fund would offer to encourage importers and exporters to circumvent the black market and seek financing from its portfolio instead.

The fund, which appears to be the latest in a series of proposed reforms since Sudan began negotiating a non-funded programme this month with the International Monetary Fund (IMF) that could pave the way for international financial support, is set to begin operating by next week, the news agency said. (Reporting by Khalid Abdelaziz; Writing by Nadine Awadalla; Editing by Alison Williams)

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