Sudan has introduced a selective ban on import letters of credit (L/Cs) in an attempt to bolster the country's foreign currency reserves.

While the government believes the prohibition of certain imports will help trim hard currency usage, analysts suggest the L/C ban will have little impact on an economy based on oil exports and defence spending.

Proscribed imports

The L/C ban has been imposed on imports considered by the central bank of Sudan to be luxury goods or to have readily available alternatives domestically.

A directive issued earlier this month by the central bank proscribes the importation via L/C transaction of furniture, some live animals and birds, several types of beverages and foodstuffs as well as a broad selection of consumer goods.

Under the central bank's directive, local banks have been banned from financing any imports of these products or issuing L/Cs for them.

Impact assessment

Some analysts say the ban on imports of consumer goods is unlikely to have a big impact on Sudan. A recent study estimated that as much as 80% of Sudan's budget is spent on defence and security.

Critics of the government in Khartoum argue that some of this money should have been invested in the country's industrial and agricultural sectors.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.