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WEEKLY NEWSLETTER
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Sudan
Index
A reasonably accurate presentation of Sudan's balance of
payments--the summary in money terms of transactions with the
rest of the world--was hampered by what foreign economists
considered understatements in official statistics of imports and
public sector loans. The lack of reliable statistical information
was a problem, but the effects on the economy of mismanagement,
famine, and war were obvious. In the current account (covering
trade, services, and transfer transactions), the trade balance
throughout the two decades from 1960 to 1980 usually showed a
deficit; only in 1973 was a relatively substantial surplus
registered. After 1973 the trade balance was unfavorably affected
by higher petroleum import costs and the greater costs of other
imports that resulted from the worldwide inflation engendered by
oil price increases. The impact on the balance of payments was
especially serious because of its coincidence with the
implementation after 1973 of an intensive development program
that required greatly increased imports. The current account
situation was not improved by the services sector (insurance,
travel, and others), which regularly experienced a net loss, as
did investment income. Transfers usually had a positive balance,
but one insufficient to offset the usual deficit in trade and
services. Net inflows and disbursement of foreign loans and other
capital failed to cover the shortage in the current account, and
the overall balance of payments was regularly in deficit (see
table 11, Appendix).
The government from its earliest days had been forced to
resort to external financing to cover balance of payments
shortfalls. Deficits and debt service obligations were relatively
insignificant until the mid-1970s. Particularly from 1974 to
1977, large-scale borrowing and new commitments were estimated at
more than the equivalent of US$2.4 billion. At the end of 1979,
outstanding public and publicly guaranteed debts (disbursed)
totaled more than US$2.5 billion, of which almost US$1.8 billion
was owed to governments, US$535 million to commercial lenders,
and US$235 million to suppliers. In 1981 Sudan's debt burden was
estimated at US$4 billion. Little control over borrowing was
exercised within the government. The Ministry of Finance and
Economic Planning officially had responsibility for contracting
foreign loans, but such loans frequently had been authorized
directly by Nimeiri. Many were relatively short-term and at
interest rates too high for Sudan, considering its economic
situation. Until the coup d'ÃÂétat of Brigadier General Umar al
Bashir on June 30, 1989, there was little fiscal control over
currency and imports, and imports tended to include a large
number of luxury goods. After 1989 there was no improvement in
Sudan's foreign debt situation, despite a reduction in government
subsidies for bread, a 50 percent reduction of wheat imports, and
the end of sugar importation, which was expected to save an
estimated US$400 million annually. Despite these measures, total
foreign debt rose in 1990 to US$13 billion, with debt
liabilities, including principal and interest, estimated at
US$980 million in 1988-89.
In 1978 Sudan failed to meet its obligations fully--debt
service payments owed that year amounted to 17.9 percent of
export earnings. It was apparent that it would also not meet its
obligations in 1979, and so it sought relief from creditors. In
late 1979, acting through the so-called Paris Club, a group of
industrialized creditor countries including the United States,
Japan, and nine West European states, Sudan rescheduled an
estimated US$400 million to US$500 million of the debts
guaranteed by Western export credit agencies. The agreed payments
were to be made over a seven-year period commencing after a
three-year grace period. Rescheduling of another US$600 million
in loans and interest with more than 100 commercial banks--
represented by the 5 main creditor banks--required a further two
years; the agreement was signed at the end of 1981. Despite
repeated reschedulings of Sudan's debt burden, both arrears and
debt service payments continued to increase.
Since 1978 the government has undertaken various measures to
improve the balance of payments situation. A 1979 devaluation of
the overpriced Sudanese pound was carried out, reducing its value
from the equivalent of US$2.87 to US$0.22. As of March 31, 1991,
the official exchange rate was US$1=ÃÂãSd4.50. Since then Sudan's
economy has steadily weakened, as have its relations with the IMF
and the Paris Club. In 1989 Sudan had repaid the IMF only a token
US$15 million and continued to resist IMF demands for further
economic austerity measures. Despite declarations by the Sudanese
government that it was determined to cooperate with international
lending organizations, in mid-1991 Sudan had made itself
ineligible for debt relief because it was unable to service its
debt.
* * *
Despite the problem of obtaining reliable and current
information, a number of significant books and monographs have
been published recently on various aspects of Sudan's economy.
Among these is El Wathiq Kameir and Abrahim Kursany's
Corruption as the 'Fifth' Factor of Production in the
Sudan, which should be read in conjunction with the two books
by Mansour Khalid, Nimeiri and the Revolution of Dis-May
and The Government They Deserve. These books not only
unravel corruption but also provide insightful analyses of
Sudanese governments. Tim Niblock's Class and Power in
Sudan covers the whole of the condominium and ends with the
Nimeiri regime. Of more contemporary interest is the sound
analysis of Sudan's economy in Dr. Medani M. Ahmed's The
Political Economy of Development in the Sudan. A more recent
work is a collection of essays, Sudan since Independence;
several of these essays edited by Muddathir Abd al Rahim, Raphael
Badal, Adlan Hardallo, and Peter Woodward pertain to the economy.
A very useful collection of essays is that edited by Ali
Mohamed el Hassan, "Essays on the Economy and Society of the
Sudan." More recent is a collection of essays on Sudan's economy
edited by Paul van de Wel and Abdel Ghaffar Mohamed Ahmed,
Perspectives on Development in the Sudan. Ali Abdel Gadir
Ali's, Some Aspects of Production in Sudanese Traditional
Agriculture has insightful comments on Sudan's economy.
Siddiq Umbadda's Import Policy in the Sudan, 1966-1976 and
Mekki El Shibly's Monetisation, Financial Intermediation, and
Self-Financed Growth in the Sudan, analyze the economy during
the Nimeiri years. An assessment of Sudan's agricultural
development is provided in Tony Barnett's and Abbas Abdelkarim's
book, Sudan: The Gezira Scheme and Agricultural
Transition. An important journal specifically devoted to the
Sudan's economy, particularly during the Nimeiri regime, is
Sudan Journal of Economic and Social Studies.
Statistical information can be found in the Annual Reports of
the Bank of Sudan (especially the 1989 edition), but their
statistical information becomes increasingly unreliable after the
fall of the Nimeiri regime, reflecting the political instability.
Moreover, after the coup of June 30, 1989, the regime became
increasingly secretive. The Economist Intelligence Unit's
Sudan: Country Report, published quarterly, provides
valuable data about Sudan's economy, as does the chapter on Sudan
in the annual Europa volume Africa South of the Sahara,
1990.
Finally, Islamic banking as a relatively new phenomenon in
Sudan cannot be ignored because of its impact on the economy and
the powerful political influence these financial structures are
enjoying in contemporary Sudan. J. Schacht's An Introduction
to Islamic Law, Islamic Law and Finance, edited by
Chibli Mallat, and the influential work by A. Mirakhour and Z.
Iqbal, Islamic Banking, are useful works on the subject.
(For further information and complete citations,
see
Bibliography.)
Data as of June 1991
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