The Sudanese government raised fuel prices by nearly 100 percent on Tuesday amidst severe economic difficulties and expectations of inflation rates exceeding 500 percent, causing many businesses to cease operations. Sudan is experiencing extremely challenging economic conditions, with external debts rising to over $60 billion and the collapse of most productive and service sectors during the 30 years of Omar al-Bashir's rule.
However, observers believe that the current transitional government, which took power after Bashir's ousting in April 2019, has failed to address the dire living crises faced by ordinary citizens.
**Government Justifications**
A government statement indicated that the decision is part of the state's policy aimed at reforming the national economy and establishing a framework that enables state institutions and the private sector to engage with international financing institutions. According to the statement, the new prices are determined by import costs, which account for between 71 percent to 75 percent of the fuel price, in addition to transport costs, port fees, VAT, and the profit margin for distribution companies; these costs collectively make up between 25 percent to 29 percent of the consumer sale price. Based on current costs, the price for one liter of gasoline has been set at 290 Sudanese pounds (with the dollar at 430 pounds), while diesel is priced at 285 pounds.
The statement clarified that fuel liberalization policy would help remove many distortions in the economy, as the government spends around $1 billion annually subsidizing fuels.
**Catastrophic Effects**
Mohamed Shekhun, an economics professor at Sudanese universities and member of the Economic Committee for the Forces of Freedom and Change, believes that such a significant fuel price increase will have catastrophic implications for the average consumer. Shekhun explains to Sky News Arabia that over 60 percent of Sudanese currently live below the poverty line and will be even more affected by this increase, which will directly impact transport costs and, consequently, prices of basic goods and services.
He adds, "Before the increase, consumers struggled to meet their basic needs, and it is certain that the current increase will exacerbate and worsen the situation."
Similarly, economist Wael Fahmy confirms that this massive fuel price hike will multiply the production costs of goods and services, leading to a significant collapse in many productive sectors, thus increasing unemployment rates and expanding the poverty base in the country, while also further straining economic and social relations. Fahmy points out that most fixed-income earners, as well as small and medium-sized business owners, will find it extremely difficult to continue operating in the market due to the expected significant decline in average consumer purchasing power.
He stated to Sky News Arabia that the most concerning effect of this increase will be the inflation rates expected to reach 500 percent or more in the short term, compared to about 360 percent currently, due to rising production and service costs. Fahmy attributes the decision to increased government measures recently taken to meet the requirements of the International Monetary Fund, World Bank, and other financing institutions to achieve the "decision point" needed for debt relief of about 80 percent of external debts.
**Confused Consumers**
Many Sudanese expressed confusion and rejection regarding this hike, indicating that they tolerated previous increases in hopes that they would positively impact economic conditions, but the reality has been the opposite.
Fikri, a government employee, states that doubling fuel prices means his monthly salary of about 20,000 Sudanese pounds will only suffice to fill fuel for two weeks. He adds, "This is a huge contradiction… How will I be able to meet my other needs that require five times my salary? This is a real disaster."
Another consumer, a middle-aged doctor, expresses even greater concerns, going further than Fikri, stating to Sky News Arabia, "This catastrophic increase will paralyze life… Many employees and low-income earners will not be able to get to their jobs, either because they can't afford the fuel for their cars or because they won't be able to keep up with the rising costs of public transportation, which already consumed most of their salary before the increase."
