Protests in Sudan and the IMF

The hope of protesters in Khartoum, Omdurman, Wad Medani, Port Sudan and every other town where people have taken to the streets is that this time will be different. Despite the daunting odds and the unsuccessful record of protests in recent years, they believe the regime can, and will, fall. That popular action in the cities of the riverine centre will succeed where traditional opposition parties have failed. That where wars on the margins of Darfur, South Kordofan and Blue Nile remain mostly distant, classic economic strife will alienate those who have kept the regime in power or assented to its position. That shutting down the internet and shooting unarmed civilians on the street are signs of desperation. Fervent though those hopes are, there’s no guarantee that this time will be different. Only hope.

The government calculates it can outlast the protests, that its brutality will have few significant consequences in the long term, and that its economic stewardship should be judged on its management of the economy since 1989 (aka the hot dog and pizza thesis). And then, there is the argument that would please neo-liberals: ‘just following IMF directives’. To quote from the Fund’s Sudan: Selected Issues Paper, published in November of last year:

Fuel subsidies are not only fiscally costly, but also inefficient and inequitable; their removal would deliver substantial gains to Sudan…Less than full pass-through of international price increases to domestic consumers dilutes their incentives to improve energy efficiency and results in higher import costs.

Your average Sudanese might retort poverty is the best incentive for energy efficiency. Still, the IMF makes the argument slightly more convincing when it notes:

The leakage of subsidy benefits to higher-income households means that price subsidies are a very costly approach to protecting poor households. For example, every SDG transferred to the bottom income quintiles through price subsidies costs the budget almost 33 SDG.

And then barely a paragraph later does its best to lose sympathy for its argument by pronouncing:

Price subsidies are a passive approach to social protection and do not induce poor households to pull themselves out of poverty through their own efforts.

As if poverty was a lifestyle choice.

And the solution?

A successful reform strategy…requires an effective public information campaign that clearly sets out the shortcomings of subsidies, the fiscal risks and urgency for reform, and the details of a reform strategy that addresses the various policy challenges. This reform strategy should be (i) gradual to allow consumers to adjust their consumption and minimize the inflationary impact; (ii) sequenced to minimize the impact on poor households and allow time to strengthen the social protection system; and (iii) durable to avoid a recurrence of subsidies.

So, the IMF might quibble with the less than gradual means by which the subsidies were lifted, and judge the president’s ‘public information campaign’ efforts as insufficient. But the thrust of its advice is now government policy. Their economic models seem to have overlooked the cost of scores of destroyed businesses and petrol stations, the costs of (even more) repression and brutality and the blow to productivity with hundreds of thousands of days of school and work lost. And what price does the IMF put on the dozens of lives needlessly taken? And those still to be lost?

Further IMF conclusions might even amuse if they weren’t linked to the tragedy of the last few days:

International evidence suggests that the combination of large relative price increases and a lack of compensation programs and public outreach can lead to political unrest in a politically fragile environment.

And it’s also a question of how you read the report – elsewhere the same document notes:

international experience shows that most subsidy reforms occur without major civil unrest…

Chalk one up for the counter-factual cases of ‘international experience.’

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7 thoughts on “Protests in Sudan and the IMF

  1. Salma Soliman

    Well said… in fact IMF advice to Mahi’s regime on the late 70s led to serouse economic failure and was the main reason for the government break down. thank you for sharing this article fantastic

    Reply
  2. Pingback: Sudan’s Government Isn’t Going Down Without a Fight | obsessionsys.com

  3. Ibrahim Adam Sudan (@IAdaminSudan)

    Dear Mr. Verjee:
    Let me refer you to my tweet (https://twitter.com/IAdaminSudan or handle @IAdaminSudan) to @JamesCopnall:

    “R #US + #IMF culpable? [Hint Aly V. + other readers: Hell Yes!!) 1) #IMF blind 2 socio-pol context of fuel sub removal 2) no #IMF $ 2 offset impact cos of #US sanctions."

    I also warned publicly long time about the dangers of the IMF's (and de facto the United States Government's) stance on Sudan when ubiquitous 'Sudan Watchers' like Mr. Verjee were dazzled (still?) by all things political about Sudan.

    Mr. Verjee – your points about the economic impact (damage to petrol stations, loss of productivity days etc) are irrelevant in the main scheme of things and have missed the big economic picture of the demonstrations; so read on: see Ibrahim Adam comments here (http://blog-imfdirect.imf.org/2009/09/10/imf-helping-africa/#comment-238) and here (http://blog-imfdirect.imf.org/2009/09/10/imf-helping-africa/#comment-270) on the IMF's own blog - IMF Direct - that I posted way back in 2009; find the typically evasive, ignore-the-elephant-in-the-awda response by the IMF to my initial comment here from its then Division Chief for Sudan: http://blog-imfdirect.imf.org/2009/09/10/imf-helping-africa/#comment-269.

