Country Report Sudan at a Glance: 2003-04
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Country Report June 2003 Sudan Sudan at a glance: 2003-04 OVERVIEW The peace process between the government and the leading southern rebel force, the Sudan People’s Liberation Army, will be kept alive by international pressure, although little of substance will be agreed in the short term. A ceasefire remains in effect until the end of June, while talks have been suspended until July. A US presidential report to Congress on the commitment of the Sudanese government to peace avoided calling for sanctions, signalling US support for ongoing dialogue. A significant rise in oil exports and a recovery in non-oil exports in 2003 are expected to ensure strong real GDP growth of 5.9%, slowing marginally to 5.3% in 2004. The current-account deficit, however, will widen over the forecast period to US$1.74bn by end-2004 (9.6% of GDP). Key changes from last month Political outlook • With halting progress in the peace talks, the political outlook is dependent upon the continued commitment to negotiations. Many obstacles remain, not least the role of the opposition groups not included in the talks and the growing unrest in the west of the country. Economic policy outlook • The government will not veer from its commitment to IMF-led policies, although expenditure may stray beyond agreed limits. Economic policy will continue to centre on balancing the budget through subsidy cutting and raising taxes. These measures, combined with a revised oil price forecast, will result in a reduced budget deficit of SD5.5bn (US$21.1m; 0.1% of GDP) in 2003, which will then widen in 2004 to SD33bn. Economic forecast • Real GDP is set to grow sharply in 2003-04, driven by increased oil output and rising non-oil exports. The Central Bank of Sudan has in effect pegged the dinar to the dollar in an attempt to maintain price stability. Inflation will remain high but stable, averaging around 10% in 2003-04. June 2003 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. 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Sudan 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2003-04 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 18 Economic policy 21 The domestic economy 21 Economic trends 22 Oil and gas 26 Agriculture 27 Foreign trade and payments List of tables 9 International assumptions summary 12 Forecast summary 19 Budget balance 28 Trade balance 29 Import spending 31 Export revenue 31 Official reserves List of figures 6Money supply 6Foreign trade 12 Gross domestic product 12 Consumer price inflation 21 Inflation, 2002 22 Exchange rate Country Report June 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 Sudan 3 Summary June 2003 Outlook for 2003-04 The peace process between the government and the leading southern rebel force, the Sudan People’s Liberation Army, will be kept alive by international pressure, although little of substance will be agreed in the short term. A ceasefire remains in effect until the end of June, while talks have been sus- pended until July. A US presidential report to Congress on the commitment of the Sudanese government to peace avoided calling for sanctions, signalling US support for ongoing dialogue. A significant rise in oil exports and a recovery in non-oil exports in 2003 are expected to ensure strong real GDP growth of 5.9%, slowing marginally to 5.3% in 2004. The current-account deficit, however, will widen over the forecast period to US$1.74bn by end-2004 (9.6% of GDP). The political scene The war in Iraq diverted international attention from the Sudanese peace process, which is no closer to a resolution. Despite the slow progress, the US chose not to implement sanctions under the Sudan Peace Act in April, and also praised Sudan for its improved co-operation over international security issues, despite remaining on the list of state sponsors of terrorism. The ceasefire has broadly held, although a new conflict has broken out in the far west of the country. Sudan has stepped up its support for Eritrean opposition groups as relations with Eritrean government have continued to deteriorate. Economic policy The economic reform programme has yielded significant results, according to a new World Bank report, which shows Sudan to be one of Africa’s fastest growing economies. A privatised telecommunications company, SudaTel, became the first Sudanese firm to be listed on an overseas capital market, and the government has moved ahead with the liberalisation of the telecoms sector. Sudan has taken over as chair of an African free-trade organisation, but its efforts to boost regional trade continue to face significant non-tariff barriers. The domestic economy Oil production is set to rise strongly following an upgrade to the export pipeline that has boosted capacity. A Canadian oil company, Talisman, has finally completed the sale of its stake in the foreign consortium developing the oil sector, although it will face a court case over allegations of human rights abuses. Mobil has also sold the remainder of its assets in Sudan, and a Swedish firm, Lundin, has reduced its presence significantly. Aid agencies report that the food situation is less precarious than had initially been feared, although areas of acute shortage remain. Agreements between the government, the rebels and the UN have significantly improved the humanitarian relief programme in the south. Foreign trade and payments Despite an increase in export earnings, Sudan’s trade balance moved into deficit in 2002, as import spending soared. Nevertheless, official reserves rose strongly during the year, ending 2002 at record levels. The reserve stock remains dwarfed by outstanding foreign debt, however, which new data show to be overwhelmingly in arrears. Editors: Philip McCrum (editor); James Reeve (consulting editor) Editorial closing date: June 6th 2003 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report June 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 4 Sudan Political structure Official name Republic of Sudan Legal system Under the constitution, sharia (Islamic law) is applicable countrywide in both civil and criminal cases. In practice, much of southern Sudan is exempt National legislature A 400-member National Assembly (parliament), of which 264 members are elected and 136 are appointed by the president National elections December 2000 (presidential and parliamentary); next elections due to be held in 2005 Head of state Lieutenant-General Omar Hassan Ahmed al-Beshir, who took office following the 1989 coup and was sworn in as president in October 1993; elected in March 1996 for a five-year term; re-elected in December 2000; next elections due in 2005 National government A joint military-civilian cabinet, the Council of Ministers, last reshuffled in February 2001 Main political parties All political parties were banned following the June 1989 coup that was backed by the National Congress (NC). The NC, known as the National Islamic Front (NIF) until it changed its name in January 1999, is the ruling party Main opposition groups The Sudan People’s Liberation Movement (SPLM) and the Sudan People’s Liberation Army, its military