Sudan takes austerity steps, launches new currency

Reuters News
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Posted: Jul 12, 2011 6:44 AM
Sudan takes austerity steps, launches new currency

KHARTOUM (Reuters) - Sudanese President Omar Hassan al-Bashir said on Tuesday the north will launch austerity measures to compensate for the loss of oil revenues after the south's secession and bring in a new currency.

North Sudan lost 75 percent of its 500,000 barrel-a-day oil production after the south became independent on Saturday. Oil is vital to both economies.

North Sudan, where 80 percent of 40 million Sudanese, has been hit by a scarcity of foreign currency and high inflation. Khartoum has tried to lower dependency on oil but economists say the pace of diversification has been slow.

"We have placed an emergency program for the next three years," Bashir told parliament, adding that an "austerity measures package" had been started and a revised budget with no new taxes or duties would be presented to the assembly.

"The package of the economic measures includes issuing a new currency in the coming days," he said, without giving details.

The south will take up to three months to replace the northern currency in its economy with its own new southern currency, its central bank governor said on Tuesday.

The northern pound has been falling on the black market in Khartoum for weeks as economists say foreign currency inflows needed for imports will decline alongside falling oil revenues.

North and south have yet to agree on a range of issues such as sharing oil revenues, assets and debt as well as ending violence in parts of the 2,000 kilometer (1,480 mile) border.

Bashir repeated that conflicts in northern border states South Kordofan and Blue Nile should be best solved through dialogue, not violence.

The army has been fighting armed groups allied to the south in South Kordofan, the source of most wealth in the north. Both states are home to thousands of former southern rebels who now find themselves on the northern side.

Bashir said the government would launch development programs in both states and the western region of Darfur, the scene of another insurgency.

(Reporting by Shaimaa Fayed, Edmund Blair and Ulf Laessing, Editing by Louise Ireland)