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abundance of natural and human resources
Sudan Economy
Sudan has an abundance of natural and human resources but remains a poor country. Economic mismanagement, the vicious circle between civilian and military coups and the civil wars prevented economic development, national
strategic planning, and growth for many years and continues to do so.
Agriculture is the most important sector of the economy, but the civil war interrupted its success, which caused disorder of the flow of inputs and outputs of agricultural products. Most importantly, although the economy is based on the agriculture sector, the development of the oil industry in the late 1990’s changed the structure of the Sudanese economy, which has led to a complete negligence of the agricultural sector. A classic example of this situation is the failure of the massive Aljazeera agricultural project.
For nearly a decade, the Sudanese economy counted and prospered on oil production and high oil prices, with revenue estimates of over $120 billion. Unfortunately, the oil wealth was not funneled into the productive economy – particularly
the agricultural sector – or into any of the significant basic, required and well- known infrastructure projects. Rather, it went into short-term economic gains, with a focus on the growth of commercial activities, as well as unprecedented government corruption. In addition, the new wealth went largely to the security system for protecting the regime, on fueling tribal conflicts and civil wars, and on financing the activities of the ruling party and its members.
Since the separation of South Sudan in 2011, Sudan has lost three quarters of its oil production, and continues to struggle to stabilize its economy and make up for the loss of foreign exchange earnings. In addition, the ongoing conflicts in Southern Kordofan, Darfur, and the Blue Nile states, along with the limited transportation network, a lack of foreign investment, lack of basic infrastructure in large areas, and reliance by much of the population on subsistence agriculture, keep close to half of the population at or below the poverty line (World Bank 2020).
Sudan introduced a new currency following South Sudan’s separation in 2011, called the Sudanese pound. Sudan formally devalued its currency in 2012, when it passed economic measures that included gradually repealing fuel subsidies. Since that time, the value of the currency has fallen drastically and continues to fall. Sudan has and is confronting a high inflation rate, which reached 47% in November 2012 but fell to about 35% per year in 2017 and rose to 57% in 2019 and to 166% in July 2020.
Development Plan and Debt
The government of Sudan drew up its first economic development plan in 1960, followed by many others over the succeeding years. Budget deficits and debt-service obligations were relatively insignificant in the early years, but large-scale borrowing has occurred since 1974. In 1979 public and publicly guaranteed long-term debt increased to more than US$2.5 billion, requiring Sudan to seek relief from its creditors, as it was apparent that it would not meet its obligations. Acting through the Paris Club, a group of industrialized creditor countries that included the United States, Japan, and nine West
European states, Sudan rescheduled an estimated US$400 million to US$500 million of the debt guaranteed by Western export-credit agencies. The agreed payments were to be made over a seven-year period, with an initial three-year grace period. In 1981 Sudan rescheduled another US$600 million in loans and interest, as its debt burden had increased to US$4 billion. Despite repeated rescheduling of Sudan’s debt burden, both arrears and debt-service payments continued to
increase (US Federal Research Division, Sudan A Country Study, Fifth Ed, LaVerle Berry).
Sudan’s economy steadily weakened, as did its relations with the IMF and the Paris Club. By mid-1990, total foreign debt had risen to US$13 billion, and debt arrears to the IMF totaled more than US$1.1 billion. In September 1990, the IMF adopted a “Declaration of Non-Cooperation” as a prelude to dismissal of Sudan from the fund, citing continuing problems with the arrears of its external debt payments since 1984. In May 1991, an IMF delegation arrived in Khartoum for discussions with the government and despite declarations by the Sudanese government that it was determined to cooperate with international lending organizations, Sudan was declared ineligible for debt relief by the international financial community because of its inability to service its debt.
In 1993 the IMF withdrew Sudan’s voting rights. In 1995 the country continued to struggle with a huge foreign debt as well as with high inflation, a serious shortage of foreign exchange, and declining foreign aid.
Since the early years of the National Salvation regime, the government made multiple efforts throughout the years and put in place many economic reform plans that were credited with re-establishing long-term economic growth, which included measures to reduce inflation; liberalize trade; strengthen the country’s external accounts by removing import and export restrictions; reduce customs tariffs, and rationalize the tariff structure; reduce the size of the public sector and increase privatization and deregulation; reform the banking sector; and revise investment and foreign-exchange controls. The government removed partial price subsidies and eliminated trade and non-trade barriers with commitment to paying its debt gradually, but the regime never respected its commitments and as a result the debt continued to rise rather than decline. By the end of 2009, the foreign debt had reached $35.7 billion, an amount that the IMF described as unsustainable. The country now has close to $56 billion in foreign debt.
Sudan’s current transitional government, which took office in September 2019, is negotiating with creditors to ease Sudan foreign debt.
Sudan is currently facing an unprecedented economic crisis, which highlights large fiscal and external imbalances, with an inflation rate at 167 percent in August and rising, and weak economic competitiveness and governance..
