Restoring international banking relations could give vital support to an economy still in crisis after more than 18 months of political transition following the ouster of former President Omar al-Bashir.
Banks are banned from correspondent relationships involving US dollars and have had difficulty dealing in other major currencies for nearly twenty years.
Importers rely on brokers with high costs to obtain foreign currencies, which means an additional cost to local consumers and helps exacerbate inflation, which currently stands at 220%.
On October 27, the general manager of Al Baraka Bank of Sudan said that the bank had completed the first dollar-denominated cash transfer in years to Sudan, as it brought in dollars from New York through its brother Al Baraka Bank Egypt, which is based in Cairo.
Al-Rashid Abdul Rahman Ali told Reuters that the conversion, which is a Sudanese trading company, was the first in nearly 20 years. “I think since the early years of the second millennium,” he added.
Most of the major foreign banks began to withdraw gradually since 2000, as the United States cracked down on dealings with Khartoum.
Washington formally lifted economic sanctions on Sudan in 2017, but continued to designate it as a state sponsor of terrorism, partly due to its suppression of the rebellion in Darfur.
Foreign banks are awaiting the removal of the country from the list of states sponsoring terrorism before re-establishing banking relationships, as they are concerned that they may be subject to secondary penalties existing against individuals with links to the Darfur war.
Ibrahim Al-Badawi, who stepped down in July from the position of Minister of Finance of Sudan, said that this is a major obstacle to the private sector, adding that this causes a great cost because it requires dealing with intermediary banks in the region, which entails burdens in terms of time and service provided by these banks.
A government of experts working under a governing council that includes both military and civilians has made unremitting efforts to remove Sudan from the list since last year.
On October 20, US President Donald Trump announced his decision to remove Sudan from the list of state sponsors of terrorism while seeking to push the country to agree to normalizing relations with Israel, and later sent the decision to Congress, which has 45 days to approve or reject it.
Heba Mohamed Ali, the acting finance minister in Sudan, said on October 27 that banks may start working the following week to establish relationships with American and European banks, and Al-Badawi said that this would definitely be of very great value in terms of reducing costs as well as time to conduct transactions.
Yusef Al-Tani, CEO of The United Money Bank in Khartoum, said that the first steps of Sudanese banks would be to communicate with former correspondent banks in Europe and the United States, but he warned that many banks may not find attractive in the small Sudanese market at the present time due to the implications of this. Legal effort and effort to comply.
“Banks around the world need time to change their internal communications with the markets, train people and change their compliance records and systems to say that transactions from Sudan are permissible,” he added.
Bankers hope that an initial agreement signed by Sudan with General Electric in October to support electricity generation will stimulate at least some US banks to speed up the process.
Under the agreement, GE agreed to rapidly construct mobile turbines and rehabilitate existing power stations to increase electricity generation by up to 470 megawatts.
The acting finance minister says Sudanese citizens will feel an immediate benefit once correspondent relations are restored as they will be able to receive remittances directly from Sudanese working abroad.
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