Sudan central bank ups dollar supply after gold sale

KHARTOUM (Reuters) - Sudan's central bank is increasing dollar supplies to local banks to stop a slide of the Sudanese pound after it generated more than $300 million from gold sales, a central bank official said on Sunday.

The African country is undergoing a severe economic crisis after losing three-quarters of its oil production when South Sudan became independent in July under a 2005 peace deal. Oil is the lifeline of both economies.

Sudan has avoided an Arab spring like Egypt or Tunisia but the economic crisis has sparked small protests against high food price inflation.

The pound hit a historic low on the black market last week after losing more than 70 percent of its value since July as the loss of oil has cut off the main source of dollars.

"The central bank has sold 6.5 tonnes of gold since January which has generated more than $300 million," central bank spokesman Hazem Abdul-Qadir told Reuters.

"Therefore we are increasing dollar supplies to banks and foreign exchange offices," he said.

He gave no figures but said dollar supplies would top the $35 million banks currently get per week from the central bank.

He said Sudan had managed to get some foreign aid but declined to elaborate. Sudanese media have said that Qatar will grant a substantial loan but nothing has been confirmed so far.

Sudan is locked in a row with South Sudan over oil payments as the landlocked new nation needs to export its crude through northern facilities.

Both sides have failed to agree on a transit fee. South Sudan shut down its entire output last month after Sudan seized southern oil as compensation for what it calls unpaid fees.

Sudan hopes rising gold exports will replace oil revenues but experts are sceptical since much of the gold comes from small-scale miners whose output is hard to verify.