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PERFORMANCE
OF THE SUDANESE ECONOMY DURING 1990-2001:
Sudan has since
early 1990s applied sound economic reform policies aimed at improving
the balance between aggregate demand and supply, attenuating
inflationary pressures, strengthening the balance of payments position
and achieving higher economic growth rates through, inter alia:
Liberalization of prices of goods, services and factors of
production,
Correction of cost and price distortions including those of
exchange rate and cost of financial services,
Privatization of public enterprises,
Reformation and liberalization of trade and the financial
sector including financial restraint to moderate pressure on imports
and the balance of payments,
Reformation of government tax system taking into consideration
the whole tax structure and particular taxes to relative prices and
incentives.
Broadening the tax base, reducing exemptions, simplifying tax
administration, adopting the value added tax since year 2000, revising
cost sharing of service deliveries and that all contributes to tax
reform has been implemented, and
Moderation of expansionary monetary policies to reduce
inflation and attain sustainable budget deficit.
The economy has
responded positively to these reform measures despite the sharp slow
down of foreign financial aid that was timed with outside political
pressures and hostilities. Such adverse developments have not deterred
the Government from pursuing rigorous macroeconomic reform and elicit
self-reliance policies. In fact such policies were smoothly reflected
in the country’s ability to contrive socio-economic resilience and
regain economic health. This is portrayed in the following set of
performance indicators:
An average growth rate of 6% of GDP was achieved during
1990-2001. Such growth rates have surmounted the rate of growth of
foreign trade, indicating that the economy remains somewhat tenable to
foreign shocks.
Agriculture which
accounts for an average contribution of 50% of GDP has recorded an
average growth rate of 8%. Cultivable area has expanded from 7.7
million hectars in 1989 to around 17 million hectars in 2001. Animal
wealth has also recorded increasing number of heads from 60 million in
1989 to around 128 million in 2001, and its contribution to GDP has
risen to more than 20% since mid 1990s. These developments have been
associated with strong macroeconomic policies and favorable climatic
conditions. Henceforth, food security has improved and a strategic
grain food reserve was built to safeguard for seasons of uneven rains
in addition to stabilize prices. Industrial sector share of GDP has
attained 15.3% during the period 1990 – 2001. Its output growth is
mainly ascribed to intermediary industries, mining and quarry whereas
petroleum production and petroleum exports have started to influence a
change in production structure and output. The service sector average
contribution has recorded about 35% during 1990 – 2001 from an
average of about 54% by the end of the 1980s. This is mainly due to
macroeconomic policy bias favoring the real productive sectors.
OTHER
MACROECONOMIC PERFORMANCE INDICATORS INCLUDE:
Domestic and foreign resource gaps used to be financed through
foreign aid were substancially narrowed leaving only a tune of 8%
secured from domestic and foreign sources.
Increase of self-finance share of cost of foreign component of
development and infrastructure projects.
Inflation rate has come down from more than 130% in 1996 to one
digit in 2000 and 2001 with an average of 8.5% and 4.8% respectively.
The exchange rate has stabilized, since 1998, following the
adoption of a new mechanism of a managed peg within a corridor.
Money supply growth rate ranges between 14% - 24% during the
last three years from an average of 65% in 1996. This is mainly due to
reduction of domestic credit and reform policies that have taken place
in commercial banks.
Reduction of budget deficit to a sustainable level of 1.8% of
GDP in 2001 from 4.4% in 1992/93.
The balance of payments has registered surpluses for the last
four years ending 2001 - amounting to US$ 25.1 million, US$ 111.3
million, 124.8 million, and US$ 85.00 million respectively. Exports
have increased from US$ 374 million in 1990 to US$ 1807.7 million in
the year 2000 and to US$ 1618 million in 2001 due to falling
international oil prices while imports have increased from US$ 618.4
million in 1990 to US$ 1539 million in the year 2001.
Financial credit from commercial banks to the private sector
economic activities has increased from SD 0.77 billion in 1990 to more
than SD 70 billion in the last two years.
To overcome the constraints ascribed to the large size of the
country, the wide dispersal of population, the varied agricultural
production systems and the highly diversified cropping, the Government
is embarking on intensive efforts to rehabilitate and expand
infrastructure in the fields of elictric power, road network and
agriculture irrigation. Other infrastructure performance has
remarkably improved during the ninities. Railway haulage capacity has
increased from 1.4 million tons in 1990 to more than 2 million tons in
late 1990s. New tarmac roads of more than 700 km length were
constructed bringing the total road network to about 3000 km length. A
notable devolopment has been made in the field of satelite and digital
wireless communication and use of optical fibre in transmission. The
country is now well connected with the outside world and locally with
the State’s capitals and main towns. Presently, teledensity is
around one telephone for each 100 persons. It is an area of
potentially huge investment opportunity for the private sector and
other economic operators. It is worth mentioning in this respect that
such developments have been achieved ensuing privatization of
telecommunications. It is also pertinent to note that the role of
telephone in economic development is highly important in developing
countries due to its higher marginal utility. The country also
espouses four main sea ports and numerous river ports in addtion to
five international and regional air ports and more than six local air
ports.
