Sudan's military government to issue new banknotes, but RSF says it will divide country

Sudan's military-backed government has ordered the replacement of high-denomination banknotes with new designs to try to combat counterfeiting and nullify looted cash, but the rival paramilitary Rapid Support Forces decried the plan as a "conspiracy to divide the country".

The new 500 and 1,000-pound notes will be circulated in eight regions that remain wholly under government control. Residents there have until December 23 to exchange the old notes, according to a statement by the central bank. Sudan has 18 regions.

The areas affected by the change are the Red Sea, Nile, Northern, Kassala, Qadaref, Blue Nile, White Nile and Sennar. Notably, Khartoum, the capital, which is mostly controlled by the RSF, will not receive the new legal tender. Smaller denominations will be introduced later, the bank said.

Sudan has been caught in a civil war since April 2023 after months of tension between the army and the RSF over their mandate and role in a democratic Sudan. Army chief Gen Abdel Fattah Al Burhan and RSF commander Gen Mohamed Dagalo are struggling for power over a vast and ethnically diverse nation home to 50 million people.

The conflict has killed tens of thousands, displaced more than 10 million and created the world's worst humanitarian crisis, with about 26 million facing acute hunger and some deemed to be on the brink of famine.

The RSF rejected the government's plan to issue new banknotes and said they would not be accepted in areas under its control. “It's a cunning conspiracy to divide the country,” it declared in a statement.

“It is a blatant violation of standard monetary regulations and an attempt to loot the public's money and use it to bankroll the war and fill the pockets of the gang in Port Sudan,” it said, alluding to the Red Sea city that is the temporary base for the military-backed government.

The central bank, however, said the change was partially designed to “protect the national currency and redress the negative effects of the war and counter the circulation of forged currency”.

The value of the Sudanese pound has fallen dramatically since the start of the war. It is currently trading in banks at about 1,920 to the US dollar, compared to about 750 on the eve of the war. But it is changing hands for about 2,220 to the dollar on the parallel market. Inflation is currently at 300 per cent.

Sudanese economist Badr El Deen Hassan was sceptical about the new notes, saying they would come too late to remedy economic ills.

“It's not a suitable moment for this step given the expansion of the war ... The cash looted from banks and government agencies has already been used to buy property, cars or converted to dollars,” Mr Hassan said.

He also questioned the bank's argument that it would help the shattered economy to recover, saying there were larger issues at play. Productivity had been badly hit by the war, while government revenue was down by more than 80 per cent and exports by 70 per cent, he said.

“The change of the currency notes can only meet its objectives if accompanied by the end of the war and solutions to the problems with exports,” said another Sudanese expert, Kamal Youssef, an economics lecturer at Khartoum's Al Nilain University.

“Any economy that does not embrace production solutions and good use of its resources and revenue will always be a failure.”

Al Shafie Ahmed reported from Kampala, Uganda