Based on an IMF press release No. 20/298, dated September 23, 2020, the IMF Board Endorses Staff-Monitored Program (SMP) for Sudan, the Government of Sudan requested the SMP to establish a strong track record of policy and reform
implementation, which is a critical pre-requisite for eventual debt relief that would eventually allow Sudan to access external borrowing. The SMP is scheduled for 12 months (covering July 1, 2020 – June 30, 2021) and according to the press release, it will support the government’s home-grown program of reforms aimed at stabilizing the economy, improving competitiveness, and strengthening governance. The overall goal of the SMP indicates that the government of Sudan
has a plan to continue the process of eliminating large fuel subsidies, broadening the tax base, and taking measures toward a unified market-clearing exchange rate.
Although the government is making huge efforts in trying to stabilize the current economic deterioration, including collaboration with the IMF through the 12 month SMP, these efforts and measures are focusing on finding
treatments to the symptoms, while the Sudanese economy is suffering from ‘cancer’, a cancer that is growing and spreading on a fast pace all over the Sudanese economic body. Therefore, unless and until major structural adjustments have been introduced and implemented, the economic deterioration will continue to worsen and may lead to a complete economic meltdown.
It is the SFCEP’s main goal to work vigorously on collecting and evaluating data, analyzing current issues and challenges and developing policy alternatives that could assist in finding the right cure for the economic disease.
More economic resources can be viewed or downloaded as PDFs in the links below.
More Economics Resources
More economic resources can be viewed or download as PDFs in the links below.
African Economic Outlook 2020 (Supplement)
Real GDP in Africa was projected to contract by 1.7 percent in 2020, dropping by 5.6 percentage points from the January 2020 pre-COVID–19 projection, if the virus has a substantial impact but of short duration. As virus continues beyond the year 2020, there could be a deeper GDP contraction in 2020 of 3.4 percent, down by 7.3 percentage points from the growth projected before the outbreak of COVID–19.
African Economic Outlook 2020
The 2020 Outlook highlights, however, that growth has been less than inclusive. Despite Africa’s solid growth performance, only about a third of countries achieved inclusive growth, reducing both poverty and inequality.
Growth’s fundamentals are also improving, with a gradual shift from private consumption toward investment and exports. And for the first time in a decade, investment accounted for more than half the continent’s growth, with private consumption accounting for less than one third.
Global Economic Prospects 2020
The report describes a global economy suffering a devastating blow. Our baseline forecast envisions the deepest global recession since World War II.
The report also includes an exhaustive analysis of the outlook for emerging market and developing economies, many of which are now fighting on two fronts—containing the domestic outbreak and its consequences while coping with the economic spillovers from the deep recessions in advanced economies.
IMF Discussion with Sudan
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2019 Article IV consultation with Sudan, the following documents have been released and are included in this package.
Sub-Saharan Africa-Macro Poverty Outlook
The projections contained in this volume are the joint product of the Macroeconomics, Trade and Investment, and the Poverty and Equity Global Practices of the World Bank. They were produced by a team of macroeconomic and poverty economists spanning the globe. These projections were produced while the COVID-19 pandemic was expanding rapidly, and the physical distancing and economic policy responses to it were in constant flux. As a result, the level of uncertainty over future events was particularly high. While we recognize that these projections will inevitably be revised as new information becomes available, we hope that sharing them at this time will make a positive contribution to policymakers’ struggle to respond to this generational challenge.
Macroeconomic Policies for Poverty Reduction: The Case of Sudan - UNDP
This report on “Macroeconomics Policies for Poverty Reduction in Sudan” is part of a global UNDP-supported project that started in 2001 and has grown to encompass policy-oriented research, advisory services and capacity development in 25 developing countries. Among the Arab States, UNDP has supported similar studies in Morocco, Yemen and Syria. This report has been prepared under the umbrella of the project: “Participatory Economic Policy Reform”.
This project is seeking to improve the national capacity to plan and monitor a comprehensive approach to the reduction of human and income poverty, taking into account the Millennium Development Goals (MDGs). This study has been funded mainly from the World Bank “Postconflict Fund”.
Sudan’s Oil Industry After the Referendum - Conference Report
On 7-8 December 2010, the conference on “Sudan’s Oil Industry after the Referendum” was held in Juba. The conference was attended by well over 100 representatives of the Government of Southern Sudan, diplomats, representatives of the Governments of Unity State and Upper Nile State, members of the National Legislative Assembly, the Southern Sudan Legislative Assembly and the Legislative Assemblies of Unity State and Upper Nile State, the SPLA, the Chinese National Petroleum Company, Total S.A, Churches, civil society organisations, the academic community, and the media.
Sudan Sustainable Natural Resources Management Project - Process Framework
Sudan faces environmental challenges due to its geographic location within the fragile Sudano-Sahelian and sub-saharan African zones. Short erratic rainy seasons, arid lands, and poor sparse vegataive cover contribute to the country’s volunerability.
Quick Facts About Sudan
The World Bank in Sudan maintains a portfolio across a range of areas, including education, health, agriculture, natural resource management, climate change, peace-building, and public financial management.