بسم الله الرحمن الرحيم Central Bank of Sudan 58th ANNUAL REPORT 2018 Website: http://www.cbos.gov.sd In the Name of Allah The Most Gracious, the Most Merciful We are pleased to present the 58th annual report of Central Bank of Sudan, which explains the latest developments in the Sudanese economy during the year 2018. The report contains ten chapters, the first is a summary of global and regional economic developments, while the remaining chapters indicate the performance of the domestic economy including: monetary and banking sector, the financial sector, the real sector, government and the external sector (foreign trade and balance of payments). On behalf of the Central Bank of Sudan I would like to express my thanks and gratitude to the Ministries, Institutions and Government Units for their cooperation in providing the necessary data and information for preparing this report. Also I would like to thank the Board of Directors of the Central Bank of Sudan and the committee entitled to review this report, and those who contributed or exert an effort in preparing it. We hope that this report will meet the needs and requirements of all the concerned parties, researchers and academies, beside the specialist on economic, financial and banking affairs from the local, regional and international institutions. Hussein Yahia Jangou Chairman of the Board of Directors And Governor of the Central Bank of Sudan BOARD of DIRECTORS Of the CENTRAL BANK of SUDAN by end of year 2018 Dr. Mohamed Khair Elziber Governor and Chairman of the Board of directors Mr. Musaad Mohamed Ahmed First Deputy Governor and Member of the Board Mr. Hussein Yahia Jangoul Deputy Governor and Member of the Board Miss. Muna Elsayed Ismaeel Under Secretary- Ministry of finance Prof. Mohamed El-Fatih Hamed Member of the Board Mr. Gindeel Ibrahim Gindeel Member of the Board Dr. Ibrahim Abdel Moneim Sobahi Member of the Board Prof. Awatif Yousif Mohamed Member of the Board …………………………………… Mr. Sami Abdelhafeez Salih Secretary of the Board CONTENTS Subject Page Introduction 1 Chapter One: Major International Economic Developments 6 Chapter Two: Central Bank of Sudan (CBOS) Polices 25 Chapter Three: Money Supply 39 Chapter Four: Banks and Non-Bank Financial Institutions 52 Chapter Five: Central Bank of Sudan Accounts 99 Chapter Six: Performance of the government general budget 107 Chapter Seven: Gross Domestic Product (GDP) 125 Chapter Eight: Production 148 Chapter Nine: Foreign Trade 177 Chapter Ten: Balance of Payments 198 Appendices 212 Introduction The annual report of the Central Bank of Sudan for the year 2018 is issued under international, regional and local, led to a difference in the level of overall performance in the Sudanese economy. This report contains ten chapters; the first chapter gives a brief summary of global and regional economic developments, while the other chapters present the performance of the domestic economy, namely: monetary and financial sector, public finance sector, real sector, and foreign sector (Viz foreign trade & balance of payments). Globally, the economy recorded a growth rate of 3.7% in 2018, on par with 2017, but less than the conditions that led to the decline in the economic activities of some major developed economies, in addition to the negative effects of trade protection measures, the tightening of fiscal policies, political turmoil in some countries, the increase in the oil import bill and low growth rates in the industrialized countries of the Euro zone, Japan, the United States and China. At the regional level, the World Bank has set up optimistic prospects for Middle East and North Africa (MENA) economies over the medium term, based on expectations of continued improvement in commodity prices, especially oil, gas and phosphate, continuing macroeconomic reforms, diversification of national income sources and reform of the business climate and labor market. On the other hand, the growth rate of Arab Free Trade Area (GAFTA) countries declined from 4.5% in 2017 to 2.4% in 2018, and the combined growth rate of the COMESA countries declined from 7.4% to 4.2%, and the average inflation rate for (MENA) From 6.7% to 11.8%, while the average inflation rate of the COMESA countries declined from 12.3% in 2017 to 12% in 2018. At the local level, the Central Bank of Sudan's policies for 2018 coincided with the guidelines and objectives of the General Budget, the Five-Year Program for Economic Reform (2015-2019) in its fourth year, the State Reform Program (2017-2021) and the outputs of the National Dialogue. These 1 policies aimed at achieving monetary and financial stability to contribute sustainable economic growth and development by stabilizing the overall level of prices and exchange rates and improving the balance of