South Sudan's secession and the loss of oil revenue

When South Sudan became independent in July 2011, Sudan lost the oilfields that had provided most of its export earnings and a large share of government revenue, since a large majority of the former country's oil output lay in the south. The Central Bank of Sudan faced a sudden shortage of foreign exchange, and the Sudanese pound, officially fixed, was repeatedly devalued while the parallel market rate moved further away. Inflation, financed by monetary expansion to cover budget deficits, rose to double digits from 2012 and above 100 percent during parts of 2020 and 2021, and subsidies were removed as part of reforms agreed with the IMF in 2021. Political turmoil, including the 2019 revolution, the 2021 coup and the war that began in 2023, has repeatedly disrupted any stabilisation and explains the persistent weakness of Sudan's output and price series.