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Sudan's economy sinks as post-coup leadership searches for support

Kitco News

Khartoum, June 20 (Reuters) - An accelerated breakdown in services including water and electricity supplies has left Sudanese citizens counting the cost of political stalemate after a military takeover last October.

The slide in living conditions comes after the coup triggered the suspension of billions of dollars in international funding, and at a time when the war in Ukraine has pushed the cost of key imports higher.

It has fed into anti-military demonstrations held at least once a week for the past eight months, while also adding to pressure for the military and civilian groups to come to a political agreement.

No prime minister has been appointed since the coup, ministers are serving in an acting capacity and mediation attempts led by the United Nations and the African Union have yet to produce results.

Authorities say they are pressing on with economic reforms that a civilian-led government began under International Monetary Fund (IMF) monitoring in 2020, aimed at reducing subsidies seen as inflationary, but government spending has skyrocketed.

"We are continuing with the economic reform programme, and reducing subsidies gradually in a way that citizens can manage," Finance Minister Jibril Ibrahim told Reuters in an interview.

The government has refrained from printing money to finance the deficit, and monthly state revenues have risen by two-thirds over the past six months to 150 billion Sudanese pounds ($264 million), he said.

Sudan recently signed a deal with the United Arab Emirates for a port and agricultural project, he said, which could lead to greater income.

But inflation means spending has grown even faster. The monthly bill for public sector salaries alone stood at 180 billion pounds, up from 54 billion pounds since the start of the year, on top of rising costs for fuel, wheat, and other imports, he added.

WATER CUTS

In al-Shigla, across the White Nile from the capital Khartoum, residents crowding round private tankers selling water said their local water supply has been dry for weeks.

"Since April water hasn't flown through my kitchen's pipes, and the Nile is just a kilometre away," said homemaker Zahra Sharif.

Roads in the neighbourhood were dotted with stagnant, green pools of water and uncollected rubbish. Several residents described their lives as hellish.

"We can't buy water because it's so expensive," said Ayoub Siddig, a 36-year-old bakery employee.

Inflation has eased slightly but remains at 192%, according to official figures. Last week, the World Food Programme warned that 15 million people, or about a third of the population, face acute food insecurity. read more

In Khartoum, major intersections are often jammed as traffic lights lose power.

Officials at Khartoum's water authority blame a lack of government funding to maintain water stations or pipes for a growing population. Frequent power outages disable water pumps, they said.

The government subsidises electricity, but there is a supply deficit which authorities hope to fill through foreign investments and renewable energy, said Ibrahim.

"What happened in October had a significant impact on the economy," he said, citing the suspension of about $4 billion in Western aid expected for 2022-23.

"We had big projects in electricity, irrigation, and rural development, and this all stopped."

MEETINGS WITH GENERALS

Former rebel group leader Ibrahim backed the takeover, which military leaders say was necessary due to political paralysis in the transition that followed the 2019 overthrow of long-time autocratic leader Omar al-Bashir.

Western donors say suspended economic assistance will only return after the appointment of a credible civilian government. Analysts say even if that condition were met, it would be harder than before for Sudan to mobilise support after the coup derailed engagement with international lenders.

This month, the civilian coalition that shared power with the military before the coup began meetings with generals in an effort to break the political deadlock, in a U.S. and Saudi-backed effort. read more

But protest leaders still refuse to negotiate with the military and many demonstrators blame the armed forces for their economic woes.

"In Sudan we've always been ruled by army men. What do they know about the economy?" said one 20-year-old college student protesting in Khartoum.

($1 = 568.0002 Sudanese pounds)

Additional writing and reporting by Nafisa Eltahir; Editing by Aidan Lewis and Frank Jack Daniel
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