Sudan’s Economy Facing the Pound-Dollar Crisis: War, Policies, or a Collapse in Economic Structure?
06 September, 2026
Khartoum (SUDANOW) — A reading of the root causes of the deepening economic crisis and possible ways out.
The rapid decline in the value of the Sudanese pound against the US dollar is no longer merely a passing economic indicator or a problem confined to the foreign exchange market. It has become a concentrated expression of a deep macroeconomic crisis whose elements accumulated over many years, before the war that erupted in April 2023 brought them to an unprecedented head.
The dollar’s recent rise above the 6,000-pound threshold in the parallel market, according to reported market transactions, should not be viewed simply as an increase in the price of a foreign currency. Rather, it is an indicator of a distorted relationship between the real economy, the monetary system, public policy, and confidence in state institutions.
In other words, this is a complex macroeconomic crisis in which the shock of war has combined with weak productive capacity, shrinking government revenues, disruptions in the foreign exchange market, declining confidence in the national currency, and weak economic management tools.
The central question is not: Who alone is responsible for the collapse of the pound?
The reality is that the crisis is too complex to be explained by a single factor. At its core, it is the result of the interaction between war, long-standing economic imbalances, declining production, falling exports, public-finance deficits, foreign-exchange shortages, the expansion of the parallel economy, speculation, declining confidence in the national currency, and weak institutional capacity to manage an exceptional economic crisis.
First: War Is the Biggest Factor, but Not the Only Explanation
There is no doubt that the war represents the most severe shock to the Sudanese economy in its modern history. It has destroyed large parts of the economic infrastructure, disrupted institutions, factories, and markets, displaced millions of people, and reduced agricultural, industrial, and service-sector activity. It has also drained public resources to finance the war effort.
World Bank estimates point to a sharp economic contraction during the first two years of the war, with much of the country’s productive capacity collapsing and services, agriculture, and supply chains severely disrupted. Government revenues have also fallen to extremely low levels compared with their pre-war position.
But a legitimate question remains: If war is the main cause, why did the pound not experience the same collapse during the first and second years of the war that we are witnessing now?
The answer lies in the fact that economies do not always collapse at the moment a shock occurs. In many cases, governments, communities, and markets can draw on available reserves, liquidate assets, redirect trade, and rely on other resources, delaying the emergence of a full-scale monetary crisis.
In other words, the first years of the war may have consumed what could be called the accumulated economic buffer built up before the collapse.
There were stocks of goods, private-sector reserves, the ability to redirect trade toward safer areas, remittances from abroad, agricultural production in some regions, and social and commercial adaptation to the war, despite the rapid expansion of its consequences.
But after more than three years, this capacity to absorb the shock has begun to run out.
Sudan has therefore moved from the initial shock of war into a more dangerous phase: the exhaustion of the economy’s ability to absorb the war. This is one of the most important differences between what was happening in the first year of the war and what is happening today.
Second: The Real Crisis Is a Shortage of Dollars Before It Is a Rise in Their Price
The dollar does not rise in Sudan simply because speculators exist. Speculators can accelerate the crisis, but they cannot, by themselves, create sustained demand for dollars if the economy is producing enough, exporting enough, and holding adequate foreign-exchange reserves.
The fundamental problem is that demand for dollars has become far greater than supply.
Sudan needs foreign currency to:
- Import food, medicine, fuel, and machinery.
- Purchase agricultural and industrial inputs.
- Finance transport and trade.
- Meet the needs of vital sectors.
- Cover external obligations.
- Finance part of the costs of the war.
- Rehabilitate infrastructure.
- Meet rising demand for goods as people return to areas retaken by the state.
At the same time, the sources of foreign currency have come under severe pressure. Exports have declined or been disrupted in many sectors, agricultural and industrial production is no longer at normal levels, and the economy has lost important parts of its ability to attract foreign investment and international financing.
