Oil windfalls during the 2000s were largely squandered, with Sudan failing to build the foundations of a non-oil economy. As part of the sanctions, the country was designated as a state sponsor of terrorism (SST), which restricted foreign assistance and debt reduction, resulted in isolation from the global financial system, and banned military exports. Reforms were prioritized to address weaknesses in the public financial management (PFM) system, contain excessive spending, and stabilize the exchange rate, paving the way for heavily indebted poor country (HIPC) debt relief. A system of multiple exchange rates and an informal parallel market contributed to macroeconomic instability. In addition, reforms were initiated to strengthen and eventually scale up the social protection system. With the recent conflict, the situation has become even more dire, highlighting the urgent need to quickly resolve the conflict, return to political stability, and resume critical reforms needed to get the country back on track to building the foundations for inclusive and resilient growth.
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