Abstract:
The paper investigated the effect of the devaluation of Sudanese Pound on the Sudan's
balance of payments during the agricultural – based decades (1973 - 1993), and the
oil-based decade (2002 -2012). To achieve this goal, Marshall -Lerner approach was
applied using an annual data covering both periods. The results obtained showed that
during the period (1973 - 1993) the weighted average of the estimated elasticity of
exports and imports were (0.073) and (0.163) respectively, and equal to (0.465) and
(0.231) respectively for the (2002-2012) period. Thus, based on Marshall -Lerner
approach, the sum of these elasticities in the two periods was less than one, indicating
that devaluation had worsened the Sudan's Balance of Payments deficit. The structural
rigidities characterizing the Sudanese economy and the high inelastic nature of the
supply of the agricultural products that dominate Sudanese exports during the first
period; besides the inelastic foreign demand for the Sudanese exports (as the study
results show), coupled with the essential nature of the imports and the absence of
domestic substitutes, may provide an explanation for the above-mentioned results.
Accordingly, appropriate economic policies should accompany the implementation of
the devaluation policy in order to have a positive impact on balance of payment
