Financial Expert to Sudanhorizon: Banking Sector Restructuring Is Essential for Successful Deficit Financing Tools
Sudanhorizon – Hala Hamza
A financial expert specialising in sukuk and securities at the Ministry of Finance, who requested anonymity, told Sudanhorizon that the ministry uses debt instruments and various financing structures to fund the budget deficit and development projects. Among the most prominent are Government Participation Certificates (Shahama) and Government Investment Sukuk (Sarh), alongside several other financial products.
The expert explained that these instruments had achieved their objectives for several years following their introduction in 1999, before facing numerous challenges in recent years, most notably exchange rate instability and delays by the Ministry of Finance in paying returns, amid deteriorating economic indicators.
The expert expected the issuance of new financial instruments through the Central Bank of Sudan to face several challenges, foremost among them the difficult conditions facing the banking sector and the challenges of recovery after the war. These include the Central Bank’s announced policies requiring banks to regularise their positions through restructuring and mergers with other banks. The expert stressed that this represents the biggest obstacle to banks purchasing the products currently being prepared for issuance, particularly as banks previously accounted for approximately 70% of total investors in government securities.
The expert also pointed to the difficulties facing public and private companies as their reserves have been depleted, reducing their capacity to purchase new securities. The public sector, represented by state-owned insurance companies, social security and pension funds, and employees’ trade union funds, has also lost a substantial portion of its assets and seen its financial surpluses eroded. These entities previously represented a significant share of investors in government securities.
The expert noted that these institutions would need time to recover and reassess how they invest their returns, with appropriate guarantees provided after evaluating the investment climate. This is particularly important given the current economic conditions, in which the national currency has suffered a sharp decline against foreign currencies.
Regarding individual investors, the source explained that households had lost their entire savings over the four years of war, leaving families facing severe challenges in meeting living and education expenses and increasingly dependent on remittances from relatives abroad as they arrive.
The expert further highlighted the low level of foreign investment in securities, attributing it to restrictive laws and the requirement to obtain approval from the Ministry of Finance and the Central Bank of Sudan in accordance with the country’s fiscal and monetary policies.
The expert called on the relevant authorities responsible for issuing financial instruments to study and analyse these factors. The expert stressed that investment funds need to help rebuild what the war has destroyed and revitalise Sudan’s investment environment.
The Central Bank of Sudan recently announced, in coordination with the Ministry of Finance, the adoption of government securities as a financing instrument, alongside the issuance of the Gold Certificate and sukuk specifically designed for banks.
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