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Recent Developments in Sudan's Fuel Subsidy Reform Process

In September 2013 Sudan introduced the third and most dramatic in a series of fuel subsidy cuts, raising prices of petrol, diesel and liquefied petroleum gas (LPG) by 65 to 75 per cent each.

This came in a context of high economic pressure, following the loss of oil revenue from South Sudan after July 2011. That resulted in significant structural imbalances in the fiscal and current accounts, sending the black market exchange rate out of control and requiring the Central Bank to print money to finance excessive government spending.

The overall pricing system was not changed by the subsidy cuts, and no explicit linkage to the market was introduced, meaning that further reforms are likely to be required. However, that may be politically difficult, given the highly negative public reaction (with the worst riots seen in the capital city for at least two decades) and the lack of support for the reforms among the media and other political forces—including sections of the ruling party itself. Internal disunity appears to have been one of the main factors preventing the government from launching an effective communications strategy and broader consultations.

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