Overview: Sudan has significant natural resources, but since independence its economy has been constrained by civil war, debt, and mismanagement. Although it has recently turned its economy around with sound economic policies and infrastructure investments, it still faces formidable economic problems, one of them the low level of per capita output. Since 1997 Sudan has been implementing International Monetary Fund (IMF) macroeconomic reforms. In 1999 Sudan began exporting crude oil and in the last quarter of 1999 recorded its first trade surplus, which, along with improvements in monetary policy, has stabilized the exchange rate. Increased oil production, revived light industry, and expanded export processing zones yielded gross domestic product (GDP) growth of an estimated 5.9 percent in 2003. Agriculture remains Sudan's most important sector; however, most farming is rain-fed and susceptible to drought. Oil production continues to rise annually and in 2003 constituted more than 80 percent of export earnings. Chronic instability, including the long-standing civil war between the Muslim North and the Christian/traditionalist South, the current rebellion in Darfur, adverse weather, and weak world agricultural prices ensure that much of the population remains at or below the poverty line. Sudan also suffers from endemic corruption, an undeveloped and neglected physical infrastructure, and a financial system still in need of major reform. Wealth is concentrated in the central Nile corridor region, the northern, eastern, southern, and western regions being markedly less prosperous.
Gross Domestic Product (GDP): GDP was US$12 billion in 2001 and was estimated at US$13.4 billion in 2002 and US$15.4 billion in 2003. Per capita GDP was about US$415 in 2002. Since 1999, economic growth has averaged about 6 percent annually, helping account for an estimated doubling in the size of the economy between 1996 and 2003. In 2003 estimates, GDP by sector was: agriculture, 39 percent; industry, 19 percent; and services, 4 percent.
GOVERNMENT Budget: The budget has been in chronic deficit from the early 1980s, largely as a result of outlays for military campaigns against the Sudan People’s Liberation Army. With the advent of the structural adjustment program in 1997, new fiscal controls combined with new revenues from the oil sector reduced the deficit from nearly 13 percent of gross domestic product (GDP) in 1990 to less than 1 percent in and after the late 1990s. In 2002 total revenue amounted to Sudanese dinars (SD) 470.6 billion (US$1.8 billion), and expenditures to SD503.4 (US$1.9 billion), including capital expenditures of SD118.6 billion (US$450 million). The deficit amounted to SD32.8 billion (US$125 million).
Inflation: Sudan experienced high rates of inflation during the early 1990s, reaching 133 percent in 1996. Since then, rates have declined through double digits to 8.4 percent in 2002 and 7.8 percent in 2003.
Agriculture, Forestry, and Fishing: Agriculture is the most important sector in Sudan’s economy, employing some two-thirds of the population and contributing about 40 percent of gross domestic product (GDP) in recent years. Grains (primarily sorghum) and livestock (camels, cattle, goats, and sheep) form the backbone of the traditional economy. Sudan also produces significant quantities of gum arabic, millet, peanuts, sesame, and sugarcane. Under the British, the al Gezira irrigation project was developed and became a cotton-producing and exporting region. More recently, dam and irrigation projects have been established at Kusti, Al Qadarif, and Kassala. In the early 2000s, sesame and livestock are Sudan’s most important agricultural exports. Forest products include gum arabic and charcoal. The Nile and its tributaries contain abundant fish, Nile perch being commercially exploitable.
Mining and Minerals: Sudan’s mineral endowment consists of oil as well as asbestos, chromite, copper, diamonds, gold, iron ore, mica, silver, talc, tungsten, uranium, and zinc. Aside from oil, gold is the most valuable mineral export. Oil was discovered in the early 1980s in the South but not exploited until the late 1990s because of insecurity. Although some petroleum is refined for the local market, most is exported as crude. Production in 2003 was about 300,000 barrels per day, of which 200,000 barrels were exported and some70,000 barrels per day consumed locally. Production is expected to reach 500,000 barrels per day by late 2005. Reserves total 800 million barrels, with estimates of up to three billion barrels.
Industry and Manufacturing: Despite recent investment and improved production, Sudan’s manufacturing sector is quite small. Several refineries produce enough petroleum products to meet local demand, with some available for export. Refined sugar and textiles are the chief manufactures, sugar being a major export. Sudan also manufactures cement, cigarettes, edible oils, soap, and shoes. The industrial sector grew more than 11 percent in 2000 after sluggish growth during the 1990s.
Energy: In 2000 Sudan’s total installed electrical generating capacity was rated at more than 2,500 megawatts, but actual production was lower than rated capacity. About 46 percent was produced by hydropower. New dams presently in the planning stage will increase hydropower significantly. Much of the country lies outside the national power grid and uses diesel fuel to generate power.
