KHARTOUM, July 20 (Reuters) - Sudan's struggling economy took another hit this week after the United States postponed a decision on lifting sanctions, causing the Sudanese currency to slide, prices to rise and businesses to halt sales.
The United States last week postponed for three months a decision on whether to permanently lift 20-year economic sanctions that have hobbled the Sudan's economy and cut it off from the global banking system.
Businessmen in Khartoum said the postponement dealt another blow to an economy that's been in turmoil since 2011, when the south seceded and took with it three-quarters of Sudan's oil output, the main source of foreign currency and state income.
The Sudanese pound lost over 13 percent of its value against the dollar on the unofficial market just over the past week, dropping to 21.5 pounds from 19. A severe shortage of hard currency has for months forced businesses to resort to the black market to get the dollars they need to import.
"The import companies we deal with said the extension of sanctions has increased the price of the dollar, and most food items like canned food, sugar, flour, cooking oils and biscuits come from outside Sudan," said Mohamed Abdallah, the owner of a supermarket in central Khartoum where tomatoes have jumped to 30 pounds from 20 the week before.
The import-dependent country had an annual inflation rate of 32.63 percent by May, after the pound weakened by over 50 percent against the dollar in the past year. Prices have also been driven up by cuts in fuel and electricity subsidies as the government tries to save cash .
Some businessmen said they stopped making sales altogether this week, unable to price goods that could rapidly grow more expensive should the dollar price continue its rapid ascent.
"There is a state of utter confusion. We don't know whether to stop selling products or to continue... it's difficult to set prices," said the manager of a company that imports electrical equipment who declined to be named.
"It's better to keep the goods in storage than sell at prices that could make us a loss, because we import all our goods from abroad and are buying hard currency on the black market," said an official at a pharmaceutical company.
Sudan argues that it has complied with a list of U.S. demands required to secure permanent sanctions relief. The list includes resolving internal military conflicts in areas such as war-torn Darfur, cooperating on counter-terrorism and improving access to humanitarian aid.
President Omar al-Bashir froze the work of a committee formed with the United States to negotiate sanctions relief just after the U.S. postponement, deepening uncertainty over whether the penalties would be lifted in three months.
Many in Sudan's business community said they were optimistic about the prospects for permanent relief, a measure they said would attract new investors. As it is, those investors are sitting on the sidelines waiting for a final decision that would enable Sudan to secure new markets for its goods, potentially netting it badly needed hard currency.
"The extension of sanctions is a huge blow. We were expecting them to be lifted, and it comes at a critical time when the export season for our agricultural crops is about to begin ... their continuation means we can't reach new markets," said the owner of an agricultural export company.
Others have turned their blame on the government.
"We are facing a disaster and are being hit with losses and the government is not interested in anything except collecting taxes," said Abdullah, the supermarket owner. (Reporting by Khalid Abdelaziz; Writing by Eric Knecht; editing by Patrick Markey, Larry King)