Sudan : Selected Issues

Sudan faces difficult challenges in the conduct of its monetary policy following South Sudan’s secession in 2011. Sudan’s economic conditions deteriorated rapidly after this permanent shock. The fiscal deficit widened owing to the loss of oil revenues and delays in fiscal adjustment. Monetization of the fiscal deficit led to high inflation, which reached 47.8 percent in March 2013. An understanding of the effects of monetary policy on macroeconomic variables (such as output, employment and prices) and the channels through which these effects are transmitted is critical for effective policy formulation and timely implementation, and for ensuring macro-financial stability