Country Risk Rating

The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely. - Source: Coface

Business Climate Rating

The highest possible risk in terms of business climate. Due to a lack of available financial information and an unpredictable legal system, doing business in this country is extremely difficult.


  • Strategic position between the Middle East and West Africa
  • Easing of sanctions imposed by the United States in 1997
  • Relative stabilization of diplomatic relations with South Sudan thanks to the oil agreement
  • Adjustment efforts under the IMF monitoring programme


  • Unsustainable external debt
  • Lack of investment in infrastructure
  • Significant business climate and governance shortcomings
  • Continuing high levels of human and food insecurity
  • High rates of unemployment (especially among young people) and poverty
  • Less activity in South Sudan, which is reducing outlets for Sudanese products
  • Claims for citizenship of South Sudan in the oil regions of the South and tensions in the Darfur region 

Current Trends

Moderate Growth, Dependent on Agriculture and Extractive Industries

Since the shock triggered by the secession of South Sudan in 2011, efforts have been made to re-establish macroeconomic stability and restore growth. Significant imbalances, linked to the loss of three-quarters of oil exports following the secession (and the corresponding income), continue to limit growth prospects, as do the difficult business climate, the lack of exchange rate flexibility, over-indebtedness, armed ethnic conflicts, and the lack of integration in international trade.

2018 harvests are expected to remain at their usual level after recovering from torrential rains in 2016. These should contribute to a modest pick-up in growth, which is largely reliant on agriculture and the extractive industries, as well as on public spending. The slight upturn in the barrel price should enable modest oil-related GDP growth, triggered by a cut in energy subsidies.

Slower monetary expansion should reduce inflation in 2018, even though it will remain very high due to rising oil (of which the country is a net importer despite surplus crude oil production) and food prices.

The easing of US sanctions is likely to have a limited impact in the short term, but over the longer term could encourage economic diversification and growth through the resumption of international financial transactions, helping to alleviate the pressure on the banks, and to restore FDI's and technology transfers.

Twin Deficits Proving Hard to Eliminate

The fiscal deficit will remain stable thanks to the cut in energy subsidies, which will, however, continue in turn to dull internal demand. Despite the efforts made to contain current spending and boost tax receipts, which would enable infrastructure investment and greater redistribution, the public deficit remains at a level requiring central bank financing – a financing method which encourages inflation.

The public and external debt ratios are high, and most of the external debt is in arrears. Because of the quasi-closing of access to international markets, Sudan has to resort to financing in the form of grants and concessional loans, and continues to work towards debt relief under the HIPC initiative. This should be made easier by the lifting of sanctions.

In 2018, the current account deficit will continue to improve because of the depreciation in the exchange rate, which will help reduce imports while boosting the growth of non-oil exports (livestock and sesame). International prices have boosted gold exports (which doubled in value in 2017) and oil exports. The easing of US sanctions should result in more trade partners in 2018, and also stimulate exports in general. However, foreign investment will not be enough to cover the deficit: substantial foreign aid is needed to avoid a fall in the foreign exchange reserves, which are already at very low levels (about six weeks of imports). Greater flexibility regarding the Sudanese pound, which is still considerably overvalued, will attract these investments.

A Very Difficult Political Context

Because of progress in the fight against terrorism and the management of internal conflicts, the United States has lifted almost all of the sanctions imposed in 1997. At the same time, the country has kept Sudan on its terrorism blacklist, and maintained sanctions relating to human rights violations in Darfur.

Coming to power after the coup d’état in 1989, President Omar al-Bashir is well placed to win the 2020 elections; the opposition remains fragmented and is too disorganized to present a credible alternative. In early 2017, the President reinstated the post of Prime Minister – a role that had been absent since the coup d’état – and formed a new government following a National Dialogue for «consensus». However, these demonstrations of a rebalancing in the distribution of power were not convincing in 2017, and social tensions persisted, fuelled by the regime’s failure to stem rising prices and to ensure the distribution of basic necessities.

Although the shared economic challenges associated with the production and supply of oil has led Sudan and South Sudan to co-operate, armed conflict persists in the Sudanese regions of South Kordofan and Blue Nile: the people in these regions identify more strongly on an ethnic level with the people of South Sudan and are demanding to become part of the country. However, their demands face repression by the Khartoum regime, which wants to maintain control over the oil resources in said regions. In 2003, economic and social marginalization of ethnic minorities led to the outbreak of conflict in the Darfur region, where the population also face repression by President Al-Bashir due to the presence of oil resources. Since 2016, unilateral ceasefire declarations by the Sudanese government have helped reduce national insecurity and the scale of population displacement linked to these conflicts. 


Coface (01/2018)