    (And also note that the IMF had zip response to my second finger-on-the-button reply).

    My comments on IMF direct - piqued by a self-aggrandising article from the then IMF head for Africa about "IMF: Helping Africa through the [recent global financial] Crisis) just go to underline why the REAL villains of the recent sad events in Sudan are NOT the Sudanese government (as you’ve stated predictably) or the demonstrators, but the IMF and the US Government.

    Key takeaway:

    Some of us saw the events of the past 10 days or so in Khartoum and elsewhere coming a while back; the United States should count itself lucky that the demonstrations were not outside its embassy in Khartoum. Ditto the IMF office in a quite dusty backstreet of Khartoum

    Best,

    Ibrahim Adam,
    Sudan

    Reply
    1. thoughtsonthesudans Post author

      Mr. Adam: evidently this is a critique of more recent IMF advice, although I certainly congratulate you on your foresight in 2009. If you want to defend the Sudanese government for its handling of the protests, that’s your prerogative.

      Reply
  4. Ibrahim Adam Sudan (@IAdaminSudan)

    Dear Aly V:

    My posts in 2009 are also a “critique of more recent IMF advice” (by which you obviously mean its decades long call for the removal of fuel and other untargeted consumer subsidies in Sudan). They are two sides of the same coin.; namely the IMF demanding yet more meat from an already bare bone – de facto because of US sanctions (read Sudan’s unjustified continued inclusion on the US’s SST list that, in turn, underpins the exceptionally hardline IMF approach to Sudan).

    Mr. Verjee: “defend”??
    No you’ve missed the point completely: it’s not about a banal, ‘yah-boo’ focus on that.

    My comments are about imploring ordinary Sudanese to wake-up (!!!) and see who the REAL villains of the piece are:
    The IMF and US sanctions.
    It is that (not so) splendid ignorance e.g. visible right now in the twittersphere (see small pic debate between @AhmadMohamed10 and @Meltilib) that, as I pointed out in my 2009 post, allowed the IMF with the backing of its Executive Directors (which includes so-called friends of Sudan/Sudan stakeholders) to disgracefully demand in the midst of the largest slump in the global economy since the Great Depression that the Sudanese gov cough up for a debt incurred many, many moons ago; and that demand to be met with not even a pip-squeak of protest from the ubiquitous, constantly hand-wringing, wailing, and gnashing of teeth Sudanese chatterati at home and abroad, which is so blindly obsessed with all things NCP.
    Shameful on all accounts.

    Then again, ignorance is bliss to many, I suppose.

    Wiv Salaams,

    Ibrahim Adam,

    Sudan

    https://twitter.com/IAdaminSudan

    Reply
    1. thoughtsonthesudans Post author

      The point of my article was to criticise the IMF’s advice. I think we’re in agreement there. But there are also limits to that culpability: the IMF isn’t the one shooting protesters.

      Reply
  5. Ibrahim Adam Sudan (@IAdaminSudan)

    Yes we are in agreement viz IMF- although as I’ve pointed out for very different reasons. “Culpability”: don’t overlook that the IMF’s nastiness (call it for what it is) towards Sudan (at the behest of US sanctions as I’ve pointed out) have, if indirectly, caused ’1000′s and 1000s of needless deaths in Sudan over the years. Not bang on-trend to say that, I know, but true nonetheless; just like it’s only know been acknowledged that US-prompted blockade of international aid to Al-Shabab held areas of Somalia led to (the unintended, though clearly foreseeable) 1000s of deaths of Somali civilians.

    Yes, no question: it’s also a tragedy that protestors were shot. And it’s a tragedy, too, that the protests morphed quickly into a mindless orgy of wanton violence on private property: petrol stations dangerously set alight; cars torched; muggings of ordinary people on the street; and break-ins into homes.

    Key takeaway: so when you look it, nobody came out of the recent events smelling of roses: not the Sudanese government, not the protestors, not the IMF – and, as I’ve also pointed out if we dig deeper into the circumstances – not the US government.

    Your comments, Mr. Verjee, quelle une surprise, just point out the easy whipping boy – the Sud government – as if the circumstances that led to the (very tragic) deaths just happened in a vacuum: context, as usual, is everything.

    Wiv Salaams,

    Ibrahim Adam,

    Sudan

    Reply

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