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.


  • Untapped agricultural (extensive arable land) and mining (gold and oil) resources
  • 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 (ceasefire signed in 2018)
  • Ongoing democratic transition process, which has been welcomed by the international community


  • Unsustainable external debt (USD 60 billion, including a significant portion in arrears)
  • Lack of investment in infrastructure
  • Significant gaps in business environment and governance; endemic corruption (172nd out of 180 in Transparency International’s Corruption Perceptions Index 2018)
  • Currency shortage and sickly banking system
  • Persistent human and food insecurity
  • High levels of unemployment (especially among young people) and poverty
  • Calls in the southern oil-producing regions to join South Sudan and tensions in the Darfur oil region
  • Included on the US list of state sponsors of terrorism

Current Trends

The recession continues

After two years of recession, growth is expected to remain negative in 2020. Major imbalances, linked to the loss of three-quarters of oil exports following South Sudan’s independence in 2011, continue to weigh on the economy. Private investment will be hampered by a lack of integration into international trade, high exchange rate risk, political instability and a weak business environment (171st in the Doing Business 2020 ranking). The infrastructure deficit and unreliable electricity supply will continue to limit private sector development. The decline in public finances is expected to depress public investment. Inflation will remain high, supported by monetization of the budget deficit and the continued devaluation of the Sudanese pound. It will continue to have an adverse effect on private consumption, which accounts for 80% of GDP. The oil sector, which made up one-quarter of exports in 2018, will continue to decline, after China National Petroleum, Petronas (Malaysia) and CGSB Videsh (India) left the country in August 2019, after not receiving dividends owed by the government since 2011. Nevertheless, if successful, the licensing round scheduled for 2020 could revitalize the sector’s activity. Sudan is Africa’s second-largest gold producer, and gold production is expected to support the mining sector despite its low productivity, with artisanal mining accounting for 80% of production. The country’s economy will continue to depend on the agricultural sector (30% of GDP and 80% of employment), which suffers from low yields due to underinvestment.

Difficult economic situation

Budgetary revenues (less than 6% of GDP) are set to decline, constrained by poverty and recession, as well as inefficient tax administration. Oil revenues, the main source of income, may be significantly reduced by the (downward) renegotiation of royalties paid by South Sudan for the use of Sudanese oil facilities. As expenditure remains high, in particular, due to the continuation of wheat and fuel subsidies until at least June 2020, the budget deficit will increase. In the absence of access to international capital markets, the government will continue to monetize. The country’s already substantial public debt will be increased by further devaluations since much of the debt is denominated in dollars.


The massive current account deficit is expected to increase. Exports, a quarter of which is crude oil, will be affected by lower prices and production. Smuggling drains a significant portion of gold export revenues (25% of trade). However, after the severe contraction in 2019, as activity came to a halt during demonstrations, the country’s exports are expected to increase. Imports, mainly of basic necessities, are expected to increase thanks to the relative political stabilization and limited investment. The large public debt, which is mainly external and composed of arrears, entails high-interest payments. Despite the government’s efforts to attract FDI, these investments will remain too scarce to finance the current account deficit. As the level of foreign exchange reserves is already low, international financial assistance will be required. In addition, the government is expected to focus its efforts on reducing the gap between the official exchange rate (pegged to the dollar) and the black market rate, suggesting further devaluations.

Fragile political and institutional transition

After 30 years in power, Omar al-Bashir was deposed and arrested by the army in April 2019 following a popular uprising, triggered in December 2018 by an increase in the price of bread. The Transitional Military Council set up at that time was then replaced, after talks between military and civilian representatives, by a Sovereign Council comprising mostly civilian representatives but chaired by a general until 2021. The Council of Ministers, the executive body of the transitional regime led by economist Abdallah Hamdock, has the daunting task of ending the internal wars, building peace and finding lasting solutions to the country’s urgent economic and political issues. The appointment of a Constituent Legislative Assembly is the next step in the transition process before general elections in 2022. However, the challenges are considerable and, despite the establishment of a ceasefire in October 2019, calls in the South Kordofan and Blue Nile regions to join South Sudan, and the marginalization of ethnic minorities in Darfur, are expected to continue to generate conflict.


Although the US lifted almost all sanctions against Sudan in 2017, the country remains on the US list of state sponsors of terrorism. In addition to curbing foreign investment, being on the blacklist blocks loans from international institutions and makes the country ineligible for debt relief. The Gulf countries, notably the United Arab Emirates and Saudi Arabia, are nevertheless supporting the country through humanitarian aid (fuel, wheat) and loans, largely concessional, so that the government can cope with imports and currency shortages. However, this emergency funding is not an answer to the economic crisis overwhelming the country, although a solution is absolutely vital to the success of the democratic transition.


Coface (02/2020)