By Mark Ford

Sudan is facing a letter of credit (L/C) shortage because citizens are hoarding foreign currency ahead of the upcoming referendum that might see the country divided into two states.

A referendum is scheduled to take place on 9 January in the south of Africa's largest country on whether to secede.

Stashed away

Many Sudanese, particularly in the north of the country, have reportedly moved money into foreign currency that they are now hoarding at home.

They fear a run on the Sudanese pound if the south votes for independence.

Booming economy

Over recent years, oil production has begun in Sudan, the revenues from which have given a massive boost to the economy.

Sudan now earns around 90 per cent of its foreign currency from oil sales.

L/C pressures

But as a result of the foreign currency shortages, several banks in the Sudanese capital of Khartoum are reportedly now unable to provide importers with sufficient L/Cs.

Moreover, the L/C shortage appears to be putting additional pressure on Sudanese importers.

Earlier this year, the central bank ordered banks to require 100 per cent coverage for any L/Cs opened for imported goods.

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