Technical Breakdown: How the Rising Customs Dollar Rate Is Reshaping Sudan’s Revenue and Inflation Outlook

Dr Mohamed Awad Mohamed Metwally
African Peoples and the Peoples of the Diaspora
When the state raises the “customs dollar” exchange rate from 3,517 Sudanese pounds to 3,743 pounds—an increase of 6.4 per cent in less than a month—it is not merely changing a figure in an accounting system. It is increasing the cost of everything that enters Sudan: from a sack of flour to a medical needle, from fuel to industrial inputs.
The decision implemented by the Sudanese Customs Authority yesterday, Wednesday, comes at an extremely sensitive time. The US dollar on the parallel market has continued to rise, reaching 5,400 Sudanese pounds for the first time. Concerns are therefore growing about the direct impact on the prices of essential goods and production inputs, given that the customs dollar is one of the principal determinants of import costs.
Technical analysis shows that the 6.4 per cent increase means that an importer will pay an additional 226 Sudanese pounds for every dollar used in customs valuation. If a trader imports goods worth US$100,000, the customs burden increases directly by 22.6 million Sudanese pounds in less than 30 days.
The importer does not absorb this additional cost. It is passed through the supply chain to the final consumer. This explains why the National Chamber of Importers has described the successive increases as “catastrophic” and warned that they will intensify pressures on living standards and contribute to the further depreciation of the Sudanese pound.
The official figures expose the failure of customs policy.
The customs dollar rate was adjusted ten times in just sixteen months, between January 2025 and May 2026, producing a cumulative increase of 66.3 per cent.
The increases were as follows:
2,827.6 → 3,222.8 → 3,395 → 3,517 → 3,743 Sudanese pounds.
Since the customs dollar was liberalised in June 2021, it has risen by more than 11,214 per cent.
This is not an “adjustment”. It is an official acknowledgement of the depreciation of the Sudanese pound and the defeat of monetary policy.
The disastrous aspect of these increases is that they have occurred at a time when imports have risen, exports have declined, and the trade deficit has widened.
In short, the government is raising customs duties to compensate for its failure to increase production and is asking citizens to pay for that failure out of their own pockets.
This is not fiscal policy.
It is a “tax of despair”.
International experience demonstrates that using the customs exchange rate as a revenue-raising instrument eventually reaches its limits.
Egypt increased its customs dollar rate only three times during 2022 before fixing it, because continuing increases had contributed to inflation reaching 35 per cent.
Turkey resorted to stabilising customs rates and granting exemptions for strategic goods after finding that every 10 per cent increase in customs charges raised inflation by 1.8 per cent within sixty days.
The difference is that both countries linked their customs policies to production strategies—something that has yet to happen in Sudan.
The economic impact of this measure can be analysed at three interconnected levels.
The first is the direct impact on commodity prices.
Markets experienced a new wave of price increases following the successive rises in the customs dollar rate from 3,222.8 to 3,743 Sudanese pounds. This was directly reflected in the prices of imported goods, particularly essential commodities such as sugar, flour, cooking oil and rice.
The second level is transport costs.
Fuel prices have risen significantly, and these increases are expected to exert additional pressure on the prices of various goods and services, particularly given the heavy dependence of supply chains on road transport.
The third level is behavioural.
Economist Dr Mohamed Al-Nayer has argued that the behaviour of the private sector, which has traditionally passed all cost increases on to final consumers, has magnified the impact of the decision on commodity prices. The prices of some products have risen four to fivefold.
Sudan faces three possible economic trajectories between now and the end of 2026.
The first is the path of short-term revenue gains and long-term inflation.
This scenario would materialise if the government continues raising the customs dollar rate in an attempt to keep pace with the parallel market.
The projected impact would be an additional increase in monthly inflation of between 2.5 and 3.5 per cent, together with a decline in household purchasing power of at least 10 per cent within six months, at a time when the majority of households spend more than 60 per cent of their income on food.
Government revenue may increase temporarily, but the tax base will gradually erode as consumption contracts.
The second trajectory is the expansion of smuggling and the informal economy.
This scenario would emerge as the gap between the customs dollar rate and the parallel-market exchange rate widens. The gap currently stands at 44.2 per cent.
The projected impact would be the diversion of between 25 and 30 per cent of imports towards smuggling routes and unofficial border crossings, accompanied by a 15 per cent decline in official customs revenue despite the higher customs exchange rate.
Meanwhile, networks that pay no taxes and operate beyond effective regulatory oversight would flourish.
The state would lose twice: in revenue and in security.
The third trajectory is one of imported stagnation.
This would occur if successive customs increases coincide with higher financing costs and persistent foreign currency shortages.
The projected impact would be an 18 per cent contraction in imports, shortages of production inputs and medicines, and the closure of a significant proportion of small factories unable to finance their imports.
This would create additional unemployment and increase pressure on public finances.
The methodological conclusion is that raising the customs dollar rate does not constitute a comprehensive economic policy.
It is a fiscal painkiller administered to the body of a bleeding economy.
It is an acknowledgement that the state has failed to increase production and has therefore chosen to increase revenue collection, and that the war has exhausted the national budget to the point where citizens have become the ultimate source of financing.
The problem is that this instrument has a limit.
Every increase raises revenue today but undermines consumption tomorrow.
Every increase closes a factory and opens a new smuggling route.
Every increase reinforces the public perception that the Sudanese pound has lost value and that importing goods has become increasingly hazardous.
Price stability cannot be achieved through customs policy in an economy suffering from a production deficit and armed conflict.
Price stability begins on the farm, in the factory and at the port—not at the customs checkpoint.
Unless the decision to raise the customs dollar rate is accompanied by a credible plan to increase production and achieve fiscal recovery, it will cease to be a revenue measure within ninety days and become the spark for a new wave of price increases.
And it will be the citizen who pays the entire bill.
Analyst, Academic and Economist; Associate Expert at the Experts Centre for Development Studies and Crisis Analysis

Shortlink: https://sudanhorizon.com/?p=15725