Sudan freezes funds of export firms as coup prompts dollar slump

Sudan’s central bank froze accounts of more than 200 exporters for failing to deposit revenues locally, according to a document and three people familiar with the move, as it seeks to ease a chronic squeeze on foreign currency after donors suspended billions of dollars in assistance. 

The U.S., Europe and international financial institutions such as the World Bank have withheld around $3 billion in financial support this year for electricity, irrigation and education projects among others following October’s military coup. That, coupled with exporters expatriating their profits, has weakened the Sudanese pound and further strained an already feeble economy.

A total of 208 businesses—most operating in the agricultural sector—had their local accounts frozen on Feb. 17, according to a central bank document that was obtained by Bloomberg and verified by an official at the bank and an executive from one of the affected firms. A former senior civilian official also confirmed the measures.

“We decided to block the bank accounts of the listed companies below because they didn’t commit to bank the revenues from their exports during past periods,” the central bank said in the document.

Finance Minister Gibril Ibrahim didn’t immediately respond to a request for comment, while officials at the central bank couldn’t be reached. Last month, Ibrahim said on state radio the government would take “appropriate measures” to oblige exporters to cash their revenues domestically.

Sudan’s finances are coming under increasing strain nearly four months after the army derailed a promising democratic transition that was beginning to show signs of economic progress, including narrowing the gap between the official and black-market rates for the pound.

In recent days, the local currency has again begun to weaken, reaching almost 450 pounds to the dollar on the informal market compared to the official exchange rate of 443 pounds. A burgeoning black market starves lenders of both foreign and local currency. 

The impoverished North African country, which looked like rejoining global markets after the 2019 overthrow of dictator Omar al-Bashir, has revised down its growth target to 1.4% for 2022, and is struggling to fund planned expenditure of 3.7 trillion Sudanese pounds ($8.2 billion).