Recent reports indicate that weak export earnings, administrative restrictions affecting export proceeds, the widening external deficit, and continued high demand for foreign currency have been among the main factors behind the sharp decline in the pound, while foreign-exchange reserves remain at critically low levels.
The real economic question, therefore, is not: How do we stop people from buying dollars?
It is: How do we increase the amount of dollars entering the economy sustainably?
This is where the fundamental weakness lies.
Third: The Production Crisis Is at the Heart of the Currency Crisis
No monetary policy in the world can sustainably protect a national currency if the economy is not producing enough. The more production declines, the greater the need for imports. The more imports increase, the greater the demand for dollars. And when demand rises while supply remains limited, the national currency loses value.
It is a clear economic cycle:
Declining production → increased imports → higher demand for dollars → depreciation of the pound → higher production costs → further decline in production.
This cycle has become one of the most serious challenges facing Sudan.
The agricultural and livestock sectors have been affected by displacement, insecurity, shortages of financing and inputs, and difficulties in transportation and marketing. The industrial sector has also suffered major blows as a result of factory destruction, power disruptions, shortages of financing, and difficulties obtaining raw materials.
The result is that the economy has become more dependent on external markets at a time when its ability to generate dollars has weakened.
For this reason, containing the dollar crisis does not begin only at the central bank. It also begins with:
The agricultural project, the factory, the export port, the gold mine, and the entire production value chain.
Fourth: Are Economic Institutions Capable of Managing the Crisis?
Here we reach one of the most sensitive questions.
Sudan’s current crisis is not a conventional crisis that can be addressed with a single tool, such as raising interest rates, changing the exchange rate, or banning the import of certain goods. It is a crisis affecting an economy operating under war, geographic division, and institutional fragmentation.
This places economic institutions before unprecedented challenges.
But the problem is not only the scale of the crisis. It is also the degree of coordination among economic institutions. Monetary policy cannot operate in isolation from fiscal policy.
The central bank cannot protect the pound if public finances are continuously putting pressure on the money supply. The Ministry of Finance cannot address the deficit alone if the real economy is not generating sufficient revenues. Likewise, decisions concerning imports, exports, customs, taxation, banking policy, and external transfers cannot operate as separate islands.
Experience suggests that partial measures can sometimes produce counterproductive results.
A ban on imports, for example, may reduce demand for dollars in the short term. But if it includes production inputs or leads to shortages and monopolies, it may raise prices and increase pressure on the parallel market.
The broad import restrictions introduced in 2026 have faced criticism from importers who argued that they did not achieve the expected monetary stability.
What is needed, therefore, is not merely the issuance of decisions, but the establishment of a central economic mechanism for managing the crisis.
Fifth: Speculators and Currency-Trading Networks Are Important Factors, but They Are Not the Root of the Crisis
The role of speculation and its networks, both inside and outside the country, should not be underestimated.
When people lose confidence in the stability of the national currency, the dollar itself becomes an investment and speculative asset.
It then shifts from being a means of trade to becoming:
- A store of value.
- A hedge against depreciation.
- A speculative instrument.
- A means of protecting savings.
The more widespread expectations become that the dollar will rise tomorrow, the more people buy it today. This behavior, in turn, pushes its price higher. The increase then confirms the fear that prompted the purchases.
This is what economists sometimes describe as a self-fulfilling prophecy of collapse.
Fear of a rise in the dollar leads to dollar purchases; those purchases cause the dollar to rise; and the rise reinforces the fear.
But it would be a mistake to reduce the crisis to traders and speculators, important as their role may be.
Speculators operate within an environment that makes speculation profitable.
The more important question is:
Why has speculation become profitable?
The answer is that there is a genuine shortage of dollars, declining confidence in the pound, a gap between the official and parallel exchange rates, and weak foreign-currency flows through formal banking channels.
Sudanese living abroad, including those working in the Gulf countries, are an important part of the national economy. A distinction must be made between legitimate remittances for families, investment, and trade, and any unlawful activity in foreign currency markets abroad and its repercussions for Sudan. Such activity does occur.
