Experts: Sukuk Can Regulate Money Supply and Reduce Central Bank Borrowing

Sudan Horizon – Hala Hamza

Banking and financial experts have welcomed the Central Bank of Sudan’s move to issue investment sukuk and securities. They told Sudan Horizon that subscriptions to government securities help withdraw part of the circulating money supply, easing inflationary pressures and stabilizing the local currency. They also noted that these instruments can reduce pressure on the central bank and limit the government’s reliance on borrowing from it.

A banker, who requested anonymity, described the Central Bank’s approach as a smart move, saying it could help free the bank from the dominance of the Ministry of Finance, which obliges it to print money and engage in open-ended borrowing beyond the ceiling set by the Central Bank Act. He noted that successful implementation of the decision would shift the burden of financing the national budget onto these investment funds.

For his part, economist Dr. Haitham Fathi told Sudan Horizon that the Central Bank’s issuance of short-, medium-, and long-term bonds and securities represents an important step at this sensitive stage, helping finance the budget deficit and cover essential expenditures. He added that the decision would strengthen confidence in economic policies and provide the banking sector with a secure investment instrument offering attractive returns, helping redirect liquidity away from uncontrolled circulation and into stable investments.

Fathi stressed the need for coordination between fiscal and monetary policies to stabilize the exchange rate and advance economic reforms. He noted that a return to public debt instruments would revive the experience of Treasury bills, which had previously demonstrated their ability to absorb excess liquidity, give the Central Bank greater room to operate in the foreign exchange market and manage liquidity, and encourage banks to attract deposits.

In a related development, Sudan Financial Services Company, affiliated with the Central Bank of Sudan, called during a meeting with the governor earlier this week for the swift issuance of new securities. It proposed using them as a monetary policy tool through open market operations and adopting government securities as a financing instrument similar to Shahama Certificates, in coordination with the Ministry of Finance.

It is worth noting that Bank of Khartoum launched Sudan’s first investment sukuk fund in 2015 through its subsidiary, Sanabel Securities Company. Valued at SDG 4.75 billion, equivalent to USD 11.3 million at the time, the fund was named the “Green Sukuk” and was intended to finance renewable energy projects in the agriculture and mining sectors.

Financial expert Dr. Shawqi Azmi said the success of the government’s new approach depends on preparing accurate feasibility studies for the planned investment funds, ensuring their full financial independence, and listing their sukuk on the securities market.

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