Sudan Sees Fruits of Painful Economic Reform - Oil Boosts Economy
KHARTOUM, May 12 (Reuters) - Sudan, clawing its way
back to financial respectability, expects its war-battered
economy to grow strongly again this year and inflation to
drop to single digits, Finance Minister Mohamed Khair
al-Zubeir said on Friday.
"Our economic programme has achieved its major
objectives of high real growth rates in an environment of
economic stability," he told Reuters in an interview.
Zubeir said the exchange rate had stabilised and the
economy had grown six percent in calendar 1998 and 1999.
The government has set a growth target of 6.5 percent for
2000.
Inflation fell to 11.9 percent year on year in April, compared
to an annual average of 14 percent in 1999. "We hope to
reach nine percent inflation by the end of the year," he said.
Sudan, now in the second year of a medium-term
International Monetary Fund staff-monitored programme,
expects the IMF to restore its voting rights at an end-August
review.
"Once we have normal relations with the IMF, we will be
eligible for various debt relief initiatives," Zubeir said,
adding that he believed Sudan could qualify for a poverty
reduction and growth facility being put together by the IMF.
Sudan has been making nominal repayments on its $1.4
billion debt to the IMF since 1997 as part of steps towards
lifting the suspension of its rights in place since 1990 when
the fund declared the impoverished African country
non-cooperative.
"By the end of the year we are confident that we will have
normal relations with our international and regional
creditors," Zubeir said, putting Sudan's total foreign debt at
$20 billion.
He said Khartoum had agreed on a programme to settle its
arrears to the Arab Monetary Fund and had already restored
normal ties with several Arab development funds.
OIL BOOSTS ECONOMY
Zubeir said oil production that began last year and the
completion this year of a 50,000 barrels per day (bpd)
refinery near Khartoum would help the balance of payments.
The refinery will save Sudan about $300 million it used to
spend on importing oil products. The government is only
getting 40 percent of oil export revenue now, but this will
rise to 80 percent once the producing consortium has
recovered its investment after four years, Zubeir said.
Production from southern oil fields is running at about
185,000 bpd after starting at 120,000 bpd in August.
Zubeir said Sudan's adjustment programme had cut
government spending and abolished subsidies on bread,
sugar and oil products with painful results for people on
fixed incomes.
"Reform itself brought higher inflation and depreciation of
the exchange rate for the first five years after 1992," he said.
"Fixed income groups and consumers bore the brunt."
Among the beneficiaries of economic liberalisation are
traders, producers, farmers and cattle grazers, he said.
Sudan, which has already partly sold its telecoms utility,
hopes to privatise at least 35 public concerns, including the
state airline, shipping line and cement plants, Zubeir said.
"We want to reduce state intervention to a minimum," he
said. "It should be limited to things like security and the
provision of basic human needs and perhaps infrastructure
projects that the private sector cannot provide."
The government, however, had to put social justice above
free competition and tailor fiscal, monetary and social
policies to ensure even distribution of wealth and
development among different regions as well as income
groups, Zubeir said.
The minister defined the major challenges for Sudan as
reducing poverty among its 30 million people, improving
transport, irrigation and power systems, and extending basic
health, education and safe drinking water to all.
"It's a tremendous task for a country whose population is
scattered over one million square miles," he said.
Zubeir declined to say how much the Islamist government is
spending on its 17-year-old war with rebels demanding
self-determination for the mainly Christian or animist south.
The conflict has cost an estimated 1.5 million lives in
fighting and war-aggravated famine and disease.
"It's costing lots of money," Zubeir said. "It is really draining
our resources tremendously." |
