Sudan's economy facing significant challenges -- minister
The Sudanese minister of finance and national economy Ali Mahmoud Abdel-Rasool has acknowledged that the country's economy is facing significant headwinds despite an austerity program implemented in the wake of South Sudan's secession.
Sudan lost three-quarters of its oil production when South Sudan became independent in July 2011, worsening an economic crisis as oil was the government's main source of revenue, providing the cash flow to fund food imports and other basic items.
Last year, the government launched a package of tough austerity measures, including scaling back fuel subsidies to close a fiscal gap, sparking short-lived protests.
Khartoum also moved to effectively devalue the currency which came under enormous pressures as a result of a big shortage in foreign currencies.
Abdel-Rasool listed what he said was signs of trouble in Sudan's economy which included a deficit in balance of payments deficit, meager outcome to the tripartite economic program, high food prices, growing gap between official and black market exchange rates and the declining rates of economic growth.
The Sudanese official, who spoke at an economic conference in Khartoum on Monday, pledged to curb inflation rate which reached 46% last April frustrating efforts by the government to tame commodity prices which have risen by 300% since 2010.
He also warned against recurrence of the global financial crisis saying that it had negatively impacted African countries including Sudan due to the drop it caused in demand for exports.
Abdel-Rasool said that the government is making strenuous efforts to expand the social security network and fight poverty as well as managing parity in exchange rate and continuing to subsidize wheat and oil.
Statistics indicate that 2 million Sudanese families live in poverty including 300,000 who do not have access to food and drink.
The ministry of social welfare has designated a monthly payment of 100 pounds SDG for poor families out of 450 million pounds SDG allocated for social support. But economists say that the monthly grant doesn't meet the basic needs of these families given the high rate of poverty and the significant rise in commodity prices.
The World Economic Outlook (WEO) released last April by the International Monetary Fund (IMF) showed Sudan's economy shrinking by -4.4% in 2012. In 2013, Sudan is expected to achieve a 1.2% growth which is higher than the -0.6% projected by the IMF last year. Next year's GDP is also forecasted to stand at 2.6% which is slightly better than the 2.1% predicted in the IMF last assessment of Sudan's economy. (ST)