Services: Aside from banking and finance, communications, and transportation, Sudan’s services sector is quite small. Despite considerable potential, tourism is restricted because of a lack of reliable transport, hotel facilities, and general insecurity. In 2001, 50,000 tourists entered the country, producing receipts of US$56 million.
Banking and Finance: The banking and financial sector has been troubled since at least 1970, when all banks were nationalized and placed under control of the Bank of Sudan. Following the coup of 1989 that brought the al Bashir regime to power, banking and finance were conducted according to Islamic principles, which among other restrictions forbid payment of interest on deposits. These restrictions, problems with capitalization, and non-performing loans greatly reduced the profitability of banks and resulted in low levels of private investment during the 1990s. The sector was one of the targets of the International Monetary Fund (IMF) economic restructuring program in 1997, which has led to some improvements. There are 25 banks, and in the early 2000s half of them were wholly or partially privately owned. Since 2000, private-sector credit has grown markedly, but a planned merger of banks into six banking groups to improve financial strength and international competitiveness has not yet been implemented.
Labor: In 1999 the labor force numbered an estimated 9.7 million, of which two-thirds were employed in agriculture.
Foreign Economic Relations: Until the late 1990s, Sudan’s external trade was largely confined to Middle Eastern countries, Saudi Arabia and Libya in particular. The development of the oil industry, however, reoriented Sudan’s trading patterns. China and Japan have emerged as the chief destinations for oil, and China now supplies the majority of imports, with Saudi Arabia in second place. Refined petroleum imports from Libya have virtually ceased, and although Saudi Arabia continues as a major market for livestock and agricultural produce, the value of this trade is well below that of oil. France, Germany, and the United Kingdom supply essential manufactures. South Africa, South Korea, and Malaysia are other trading partners. Beginning in 1993, Sudan was denied access to loans and financial support from the World Bank and the International Monetary Fund (IMF) because of unpaid debt arrearages. Although the IMF helped design the structural adjustment program in 1997, IMF financing remains in suspension. In 1997 the United States charged Sudan with violations of human rights and support for international terrorism and imposed economic sanctions, measures that were still in effect in 2004.
Imports, Exports, and Trade Balance: Development of the oil export industry drastically altered the structure of Sudan’s foreign trade account, which has passed from average yearly deficits of more than US$600 million during the 1990s to surpluses of US$300 million annually from 2000 to 2002. In 2002 imports amounted to about US$1.7 billion on a free on board basis, and exports totaled about US$1.9 billion on a free on board basis, leaving a trade balance of more than US$200 million. Sudan’s major imports were machinery and equipment, manufactured goods, refinery and transport equipment, wheat, and wheat flour. Oil and oil products were the overwhelming export commodities at US$1.1 billion, followed by livestock and meat at US$103 million.
Balance of Payments: Sudan had a record of large balance of payment deficits averaging US$621 million annually during the 1990s. In 2002 the deficit was US$747 million, as positive balances in trade and current transfers (largely remittances from Sudanese working abroad) were more than offset by outflows for services and return of capital and profits to foreign firms in the oil sector. For 2003 the deficit was estimated at US$1.4 billion. During the next few years, as repayment of foreign capital for development of the oil industry declines, analysts estimate that the balance of payments should approach equilibrium.
External Debt: Sudan accumulated a sizable foreign debt in the 1970s and 1980s, partly to finance a development program but also because of rising interest rates and prices for imported oil. Repayment has so far proven to be beyond the country’s means. Between 1999 and 2002, total foreign debt averaged US$15.9 billion. In 2003 the World Bank estimated the debt at US$17.1 billion. The International Monetary Fund (IMF), however, placed the figure at more than US$24 billion. Most of the debt represents government borrowings from bilateral and multilateral lenders, an estimated 90 percent of it in arrears.
Foreign Investment: In 2003 foreign direct investment rose to US$1.4 billion, double the previous year’s total and much higher than investments of the 1990s. Most of these funds were invested in the oil and electric power sectors.
Foreign Aid: Sudan receives a significant amount of relief aid from international organizations to alleviate the effects of civil wars in the South and in Darfur. Amounts vary according to the intensity of the conflicts and rainfall patterns, both of which affect food production. Much aid is channeled through the United Nations, which sought to raise US$225 million for its programs in 2003–04.
Currency and Exchange Rate: Sudan’s currency is the Sudanese dinar (SD). On March 1, 1999, the Sudanese pound was replaced by the Sudanese dinar, equivalent to 10 Sudanese pounds. The pound was withdrawn from circulation on July 31,1999. In late 2004, the exchange rate per US$1 was SD255.7.
Fiscal Year: Sudan’s fiscal year is the calendar year.