The strategic problem is not the existence of expatriates or remittances. It is the failure of the formal economy to attract the largest possible share of these flows through reliable, competitive, and attractive banking channels.
Every dollar that enters through the parallel market is a dollar lost by the banking system.
Sixth: Sudanese Gold — A Major Resource That Has Not Fully Become Monetary Strength
Sudan possesses a vast strategic resource: gold.
But the question is not only how much gold Sudan produces. It is:
How much of the revenue from that gold actually enters the national economy’s treasury?
Gold smuggling, or the export of gold through channels that bypass the formal financial system, means that the economy loses one of its most important sources of foreign currency.
Here lies the Sudanese paradox:
A country that possesses gold, yet suffers from a shortage of dollars.
The solution is not simply to increase production. It is to build an integrated system that includes:
- Controlling production.
- Regulating purchasing.
- Ensuring competitive domestic prices.
- Combating smuggling.
- Tracking exports.
- Ensuring the repatriation of export proceeds.
- Bringing revenues into the banking system.
Every reform of the gold market can therefore become, at the same time, a reform of the foreign-exchange market.
Seventh: The Cost of War Has Become a Direct Monetary Factor
War is not merely a military cost. It is also a monetary, fiscal, and economic cost.
The state needs resources to finance defense, security, and emergency services, while tax, customs, and productive revenues are declining.
This creates a gap between:
What the state needs to spend and what it is able to collect in revenues.
Under such circumstances, financing options become limited.
If part of the deficit is financed through monetary expansion, the quantity of pounds in circulation rises at a time when production is not increasing at the same pace. The result is further inflation.
As inflation rises, individuals move away from holding pounds and turn to dollars, gold, or goods.
The fiscal crisis then becomes an exchange-rate crisis.
International institutions’ estimates point to continued pressures related to the fiscal deficit, weak revenues, and the need for monetary expansion, alongside high inflation and the continued fragility of the banking sector.
Eighth: The Crisis Is Also a Crisis of Confidence
The modern economy does not rest solely on production and resources. It also rests on trust.
Trust in:
- The currency.
- Banks.
- Institutions.
- Policies.
- The future.
When citizens and traders believe that the pound will lose a significant part of its value within a short period, they hold it only to the extent necessary.
When exporters do not trust that their proceeds will be managed fairly, they seek alternative channels.
When expatriates do not trust the banking system, they may send their money through informal markets.
Therefore, stabilizing the pound cannot be achieved through security measures alone. It requires a comprehensive package of policies and tools that addresses and contains every threat.
It requires an economic policy that people can believe in: a policy whose objectives citizens understand and whose implementation they can monitor.
Ninth: Are External Pressures an Influential Factor?
Yes, but they are not the only explanation.
The war has led to a decline in foreign financing and investment. Sudan also faces enormous debt and arrears that limit its ability to access international financing.
International institutions confirm that fragile public finances, a narrow savings base, debt and arrears, and political and institutional instability limit Sudan’s ability to obtain external financing.
The international environment, along with rising transportation, energy, and commodity costs, also affects the import bill.
But placing the blame entirely on external factors can obscure the central problem.
States cannot always control the international environment, but they can improve their internal capacity to withstand external shocks.
The more productive and diversified an economy is, the less vulnerable it becomes to external shocks.
Tenth: What Is the Most Dangerous Factor Explaining the Current Crisis?
In my view, the most dangerous factor is the convergence of five crises at the same time:
1. A production crisis
A decline in the capacity to produce and export goods.
2. A foreign-exchange crisis
Rising demand for dollars alongside weakening sources of supply.
3. A fiscal crisis
Declining public revenues, rising obligations, and the cost of war.
4. An institutional and policy crisis
Weak coordination among economic policy tools and, at times, reliance on partial solutions.
