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FFC: ‘Sudan 2021 budget will lead to economic collapse’

January 11 - 2021 KHARTOUM
Acting Finance Minister Heba Mohamed (Social media)
Acting Finance Minister Heba Mohamed (Social media)

The Economic Committee of the Forces for Freedom and Change (FFC) has warned that the 2021 National Budget approved by the Council of Ministers last week will lead to an economic collapse of the country.

In an interview with Radio Dabanga, professor Mohamed Sheikhoun, member of the FFC Economic Committee, accused acting Finance Minister Heba Mohamed of presenting incorrect information about the 2021 education budget. The 2021 budget was approved by the Council of Ministers last week.

“The education budget is much smaller than the budget reserved for defence,” professor Sheikhoun he said. “The 2021 defence budget amounts to SDG 89.82 billion, which is an increase of 173 per cent compared to last year [not taking into account inflation], while education will have a budget of 16.2 billion, an increase of only nine per cent.”

According to the FCC Economic Committee, the defence and security budget should be reduced by at least 40 per cent. The budget reserved for education must be increased by at least 50 per cent. The infrastructure sector should at least have a budget of SDG 6 million.

The revenues of gold mining and the taxes on companies owned by the military and the security apparatus are not included in the budget, he stated.

The economist called on Prime Minister Abdallah Hamdok to work with the previous budget for a limited period of time until the observations of the FFC Economic Committee have been taken into account.

Last week, the FFC Economic Committee handed a memorandum to Prime Minister Hamdok about “the major imbalances in the distribution of resources between the various sectors in the country”. The expenditure on security, defence, and police was set on SDG 245 billion, while just SDG 72 will be spent on billion health, education, agriculture, transport, and infrastructure.

One-third of the budget's revenues come from the sale of fuel. The government increased the fuel price in October from SDG 128 to SDG 540 per gallon. Economist Sheikhoun:  “This means that the government takes its revenues directly from the people's pockets, which is exactly what the previous regime did, against which the people revolted”.

The government should impose progressive taxes on companies owned by the army and security apparatus and telecommunications companies, he said, instead of raising the prices of fuel and electricity. Military and security apparatus leaders have repeatedly defended companies affiliated to them.

The FCC Economic Committee warned of a negative impact of the proposed budget policy on inflation, production, exports, and public revenues. It called on Hamdok to review the price increases of petrol and diesel, freeze the electricity tariffs, and review the current import policies.

The committee stressed the need to determine how much the companies owned by the military and security apparatus contribute to the budget, in both local and foreign currencies. The government should also take control of the gold export and establish a stock exchange for gold and crops.

 

* USD 1 = SDG 55.1375 at the time of posting, according to the daily middle US Dollar rate quoted by the CBoS. Effective foreign exchange rates however can vary widely on Sudan’s parallel market, where the rate of the greenback sold has risen again, to SDG 266 this early morning.


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