In the field of education, remarkable progress has been made.
The number of students in basic and secondary education has more than
doubled from less than two million to 4.5 million whereas the number
of universities has multiplied from 6 to 27 distributed among the
different States in addition to 22 private universities and colledges.
The Government policy now and in the future shall continue to improve
the standard of education to grapple with new levels in terms of
quality and outreach necessary to spawning competent workforce capable
of emplementing innovative and intellectual policies. New thrusts are
inevitably needed to meet the current and emerging local, regional and
global challenges. This includes preparing people and availing
competent workforce that would benefit from the opportunities provided
by the information technology and technological developments through
universities, research institutions and information centers.
Developments have also taken place in the health sector whereby
health service coverage has reached 70%. In this regard, Sudan was
granted praise for its high record of child immunization of 80%
coverage. General health, maternity and evironmental health in
addition to primary and specialized health care are receiving greater
attention in national policies and programs. Private investments have
been encouraged in the health sector to the extent that more than 50
clinics and hospitals have been established in the last few years and
more investment is expected to be realized in this field in subsequent
years.
RESOURCE
MOBILIZATION:
The basic challenge facing the national economy in a globalized
economy tainted with declining official financial flows and coupled
with fierce competion in the international market place, are those
issues related to the mobilization of domestic resources, increased
savings and the provision of inevitable investment to achieve higher
levels of sustained economic growth with transformation. It is worth
mentioning that low levels of savings before the 1990’s had been
influenced by persistent economic structral imbalances, asymmetric
policy orientation and the stature of relaxation triggered by the
plethora of foreign aid flows, used as well to finance increased
budget deficit. Other sharp imbalances manefested themselves in
consumer price index rise from 541% in 1987 to more than 1500% in 1989
in addition to the low level of savings averaging 4.2% ofGDP during
1980 – 1989.
A bundle of macroeconomic policies, instruments and measures
have been undertaken within the framework of the reform programmes to
mobilize resources. These include inter alia:
v
Reforming the taxation system with the aim of broadening
the tax base, enhancing the capacity of tax collection and the
introduction of VAT in year 2000.
v
Repealing tax and customs exoneration,
v
Sustaining macroeconomic stability in a non-inflationary
environment, non-expansionary monetary policies, low budget deficit
and manageable balance of payments,
v
Carrying out public enterprises reforms including the
promulgation of a new law that regulates their activities, and
stimulating their performance efficiency in a manner that helps them
to secure finance for recurrent activities and for replacement of
dilapidated assets in addition to increasing their contribution to the
general budget revenues,
v
Revising services delivery charges to cover the real
cost incurred,
v
Applying a strict control system to rationalize public
expenditure through programming of priorities and directing real
resources to finance production and essential services delivery,
v
Realizing general budget integrity through sanctioning
all expenditure outside its preview and removing all inherent
distortions and ill-practices resulting therefrom,
v
Amending the Financial and Accounting Law and Procedures
to reaffirm the Ministry of Finance and Economy’s custody over
public funds,
v
Preparing the general budget on realistic and scientific
basis within the macroeconomic model and associated policies,
instruments and measures which in turn aimed at: resource
mobilization, reduction of inflation, stablization of exchange rate
and increasing economic growth and exports. They all nurture savings
and are much determinental to investments,
v
Private savings have been hit by problems that haunted
the monetary sector and the vital shortage of foreign exchange during
the first half of 1990s. These problems manefested themselves in
rising inflation rates, deterioration of the exchange rate and
weaknesses of the banking sector. However the stability achieved in
both the exchange rate and prices and the expantion that is taking
place in investment and development shall eventually lead to
improvement in the saving environment, enhancement of private saving
opportunities and redirection of resources to the productive sectors.
Repealing of financial, legal and administrative hurdles and the
contraction of tertiary activities are necessary steps taken for a
healthy environment,
v
Designing and implementing a medium-term reform
programme for the banking sector covering the period 1999 – 2002.
The programme includes, inter alia, the establishment of investment
portfolios, increasing of banks’ capital stocks and modernization of
banking practices to cope with globalization and liberalization of
international trade and investment. Another important development is
the establishment of the Khartoum Stock Exchange in 1994 with the
number of registered companies progressively increasing as well as the
value and volume of stocks and shares exchanged. The Stock Exchange is
expected to effectively participate in the privatization process and
in raising the level of savings and investments.
v
The initiation of GMC and CMC improvise a success. These
usuary-free innovative financial instruments provide additional real
resources for both public and private expenditures. They are also used
as indirect instruments for managing liquidity and attracting savings.
They had registered great successes through auctions organized by the
Sudan Financial Services Company and the foreign exchange clearing
chamber of the Bank of the Sudan.
Macroeconomic stability, sustained economic growth and
the enhancement of capacity building in public sector management have
stirred savings and investments. Furthermore, investment incurred and
the potential opportunities in the mining and petroleum sector assured
the Government of improved conditions for foreign finance and FDI
flows and created enabling conditions for the economy to thrive and
respond to the changing international environment.
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