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 stabilisation of diplomatic relations with South Sudan thanks to the oil agreement
  • Budgetary 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

Modest Growth Weakened by Austerity Measures and Alarming Inflationary Pressures

Since the shock triggered by the secession of South Sudan in 2011, efforts have been made to re-establish macro-economic stability and restore growth in Sudan. Nevertheless, 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. These structural weaknesses will continue to hinder private investment and, more generally, growth in 2018, despite the lifting of most US sanctions in October 2017. In the longer term, this decision could promote economic diversification and growth, in particular through the recovery of international financial transactions, easing pressure on banks, a revival of FDI, and technology transfers. In 2018, despite fairly good weather conditions which will benefit the agricultural sector, growth should even slow down. The increase in inflation, due to the withdrawal of many subsidies (notably for energy and wheat), the transmission effect of the depreciation of the Sudanese pound (devalued in January and February 2018) on prices and the rise in oil prices (the country is a net importer of petroleum products despite a surplus of gross production), will weigh on private consumption, which represents nearly 80% of GDP. In addition, austerity measures aimed at containing the budget deficit are expected to constrain public investment and consumption. The main positive contribution to growth is expected to come from modest oil GDP growth, which should benefit from the recovery in the price of oil.

Growing Twin Deficits

After three years of stabilisation, the fiscal deficit will widen in 2018. Despite the efforts made to contain current spending, the sluggishness of the growth will weigh on tax revenue, which will then be lower than expected.  In consequence, the public deficit will remain 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 rise again, despite the depreciation in the exchange rate, which was expected to reduce imports while boosting the growth of non-oil exports (livestock and sesame). The easing of US sanctions should also have stimulated these exports. Nevertheless, in the first quarter of 2018, the country recorded a decline in exports compared to the first quarter of the previous year. The withdrawal of these sanctions should, however, allow for a multiplication of commercial partnerships. The country has, for example, concluded economic cooperation agreements with Russia and Turkey a few months after the United States' decision. However, foreign investment will not be enough to finance 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 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, despite the discontent of the Sudanese population with regard to him. The opposition remains fragmented and is too disorganised 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, and social tensions persist in 2018, fuelled by austerity measures, like the cut in subsidies, as well as the regime's failure to stem rising prices

The shared economic challenges associated with the production and supply of oil has led Sudan and South Sudan to co-operate. On 12 September 2018, with mediation from Sudan government, a peace agreement between the South-Sudanese government and the rebels was concluded. If respected, this agreement should promote oil production in Southern Sudan and, thus, benefits the Sudanese economy. However, 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. In the Darfur region, economic and social marginalisation of ethnic minorities also generates tensions. 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 (09/2018)