Former Bank Managers Reject Sovereignty Council’s Decision to Control Central Bank of Sudan

Former general managers of banks in Sudan have expressed their disapproval of the Sovereignty Council’s decision to subordinate the Central Bank of Sudan to its control, rather than the Council of Ministers.

Independence of Central Banks

Dr. Kamal Al-Zubair, former General Manager of United Capital Bank, explained that central banks in most countries enjoy complete independence in their monetary policies. This independence allows them to make decisions that are in the best interest of the economy, such as controlling inflation and regulating the money supply.

Constitutional Decree

Lieutenant General Abdel Fattah Al-Burhan, Chairman of the Sovereignty Council, recently issued a constitutional decree assigning the Bank of Sudan to the Council. This move is seen as an attempt to strengthen the role of the sovereign in managing economic affairs.

Global Practices

Dr. Al-Zubair pointed out that central banks globally do not allow the Ministry of Finance to borrow from the banking system except within certain recognized ratios. He also emphasized that the authority to supervise the central bank and appoint its leadership lies with the legislative bodies or state leadership.

Possible Motivations

Dr. Al-Zubair suggested that the decision to subordinate the Central Bank of Sudan to the Sovereignty Council may have been motivated by a desire to separate it from the Ministry of Finance and give the Council some executive authority over it. However, he believes that this decision may have been driven by political rather than fundamental considerations.

Current Situation in Sudan

Dr. Al-Zubair described the current situation in Sudan as unbalanced, with most of the country’s facilities not operating in accordance with generally accepted principles and controls. This makes it difficult to determine which financial policies can be followed in the future.

Link to Ministry of Finance

Dr. Othman Al-Tom, former General Manager of the Bank of France, pointed out that the Central Bank was previously linked to the Ministry of Finance more than it was linked to the Council of Ministers. This led to the bank continuing to print money while presenting to the Ministry of Finance, which was unable to provide real resources to pay its obligations.

Consequences of Borrowing

Dr. Al-Tom emphasized that the Ministry continued to borrow from the banking system without the ability to repay, leading to the acceleration of inflation and the deterioration of the local currency exchange rate. This also led to the erosion of banks’ capital and the inability of the Central Bank to pump money into the banks to help them meet the financing needs of the productive and service sectors.

Positive Step

Dr. Al-Tom suggested that if the goal of subordinating the bank to the Sovereignty Council is to prevent, control, and rationalize debt and encourage finance to find alternatives to debt, it could be a positive step. However, this would require practical steps to include other reforms, such as finding alternatives to debt, rationalizing government spending, and improving the efficiency of the tax system.

Need for Independence

Dr. Al-Tom highlighted the need for the independence of the central bank for the stability of monetary policy, the banking system, and the economic sectors as a whole.