Sudan : Welfare Impacts of Recent Food Price Hikes, November 2017–July 2018
With the end of the oil economy in 2011, Sudan’s regime of subsidies for wheat and fuel became increasingly unsustainable. The loss of oil revenues in the wake of the secession of South Sudan in 2011 resulted in severe macroeconomic imbalances, including a substantial budget deficit, pressure on the exchange rate, increases in the inflation rate, and the emergence of a system of multiple exchange rates. Despite an increase in the fiscal cost of these subsidies due to downward pressure on the Sudanese Pound (SDG) and except for incremental price hikes for electricity and fuel, both wheat and fuel subsidies remained largely in place until the end of last year. This policy note aims to estimate the level and incidence of welfare effects of increasing staple food prices between October 2017 and July 2018. Combining household-level data from the first round of the National Household Budget and Poverty Survey 2014/15 and monthly wholesale prices collected in up to six major markets throughout the country, this note evaluates the distributional effects of recent price hikes. Future subsidy reforms should pay close attention to typical food price fluctuations over the year: ideally, reforms are implemented shortly after sowing and before the main harvest season. Food prices typically fluctuate substantially in Sudan over the course of the year. Fuel subsidy reforms should be timed to take advantage of this pattern, which would most likely mean that they should be initiated directly after the sowing season and before the beginning of the harvest season so that prices remain stable at this point.
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| Format: | Policy Note biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018-09
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| Subjects: | FOOD PRICES, POVERTY, CONSUMPTION, WHEAT SUBSIDIES, WELFARE IMPACT, |
| Online Access: | http://documents.worldbank.org/curated/en/797841628491511658/Sudan-Welfare-Impacts-of-Recent-Food-Price-Hikes-November-2017-July-2018 http://hdl.handle.net/10986/36098 |
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| Summary: | With the end of the oil economy in 2011,
Sudan’s regime of subsidies for wheat and fuel became
increasingly unsustainable. The loss of oil revenues in the
wake of the secession of South Sudan in 2011 resulted in
severe macroeconomic imbalances, including a substantial
budget deficit, pressure on the exchange rate, increases in
the inflation rate, and the emergence of a system of
multiple exchange rates. Despite an increase in the fiscal
cost of these subsidies due to downward pressure on the
Sudanese Pound (SDG) and except for incremental price hikes
for electricity and fuel, both wheat and fuel subsidies
remained largely in place until the end of last year. This
policy note aims to estimate the level and incidence of
welfare effects of increasing staple food prices between
October 2017 and July 2018. Combining household-level data
from the first round of the National Household Budget and
Poverty Survey 2014/15 and monthly wholesale prices
collected in up to six major markets throughout the country,
this note evaluates the distributional effects of recent
price hikes. Future subsidy reforms should pay close
attention to typical food price fluctuations over the year:
ideally, reforms are implemented shortly after sowing and
before the main harvest season. Food prices typically
fluctuate substantially in Sudan over the course of the
year. Fuel subsidy reforms should be timed to take advantage
of this pattern, which would most likely mean that they
should be initiated directly after the sowing season and
before the beginning of the harvest season so that prices
remain stable at this point. |
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