The Controversy of Exchange Rate Devaluation in Sudan: An Economy-Wide General Equilibrium Assessment

African Development Review, Vol. 24, No. 3, pp. 245–254, September 2012

Posted: 21 Nov 2012

See all articles by Khalid Siddig

Khalid Siddig

University of Khartoum; Humboldt University of Berlin - Faculty of Life Sciences Thaer-Institute

Date Written: September 30, 2012

Abstract

The International Monetary Fund (IMF) has worked with Sudan since 1997 to implement a managed float exchange rate. The IMF sees exchange rate flexibility as key to safeguard and rebuild foreign exchange reserves and essential to meet the international reserve target in Sudan. However, authorities in Sudan are concerned about the inflationary pressures that exchange rate flexibility may cause. A review of the literature reflects huge ambiguity about the outcome of exchange rate policies in Sudan. This calls for additional empirical investigations. This paper applies a computable general equilibrium (CGE) model to investigate the possible effects of devaluing the currently overvalued Sudanese pound, by simulating a depreciation of the Sudanese pound by 5 per cent, 10 per cent and 15 per cent. Based on the results, the study recommends that additional flexibility of the Sudanese exchange rate regime as suggested by the IMF be carefully considered if such flexibility devalues the Sudanese pound.

Keywords: Sudan, exchange rate, CGE models

JEL Classification: D5, D6,E5, F1, F2

Suggested Citation

Siddig, Khalid, The Controversy of Exchange Rate Devaluation in Sudan: An Economy-Wide General Equilibrium Assessment (September 30, 2012). African Development Review, Vol. 24, No. 3, pp. 245–254, September 2012 , Available at SSRN: https://ssrn.com/abstract=2178929

Khalid Siddig (Contact Author)

University of Khartoum ( email )

Shumbat
Khartoum
Khartoum, Khartoum 13314
Sudan

Humboldt University of Berlin - Faculty of Life Sciences Thaer-Institute ( email )

Unter den Linden 6
Berlin, 10099
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
206
PlumX Metrics