‘Loss of oil constrains Sudan’s growth prospects’: IMF
According to the International Monetary Fund (IMF), the loss of most of Sudan’s oil export potential has exacerbated the crises in the country.
Sudan as a united country started producing oil in the 1990s, though the division of Sudan and South Sudan in July 2011 left most of the oil fields straddling the new border. The secession of South Sudan resulted in a loss of 80 per cent of Sudan's oil export revenues.
Oil still plays an essential role in the economy and policy adjustments in the wake of the birth of South Sudan had reduced inflation and supported recovery to some extent, the IMF stated in a report on its 2016 Consultation with Sudan.
"Despite these efforts, however, large macroeconomic imbalances -triggered by the loss of three-quarters of oil exports- continue to constrain growth prospects, along with weak policies, internal conflicts, and US sanctions.
“Low commodity export prices, absence of policy buffers, economic sanctions, the withdrawal of foreign correspondent banking relationships, and a weak business environment will continue to constrain economic activity,” the report reads.
“Domestic and international efforts to end internal conflicts have yet to bear fruit, and the humanitarian situation remains difficult. Sanctions and the withdrawal of correspondent bank relations weigh on trade, investment, and growth. Absence of progress toward debt relief limits access to official external financing.”
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
In late September, the World Bank urged Sudan to accelerate its economic diversification.
In a report, entitled Realizing the Potential for Diversified Development, the World Banks identifies a number of barriers that have been preventing Sudan from effective economic diversification. These include high and volatile inflation, a long overvalued exchange rate, low productivity in agriculture, among others.
The Sudanese government recently agreed to a package of measures proposed by the Ministry of Finance and the Central Bank of Sudan to curb the fast rise of the US Dollar on the black market.
Finance Minister Badreldin Mahmoud announced on 1 October that his Ministry will refrain from intervening in the exchange rate of the Sudanese Pound against the foreign currency.
Decisions to stop the import of certain types of consumer goods, “in order to reduce the importation bill”, will include types of cars, children's toys, plastic pots, ornamental trees, and some varieties of vegetables and fruits.
(Source: IMF, oilgasdaily.com, Dabanga Sudan)
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