1.  Bushra khair – central bank of Sudan  Rasamoelison Miora-central bank of Madagascar  Hassan Mahgoub -central bank of Sudan

2.  Introduction  Monetary transmission mechanism (MTM)and Sudan economic structure  Analysis of real sector  Analysis of financial sectors  The reaction of the monetary policy to the economic system  Monetary aggregate analysis  Econometric analysis of the reaction  Conclusion

3.  Main policy guidance  Government strategy  Three recovery programs  Main players (drivers) ◦ Agriculture structure ◦ Oil production and division ◦ seccession of south Sudan(2011) and civil War  As results: ◦ Low GDP growth rate and productivity ◦ Internal and external imbalanced ◦ High level of Prices and exchange rate depreciation ◦ Non p loans  The objective:  Check how the Sudanese economic system will react after one policy instrument shock depending on real and financial sectors structure and the sense of data

4.  The conditions on which MTM work: ◦ The structure of economy ◦ Financial sector ◦ Others (fiscal dominant)

5.  Agriculture sectors (formal and informal)  Industry (intermediate goods)  Services sectors (non tradable goods)  Labor markets  Prices move from one digit up to 40%  Exchange rate depreciation round 40%

6.  Low level of monetarization (around M2/GDP=25%-30%)  Low level of competitiveness ( lending rate=15%)  High level of concentration (30 commercial banks, 5 to 6 of them have the main part in loan market, but change overtime).  Degree of openness (Imports /GDP)around 15% last years ---30%

7.  Monetary agregate  Exchange rate

8.  The main variable of the model ◦ Cpi - consumer price index ◦ M - monetary aggregate ◦ E - exchange rate ◦ RY- real GDP  The main policy(tool,channels) ◦ Monetary aggregate ◦ Exchange rate

9.  Stationarity test  Cointegration test  Granger causality test  VAR model  Impulse response and variance decomposition  ECM model  S VAR model  Data sample(2000Q1:2013Q4)

10. ◦ Cpi ~ I(2),log(m~) I(1),logE~ I(1), log(ry~) I(1)

18. Real sector Financial sector Fiscal dominant Internal and external imbalances After an action on exchange rate from the central bank, the model didn't show any significant reaction on the GDP and prices in the short terms due to the data history Based on the shocks the government implement Three and five year recovery program

19. Thank you very much