payments performance by reducing the current account deficit to safe and sustainable level. In the real sector, the GDP growth rate declined from 4.7% in 2017 to 2.8% in 2018. The average inflation rate increased from 32.4% in 2017 to 63.3% in 2018. These policies also aimed at solving the problem of the shortage of banknotes by providing them in commensurate with the size of economic activity in addition to making maximum use of payment systems, electronic banking, ICT, expanding the financial inclusion and spreading microfinance programs, in order to create financial and banking resources, to boost economic growth reduce the proportion of Poverty and enhances the role of the private sector. It is worth mentioning that one of the main challenges that accompanied the economic performance during the year 2018 is the significant depreciation in the exchange rate during this year. In terms of monetary performance, the growth rate of money supply increased from 68.4% in 2017 to 111.8% in 2018 as a result of the increase in revaluation of assets and liabilities in foreign currencies due to the depreciation in the local currencies viz-a-viz the us dollar, the increase of budget deficit financing from the Central Bank of Sudan to meet the commitments of the central government, in addition to the growth of bank financing to the private sector. Regarding the performance of the banking sector, the assets and liabilities of the Central Bank of Sudan increased from SDG188,048.6 million at the end of 2017 to SDG 757,300.7 million at the end of 2018 at a rate of 302.7%. This was mainly due to the change in the dollar exchange rate against the Sudanese pound. 2 The asset and liabilities of the operating banks increased from SDG 211,245.8 million at the end of 2017 to SDG 447,850.5 million at the end of 2018, an increase of 112%, due to the increase in balance of their foreign correspondents Vostro accounts from SDG 6,746.9 million to SDG 27,639.2 million at 309.7%, and increase the balance of the accounts kept with the central bank from 47,688.3 million to SDG 181,418.1 Million at a rate of 280.4%; the in addition to the increase in the temporary bank financing to the government from SDG 14,753.3 million to SDG 56,138.0 million at a rate of 280.5%. In terms of the government's financial sector, the general budget of the state in 2018 aimed to stimulate the national economy, by increasing the rate of economic growth, reducing the rate of inflation and maintaining the stability of the exchange rate. The total public revenue amounted to 124.9 billion, while total expenditure reached 162.8 billion pounds at the end of the year. 2018, recording a total in budget deficit SDG 37.8 billion. Regarding the external sector, the total balance of payments deficit increased from US $ 12.8 million in 2017 to US $ 25.2 million in 2018 due to the increase in current account deficit from US $ 4,851.1 million to US $ 4,928.1 million, or 1.6%, this deterioration in the current account is attributed to deficit in the services and income account and current transfers despite the decrease in the trade balance deficit. Sudan's foreign indebtedness increased from $ 48.2 billion at the end of 2017 to $ 49.9 billion by the end of 2018. The increase in indebtedness is due to the accumulation of penalty interest rates and exchange rate fluctuations during 2018. Global, Regional and Domestic economic indicators for the years 2017 and 2018 2017** 2018* Global Economic Indicators - Global economy Growth Rate (%) 3.7 3.7 - Industrial economies Growth Rate (%) 2.3 2.4 - Industrial economies Inflation Rate (%) 1.7 2.0 - Industrial economies unemployment Rate (%) 5.6 5.2 3 2017** 2018* - Industrial economies Current A/C position as percent of GDP (% ) 0.9 0.7 - Developing economies Growth Rate (%) 4.7 4.7 - Developing economies Inflation Rate (%) 4.3 5.0 - Developing economies Current A/C position as percent of GDP (% ) )0.1( )0.02( Regional Economic Indicator - Growth Rate in Sub-Saharan African countries (%) 2.7 3.1 - Growth Rate in Asia countries (%) 6.5 6.5 - Growth Rate in Middle-East and North Africa countries (%) 1.8 2.0 - Growth Rate in Latin America and Caribbean countries (%) 1.3 1.2 - Inflation Rate in Sub-Saharan African countries (%) 11.0 8.6 - Inflation Rate in Asian countries (%) 2.4 3.0 - Inflation Rate in Middle-East and North Africa countries (%) 6.7 11.8 - Inflation Rate in Latin America and Caribbean countries (%) 6.0 6.1 - Current A/C position as percent of GDP in Sub-Saharan African countries (%) )2.3( )2.8( - Current A/C position as percent of GDP in Asian countries (%) 0.9 0.2 - Current A/C position as percent of GDP in Middle-East and North Africa countries (%) )0.3( 2.6 - Current A/C position as percent of GDP in Latin America and Caribbean