The main objective of the research is to evaluate the performance of the monetary and credit policy carried out by the Central Bank of Sudan after declaration and adoption of the liberalization measures. The study surveyed the performance of the financial system during the pre-reform period to comare between the two periods. It also reviewed the steps of transition from direct to indirect instruments of monetary policy. CBOS financial reform package as well as its liberalized monetary policy for the post liberalization period (1990) have been evaluated with respect to achieving the main targets; namely, inflation, exchange rate, liberalization, and targeted GDP growth rate. The study proved that liberalization of monetary policy tools has effectively enhanced the capacity of the banking sector to attract more savings, and mobilize them towards productive investments. As for exchange rate market reform, the policy package applied has effectively contributed to stabilization of the exchange rate. It also encouraged banks to create foreign exchange reserves with the Central bank, which were used to stabilize the exchange rate. The study also addressed the problem of inflation and price stability as one of the targets for libralized monetary policy. Inflation control has contributed indirecly in in strengthening of the banking system and facilitating its role to attract and mobilize savings. The econometrics test proved that money growth and inflation tend to be highly correlated.It is concluded that targeting banks finance, banks reserves with the CBOS and use of OMO to control the monetary base, contributed significantly in stabilizing inflation . The study recommended a set of policy options that seem to be vital for successful monetary policy in its endeavors to realize its ultimate gools. These recommendations are summerized as follows: -It is essential for the credibility of monetary policy geared to targeting low inflation that financial vulnerabilities of the banking system to high cost for credit and to large fluctuations in credit cost be corrected. -Maintaining tight liquidity, where needed, better be done primarily via open market operations. Non-remunerated reserve requirements (LRR) on bank deposits and credit controls could be used only as a last resort. - CBOS needs to follow policies that encourage mobilization of external loans and capital inflows.