5. A crisis of confidence and expectations
The transformation of the dollar into a refuge against the depreciation of the pound.
These factors interact with one another.
That is why the crisis cannot be solved simply by arresting currency traders. Nor can it be solved by printing money, banning imports alone, changing the exchange rate alone, or relying on gold alone.
How Can the Decline Be Contained?
The solution must be an exceptional economic program, not a collection of scattered measures.
First: Establish a High-Level Economic Command Room
It should include:
- The Central Bank.
- The Ministry of Finance.
- The Ministry of Trade.
- The Ministry of Minerals.
- The Ministries of Agriculture and Animal Resources.
- Customs authorities.
- The banking sector.
- Relevant economic and security agencies.
It should operate according to clear weekly indicators, including:
- Foreign-exchange availability.
- Export earnings.
- Remittances from workers abroad.
- The size of the money supply.
- Prices of essential goods.
- The exchange rate.
- Imports of strategic commodities.
Second: Increase the Supply of Dollars Before Attempting to Lower Their Price
This can be achieved by:
- Recovering export proceeds.
- Reforming the gold trade.
- Combating smuggling.
- Encouraging remittances from Sudanese abroad.
- Providing competitive banking incentives.
- Supporting agricultural exports.
- Restarting factories with rapid export potential.
Third: Protect Production
The highest priority should be agriculture and small and medium-sized industries.
Every locally produced good that replaces an imported good is, in effect, a saving in foreign currency.
There should be an emergency production program for:
- Wheat and grains.
- Edible oils.
- Essential medicines.
- Food inputs.
- Essential consumer goods.
Fourth: Minimize Inflationary Financing
Any monetary expansion not linked to increased production will ultimately return to the market as additional demand for dollars.
Controlling the money supply must therefore be a central component of any program to rescue the pound.
Fifth: Narrow the Gap Between the Formal and Parallel Economies
The slower banking procedures are, the higher transfer fees are, and the less realistic the official exchange rate is, the more the parallel market expands.
The objective should be to make the formal system more attractive, less costly, and faster.
Sixth: Adopt a Clear Policy for Managing Imports
The goal is not to close imports.
It is to prioritize them.
There is a difference between banning imports and managing imports.
The economy needs certain imports in order to produce. Denying a factory or farmer access to production inputs may ultimately increase demand for dollars rather than reduce it.
Conclusion: There Is No Single Bullet for Saving the Pound
Sudan’s current economic crisis is not the result of war alone, although the prolonged war is its greatest catalyst.
Nor is it the result of speculators alone, despite their clear role in accelerating the deterioration.
Nor is it merely a failure of institutions, although weak economic management makes the crisis worse.
It is a cumulative, multilayered crisis in which the following have converged:
War, declining production, falling exports, dollar shortages, public-finance deficits, inflation, speculation, resource smuggling, weak confidence, fragmented markets, and external pressures.
But the most important economic lesson the state must understand is this:
«The dollar cannot be defeated by decisions alone. It can be contained through production, confidence, fiscal discipline, and the flow of resources through the formal economy.»
The real question is not how to lower the dollar’s price for a day or a week.
It is:
How do we rebuild an economy that generates more foreign currency than it consumes?
Only then will the stability of the pound become a natural consequence of economic strength, rather than the temporary result of exceptional measures.
Sudan does not need only a policy for the dollar. It needs a policy for rebuilding the national economy itself.
Unless crisis management moves from treating the exchange rate to addressing the causes of demand for dollars and the causes of the pound’s weakness, any improvement will remain temporary, and the market will continue to await the next shock.
Saving the pound begins with saving production. Saving production begins with restoring the state’s ability to manage the economy during wartime and preparing for the post-war economy.
Therefore, I believe:
«“The stability of the pound is not a battle against the dollar, but a battle to restore production, discipline public finances, protect resources, and rebuild confidence. A currency does not derive its strength from the decisions that guard it, but from the economy that stands behind it.”»
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